How CFOs expect to manage office space post-pandemic

July 7, 2021

As expected, companies are beginning to develop their office space strategy for the long term in preparation for a post-pandemic environment. Many companies were forced to convert nearly all of their workforce to remote workers overnight. While this represented an unprecedented challenge to navigate, it was also a unique opportunity to evaluate all impacts of remote work on the organization to support future strategies. Some would point out the work culture, and supporting technologies were already headed down this path, and the pandemic just caused an acceleration of this movement to remote working.

Aided by technologies such as Zoom, Teams, Slack, and a host of cloud software, the results have been mostly positive in team collaboration and individual productivity. However, many employees have also decided they prefer the work-life balance afforded by remote work and don’t plan to return to the office’s now antiqued 9-5 M-F model.

For these reasons, many CFOs are never going back to their pre-pandemic office space levels.

The Wall Street Journal describes how CFOs are subletting their office leases and taking one-time accounting charges in hopes of coming out ahead in the long-term.

“Companies book impairment charges when they sublease office space for less money than what they pay for it, according to Jonathan Milian, an accounting professor at Florida International University. The charge represents a decline in the asset’s value, he said.” Kristin Broughton and Nina Trentmann , The Wall Street Journal

It may still be too early to predict what will happen to the office space as an asset as the forces of supply and demand challenge it. One can assume less demand by CFOs for office space should lower the costs of leases in the short term, but will that lower price level create an opportunity for new players to start utilizing those spaces in creative ways?