Hybrid work was borne out of the flexibility introduced by the pandemic and the post-Covid desire for in-person connection. Employees got to enjoy a more fluid work schedule while still forming in-person relationships with their teams. 

Best of both worlds, right? Well, not necessarily. Over the last year, we’ve seen companies start to shy away from their previous praise of remote work. Concerns around productivity, worries about company culture and distress around office space utilization have all culminated in a call for employees to head back to company HQ. 

So where does that leave us with hybrid work now? 

Today, 56% of respondents say the majority of their employees work in the office full time, 40% say the majority of their teams work hybrid. That’s a 19% increase in predominantly full-time office work and a 21% decrease in hybrid work since our last report in 2022.

This shift mirrors many news headlines as of late. Businesses across industries are calling their teams back to office. In fact, 88% of companies mandate employees work a certain number of days in the office. That’s up nearly 20% since 2022.

The number of days mandated in-office varies, with 2% not mandating any days. Of our respondents that do mandate part-time in office: 

• 3% mandate 1 day in-office
• 16% mandate 2 days in-office
• 26% mandate 3 days in-office
• 52% mandate 4 days in-office

Notably, the number of businesses mandating 4 days a week in office has increased 32% since 2022 with a 16% decrease in 3 day mandates. While it’s clear that in-office time is more of a priority this year, it’s important to note that the majority of companies surveyed are working on a structured hybrid schedule, with some in-office time and some level of flexibility reported.

Saving Money with Hybrid Work 

The cost of office space is a considerable expense, which makes more flexible work an appealing option. With a hybrid work schedule, leaders and facilities managers can adopt flexible seating arrangements where employees use available workspaces when they come to the office, rather than having permanent, assigned desks. As a result, the overall square footage required for traditional office layouts is significantly reduced with maintaining an enjoyable workplace experience.

Of those organizations working hybrid, 91% are using this flexible working model as a cost-saving measure - an 8% increase since 2022. 

For some, however, more flexible working models are still out of the question. Companies that won’t consider hybrid work, even if it meant avoiding layoffs, cite a few key reasons: 

• 42% say they have already invested in a new office space
• 30% say they are not willing to compromise their in-office culture
• 27% say their employees are unable to work outside of the office

We have an idea of what kind of in-office policies businesses are putting on the table but here’s the thing: just because there is a mandate in place, doesn’t mean it’s being followed. In fact, according to research by Stanford, of companies requiring employees to come in five days a week, only 48% of employees are actually doing so — meaning that more than half of their workforces are flat-out refusing to comply. 

Even at companies that require attendance for only part of the week, there's still a sizable share of employees —  as high as 19% — who aren't coming in as much as they're supposed to.

The proof is in the pudding. Of our survey respondents, 40% are currently utilizing only half of their available office space or less. What’s more? Only 28% of businesses are using 100% of their office. 

While these numbers aren’t where most business owners want them to be, it is worth noting that this is an improvement from 2022. Last year, only 11% of businesses were utilizing 100% of their office space and 46% were using only half their space or less. 

A considerable 80% of offices have downsized since the pandemic. That’s a 20% increase since 2022, suggesting that more companies have downsized in 2023 and, as a result, have increased the utilization of their smaller spaces.

Still, many business leaders and facilities managers are worried about the future of their office space. Of respondents, 82% are worried about their company being able to keep their office space, whether due to a recession or underutilization of space. That’s a 20% increase in concern since 2022. The million dollar question is: how much space is the right amount of space?

The Economics of Office Spaces

For companies with a physical presence, the office is easily one of their top three biggest expenses. That makes underutilization an expensive problem to have and highlights the importance of strong space management strategies.

And, despite some improvements, over 60% of organizations pay more than $50 per square foot for their office space. Yet, interestingly enough, the number of businesses paying under $50 per square foot has increased by 19% since 2022. 

This is likely a side effect of the massive commercial real estate contraction. We’d guess that property owners are currently offering lower the average price for their spaces in an attempt to get people in the door.

When you consider utilization rates and the cost of leases, it’s not particularly surprising to find out that 75% of businesses plan to reduce office square footage next year. That’s nearly a 30% increase since 2022, suggesting that companies may have been waiting for utilization to rebound before making a decision. 

Of those respondents that plan to downsize, 69% report they'll reduce their current space by 50% or more and 31% plan to right-size their office by a quarter or less.

Some organizations remain hopeful, with 42% of survey participants believing that offices will go back to pre-pandemic levels of activity. Yet, the remaining 58% maintain that volume of office attendance is long gone. 

When asked how organizations could remedy low attendance rates, most respondents mentioned incentivizing trips into the office. Companies would be wise to take a closer look at what drives people into the office and how they can better support those motivators.

Reimagining Office Space and Resources

With these office moves or reconfigurations, organizations are outfitting their spaces with amenities that better reflect the current state of work. In fact, 89% of offices are changing the office layout or design to support new employee demands.

When asked what amenities their office offers, respondents mentioned: 

• Soft seating/lounge (60%) 
• Collaboration/huddle rooms (58%) 
• Quiet rooms/booths (54.31%) 
• Wellness spaces (53.18%) 
• Hot desking (52.81%)

The amenities of priority seem to be around either collaboration or focus work, reflecting the varied needs of employees when in-office. Hot desking, in particular, suggests an uptick in more flexible use of office resources. With the right technology solutions, companies can empower teams to book the resources they need to get their best work done.

Organizations are responsible for making the office more of a magnet and less of a mandate. Here are some trends we expect to see in the near future for office spaces across industries: 

1. If context is king then data is queen: You can’t fix what you can’t measure. That’s why data around space utilization will be critical for businesses moving forward. By understanding how desks, rooms and other office spaces are being used with workplace analytics, leaders will be better able to forecast future demand and real estate needs, minimizing wasted space. Office space reports tailored to your organization will be crucial.

2. Office spaces will continue to contract: For most industries, five days a week in office isn’t going to happen. As such, companies will continue to downsize their office footprint to better accommodate the realities of modern-day work. This contraction will also lead to a reduction in the national average costs of corporate real estate as property owners look to incentivize new and legacy tenants. 

3. More organizations will embrace flexible work: With utilization remaining low and companies looking to cut costs, we expect to see a shift in conversation around hybrid and flexible work. As leaders recognize the cost-saving potential of hybrid work arrangements and realize employees deeply value flexibility, more companies will adopt hybrid work arrangements. 

4. Companies will rely on flexible workplace solutions: As offices embrace a more fluid schedule for employees, having the right supporting technology in place will be crucial. Resources will need to be more flexible and workplace leaders will need a way to enable booking of these resources for their staff. Expect to see an uptick in investments for things like hot desking solutions, room scheduling software and visitor management tools. 

‍5. Incentives for office attendance will gain more popularity: When asked how to address low attendance rates in office, the majority of respondents mentioned incentives. Yet, according to our incentives report, only 25% of employees said their company did this “exceptionally well,” nearly 30% gave their employers a failing grade, and 36% fell somewhere in the middle. Companies will continue to think up new ways to incentive in-office time for employees.