Business
Who still needs the office? U.S. companies start cutting space
NEW YORK (Reuters) – Corporate America is downsizing its real estate footprint as companies allow more employees to work from home, a growing threat to the bottom line of owners of traditional office buildings and a sign that companies are looking for ways to cut costs as a result of the coronavirus pandemic.
A Reuters analysis of quarterly earnings calls over the past week revealed more than 25 large companies plan to reduce their office space in the year ahead, a move designed to reduce the second-largest expense after payrolls at corporations.
Energy company Halliburton Co said it intends to close more than 100 facilities.
Financial services company State Street Corp said it is going to nearly double the workers assigned to one office before adding additional space, based on the assumption that a significant portion of its workforce will continue to work from home even after a vaccine for COVID-19 emerges.
Bedding company Sleep Number Corp plans to slow the growth of its total square footage as more consumers shop online.
“You should expect and hold us to a much lower footprint really starting quite soon,” State Street Corp’s CEO, Ronald Philip O’Hanley, said on the company’s July 17 earnings call.
Regions Financial Corp, meanwhile, told analysts: “Whether through increased use of hoteling, work from home or modified scheduling, we are confident overall office square footage will continue to decline,” as some workers share desks or stop coming into the building.
Analysts say the plans to cut back on real estate are likely the first wave of cost-cutting measures to hit office workers as companies try to maintain margins going into what may be a long recession. So far, the majority of the 14.7 million U.S. jobs lost during the pandemic have been in hard-hit areas such as restaurants, travel and retailers.
Reductions in office spending could likely be followed by layoffs and investments in technology that should help improve productivity with a reduced workforce, said Bill McMahon, chief investment officer of active equity strategies at Charles Schwab.
“Clearly, we’re seeing businesses starting to rationalise their physical plants and at some point they will turn to labor too,” he said.
Morgan Stanley in June forecast that work-from-home policies will increase vacancy rates in office buildings. Vacancy rates in New York will reach 10%-12% in the next two to five years from 8.7% now, while San Francisco will reach 7-9% from 5.8%, it predicted.
So far, concerns about declining office space use have not hurt commercial mortgaged-backed securities, with the iShares CMBS ETF up 4.4% for the year to date.
While companies tend to cut back on their real estate needs during typical recessions, the last four months of economic lockdown have shown that many workers can remain productive at home, said Danny Ismail, an analyst at independent research firm Green Street Advisors. As a result, the cutbacks that companies are making are more likely to be permanent, he said.
“Every company just went through a mass work-from-home experience and for the majority it was mostly positive,” he said.
Green Street Advisors expects that office demand will be reduced by up to 15% as a result of work from home policies once the coronavirus pandemic is contained.
That reduction in necessary space will most likely hurt real estate investment firms with large exposures in cities such as San Francisco and New York as workers are expected to be given more freedom by employers to live in lower-cost areas away from the coasts, Ismail said.
“Even before COVID-19, you’d seen a migration from majority coastal cities along the Northeast and West Coast to Sun Belt markets,” he said, referring to the region stretching from Florida to Southern California, collectively known as the Sun Belt.
“We think that will accelerate in the future as the cost of living, quality of life and ability to keep your job is much better in a post-COVID-19 world than before.”
Reporting and photo: Reuters
Barcelo Nasandhura Malé, the Maldives’ newest luxury destination, is set to open its doors in Q1 2025.
Located on the site of the former Nasandhura Palace Hotel, the property will become the largest hotel in the capital, Malé. With 136 elegantly designed rooms, including 95 with stunning ocean views, and 116 luxurious serviced apartments, Barcelo Nasandhura Malé promises a unique blend of sophistication, comfort, and convenience in the heart of this vibrant city.
Operated by the renowned Spanish hotel chain Barcelo Group, the hotel represents a significant expansion of the brand’s presence in the Maldives and beyond. Barcelo Group, known for its exceptional resorts, recently opened Barcelo Whale Lagoon Maldives in South Ari Atoll in August 2024, further solidifying its growing portfolio in the region. In addition to its Maldivian properties, Barcelo Group manages a range of high-profile hotels across the UAE, Thailand, and several European countries.
Barcelo Nasandhura Malé will feature an array of premium facilities, including four upscale dining outlets, a rooftop shisha bar, an oceanfront pool, a state-of-the-art gym, and a luxurious spa. The hotel will also boast 1,034 square meters of versatile MICE (Meetings, Incentives, Conferences, and Exhibitions) space, making it an ideal venue for corporate events and gatherings.
