To Cut Costs, Companies Are Moving Away From The City

As inflation rises and companies need to cut costs, they’re laying off workers and moving out of city centers and possibly into the suburbs.

In a recent KPMG survey of CEOs, more than 90% of executives feel that a recession will occur within the next year.

Because of this — and high inflation — it seems that companies are moving away from city centers to be more cost effective.

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For instance, Meta is walking away from a $110 million lease for 200,000 square foot property on Park Avenue In NYC. It also has plans to reduce its real estate footprint in San Francisco.

“There is a binary fight between workers who want to remain remote and the bosses who want them to return to an office five days a week. This tug of war has massive consequences for real estate in big cities, like New York, Chicago and San Francisco, and what the prevalent future of work will look like,” according to Forbes.

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As workers pushing back on coming back to work in the office, major office buildings may lose $50 billion if this trend continues.

A hybrid work model might be the most financially viable way for organizations to save money while also making employees happy.

According to IWG’s CEO Mark Dixon, he suggests that buildings be retrofitted to be more inviting for workers to come into the office to socialize, brainstorm, meet with clients, etc. Dixon believes that the best option might be for organizations to offer coworking spaces in the suburbs.