Is Physical Office Space Still Required in 2024?

Physical office

According to the World Economic Forum, the number of employees across Europe who worked from home rose to 12.3% in 2021 and the number has only increased since that time.

With this meteoric rise in remote work, many companies have begun to wonder if they still need physical office space. The answer is complex, of course, as many different factors should go into that decision. However, there are three major considerations that companies will want to take into account before deciding to reduce or even eliminate their physical footprint.

Real Estate as an Investment Strategy

As the old saying goes, “People will always need land; it’s the one thing they aren’t making any more of.” If a company has the capital to purchase land, it can be an excellent investment opportunity. At least in a long-term sense, the real estate market typically only goes up.

In Singapore, for example, the Lumina Grand is an Executive Condominium building that spans 10 residential blocks. Although it didn’t happen in this case, imagine a European company that owned that land but, for various reasons, needed to pull out of its Singapore operations. The amount of money they would have made on the land sale would very likely cover whatever losses they made that required them to restrategize and focus its efforts back in the EU.

If maintenance is performed efficiently at a lowered cost and the company also gets enough present value out of its operations within the building, it can easily turn a profit when it is eventually sold many years down the road. If the company is short on liquid cash at any point, the property can also be leveraged for loans.

Expanding into New Markets

If a business is considering expansion into new countries, it must have ample office space in both the old and new locations. Potential customers in the new country aren’t likely to trust an operation that doesn’t have a local headquarters. Instead, they might tend to see the new company as an interloper, part of a soulless multi-national corporation out to destroy local competitors that have operated for decades.

It’s also a good idea to have local employees working in the new location for several reasons. First, they’ll better understand the region than even the world’s best market research ever could. Second, it builds trust within the community. Finally, these local employees can also work as brand ambassadors. As they tell their friends and relatives about the exciting new job they’ve just landed, it can be a massive benefit in terms of sales.

Additionally, having the company’s name on a large building in a conspicuous part of town is excellent for word-of-mouth advertising. Residents who see the name might research the business out of idle curiosity and, if the rest of the company’s marketing does well, that resident could become a loyal customer. All because they saw the name of a business on a building while walking through downtown.

Face-to-Face Meetings

Some companies have started to use virtual reality technology for business transactions, conducting them over the Internet from their respective offices. However, in many cases, a face-to-face meeting will be preferred by both parties.

Thanks to the ease of travel within the European Union, if both companies are headquartered in EU territory, this can be easily accomplished. However, as many international deals will require travel to or from the European continent to Asia or the United States, it will be a massive benefit for the company to have plenty of office space.

Additionally, many older business executives are likely to insist on in-person meetings. They also may balk at the deal immediately if they come to visit a company’s headquarters and see that the building is considerably smaller than they were expecting. It may not be fair but the fast-paced business world rarely is.

Final Thoughts

Although the answer is complex and will depend on the exact needs of the company in question, generally speaking, it is a good idea for most companies to continue investing in physical office space. It might seem like an easy way to save money in the short term but despite technological advances and new ways of thinking, the importance of face-to-face business meetings makes it almost mandatory.

It should be noted, however, that there are a few exceptions. Startups, small companies with less than 50 employees, and software-based tech companies will probably benefit from growing the business in other ways first.

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