While some serviced apartments were initially intended for residential use, they will now be available for daily rental, offering guests enhanced flexibility and a wider range of accommodation options. Originally scheduled to open on December 1, 2024, the opening has been slightly delayed due to minor construction work. However, the team remains committed to ensuring Barcelo Nasandhura Malé is ready to welcome its first guests in Q1 2025.
Barcelo Hotel Group, awarded World’s Leading Hotel Management Company 2023 by the World Travel Awards, is the second-largest hotel chain in Spain and ranks among the 30 largest globally in terms of the number of rooms. Founded in 1931, this family-run organisation operates 280 four- and five-star city and holiday hotels, offering more than 62,000 rooms across 25 countries. The group markets its hotels under four distinct brands, each focused on providing diverse and memorable travel experiences.
Renowned for its commitment to excellence and sustainability, Barcelo Hotel Group delivers exceptional stays, seamlessly blending luxury, comfort, and environmental responsibility.
As part of its ‘Masters for Masters’ series, The Nautilus Maldives will host Denise Hoefer, Germany’s No. 1 padel player and one of the world’s top 50 most influential figures in the padel industry, for an exclusive Padel Masterclass from March 22 to 25, 2025. This exceptional event invites guests to enhance their padel skills under the expert guidance of a global champion, all set against the stunning backdrop of the Maldives’ Indian Ocean.
Padel, recognised as the world’s fastest-growing sport, has captured the hearts of 30 million enthusiasts globally, according to the International Padel Federation. This March, The Nautilus will provide a unique opportunity for guests to immerse themselves in this thrilling game during a four-day Padel Masterclass led by Denise Hoefer, Germany’s top-ranked female padel player and captain of the German national team. Participants will refine their techniques on The Nautilus’s state-of-the-art padel court, while experiencing the island’s signature blend of world-class coaching and timeless, unscripted hospitality.
The Padel Masterclass will feature a tailored mix of group and private sessions, catering to players of all levels. Younger participants will have the chance to join the Young Wonderers program, offering specially designed classes that introduce the sport in a fun and engaging way. After an energising day on the court, guests can unwind at Solasta Spa, where exclusive treatments by Maison Caulières—such as Spinal Connection Deep Tissue Healing, Volcanic Stone Therapy, and Warm Poultices—promise ultimate relaxation and rejuvenation. These tranquil spa experiences provide a perfect complement to the day’s dynamic activities, leaving participants refreshed and revitalised.
With just 26 ultra-luxury houses and residences, The Nautilus offers an intimate sanctuary within the Baa Atoll, a UNESCO Biosphere Reserve. Surrounded by powder-soft white sands, vibrant coral reefs, and crystal-clear waters, this private island retreat redefines bespoke hospitality. Every element is meticulously crafted to inspire, offering guests an unparalleled ultra-luxury experience focused on relaxation, renewal, and discovery. Whether honing padel skills or embracing the serenity of island life, The Nautilus stands as the ultimate destination for discerning travellers.
BBM, in collaboration with Lifebuoy, marked Global Handwashing Day 2024 with engaging activities aimed at instilling the habit of proper hand hygiene among Maldivian school children. Held on November 17th, the event continued the successful “H for Handwashing” campaign, blending education with creativity and fun.
The initiative featured info sessions, exciting games, and creative contests designed to teach children the importance of handwashing while giving them a hands-on understanding of the correct techniques. Activities ranged from reimagined board games like “Germs & Ladders” and “Handwashing Ludo” to interactive sessions that reinforced hygiene habits in an enjoyable way.
This campaign underscores BBM’s commitment to fostering healthier practices among the younger generation, contributing to a healthier and more hygienic Maldives. COO of BBM, A.V.S. Subrahmanyam, emphasised, “At BBM, we believe that empowering the next generation with the knowledge and tools for better hygiene practices is vital for building a resilient and healthy community. We are proud to continue our efforts in collaboration with partners like Lifebuoy.”
Adding to this, Muksith Hussain, Head of Retail Sales at BBM, shared, “Reaching children through such innovative initiatives helps us lay the foundation for a healthier tomorrow. We are thrilled to see the enthusiasm and participation of these young minds in learning the importance of hygiene.”
The event also saw valuable support from the Maldivian Red Crescent (MRC), whose contributions enriched the experience for the children. BBM expressed gratitude for MRC’s involvement, as their efforts played a key role in making the event impactful and memorable.
Through campaigns like this, BBM aims to nurture a lifelong habit of handwashing, creating a brighter and healthier future for the Maldives.
Let’s keep the spirit alive—join the Handwashing Revolution with BBM and Lifebuoy!
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