Office occupiers are moving from reactive downsizing in the wake of the pandemic to proactive portfolio management as average lease sizes have grown by 13% during the past two years, according to a Cushman & Wakefield report.
One in eight participants in the study of major global occupiers indicated they plan to expand their footprint because they are at or nearing capacity. Following the flight from offices during the pandemic, interest rates were high and capital was hard to come by, said Anshul Jain, head of Cushman & Wakefield's Asia Pacific tenant representation business. Rates have come down slowly, but uncertainty surrounding President Trump’s policies has begun to impact the market.
“There have been quite a few years of real estate prudence while companies continued to grow – occupiers were not releasing their purse strings unless they were really forced to,” said Jain.
Return to office (RTO) strategies and increasing occupancy rates are beginning to force occupiers’ hands, said Cushman & Wakefield’s Asia Pacific head of global occupier services, Cameron Ahrens. This is leading the market to a tipping point during the next six to 18 months when multinational firms will start acting on their need for more space, especially in key markets.
Cushman & Wakefield’s What Occupiers Want 2025 survey found that cost remains the top driver of corporate real estate decisions, but many firms are taking people-centric factors into consideration. Political instability, changing workplace behaviors and unclear return-on-investment metrics have caused hesitation among many organizations.
Following several years of footprint reduction, the era of mass downsizing appears to be over, according to the report. Only 32% of companies plan to further reduce their space. At the same time, office utilization rates are stabilizing, and global occupancy stands at between 51% and 60%. This is below pre-pandemic norms but is rising steadily as firms implement structured RTO policies.
The majority of tenants expect landlords to provide enhanced amenities, services and workplace experiences. About half are willing to pay a premium for these upgrades, the report found.
As a result, top-tier office space commands a nearly double-digit rental premium. However, the study uncovered a noticeable gap in how employees view their current workplace, with many saying it does not fully support collaboration, relationships and culture building.
“Corporate real estate needs to think about return on investment not just from a financial perspective, but from an employee’s perspective,” said head of Total Workplace Asia Pacific Carol Wong. “As employees start to invest the time and energy and money into returning to the office, there needs to be a benefit to them. So real estate decisions become decisions about workplace performance, talent retention, culture and competitive advantage. They need to be considered holistically; it’s a strategic imperative.”
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