Office footfall on the rise ascCompanies embrace hybrid work, CBRE survey reveals

26 August 2024

Office occupancy rates across Europe have seen a significant increase over the past year, according to a new survey by CBRE, a global leader in commercial real estate services. The survey reveals that a growing number of companies are successfully drawing employees back to the office, with 61% of firms now reporting average occupancy rates between 41% and 80%, up from 48% last year.

“The results of our survey show that offices are coming back to life,” said Simon Orr, Head of Office Sector at CBRE in the Czech Republic. “While many consider the current level of occupancy to be stable, 30% of companies expect further growth. Hybrid working has become common practice, but it remains a challenge to align employers’ long-term expectations with their employees’ expectations.”

Large companies, particularly those with 5,000 or more employees, have led the charge in increasing office utilization. Nearly two-thirds of these companies report space utilization of at least 41%, driven by both natural progression and a growing number of mandates requiring physical presence in the workplace. The survey found that over three-quarters of companies (76%) have implemented some form of regulation regarding employee attendance, with 40% enforcing mandatory office days.

Smaller companies, while showing lower overall occupancy rates, also demonstrated improvements in employee attendance. Notably, the proportion of employees in firms with fewer than 5,000 workers who commute to the office four to five days a week increased by 18%. This trend is even more pronounced in companies with fewer than 1,000 employees, where 31% of workers now attend the office with this frequency. Despite these gains, Mondays and Fridays continue to see the lowest attendance rates.

“The proportion of employees who regularly come into the office three or more days a week has risen to 43%, up from 37% last year,” noted Helena Hemrová, Head of Office Leasing at CBRE. “This increase in occupancy is a clear indication that more people are returning to the workplace, rather than companies shrinking their office portfolios.”

In the Czech Republic, shorter commuting times have mitigated the impact of remote work, particularly in Prague. “The use of Prague offices is on the rise again,” Orr added. “People are motivated primarily by the social aspects of working from the office and the opportunity to collaborate. Many employees also recognize that excessive remote work can negatively affect their mental health and career growth.”

Despite these positive trends, more than half of European companies (57%) are considering downsizing their office space over the next three years, likely due to surplus space and a desire to cut operating costs. However, 17% of companies plan to maintain their current office space, and 24% are looking to expand, driven largely by expected business growth.

This trend is also reflected in the Czech market, where the technology sector and flexible office spaces are thriving. As a result, vacancy rates in Prague remain low, although offices on the outskirts of cities face a greater risk of declining occupancy than those in central locations with rich amenities.

Most companies planning to downsize intend to do so as their leases expire. However, 58% of respondents are open to extending their leases if the terms remain favorable. “Landlords are increasingly willing to negotiate and offer greater flexibility,” Orr noted. “The importance of offices remains undeniable. They serve as a showcase for brands, a tool for attracting talent and increasing productivity, and a platform for strengthening company culture and collaboration.”