Deloitte Touche Tohmatsu, one of the world’s so-called “Big Four” accounting and business consulting firms, is giving up a 185,000-square-foot building in New Street Square, a prestigious office address in the heart of London, the company has announced.
Deloitte also decided not to reopen another London office; it closed early in the COVID era and has abandoned a two-floor digital center nearby.
With the latest move, Deloitte has shrunk its downtown footprint by about 250,000 square feet in the past two years.
In 2020, the firm also shuttered offices in Gatwick, Liverpool, Nottingham, and Southampton, sending those workers home full-time.
Accounting firms BDO and Grant Thornton also have closed satellite offices near London because of the shift to hybrid work.
Last year, KPMG—another of the Big Four—left its Manchester Technology Center and shifted staff downtown because the company was unable to use so much space.
The moves heighten concerns among commercial landlords, who have seen companies in many business hubs streamline their office space as workers spend more time at home.
In February, fewer than 25 percent of office workers were in central offices on any given workday, the Financial Times reported.
TREND FORECAST: London’s disappearing office workers emphasize our forecast that demand for commercial office space is permanently shrinking and will lead to a commercial real estate bust in cities that have been the world’s business hubs for decades.
We forecast that at minimum, since remote work is part of the new Metaverse World, demand for downtown office space will contract by at minimum 15 to 20 percent. That would drive rents lower and flip many landlords’ buildings from profitability to deficit.
And, in the Metaverse world, it is also a savings for businesses to have a good portion of their staff work remotely so they can pay less rent. And besides the drudgery of commuting, with inflation skyrocketing, workers are saving money by not filling their gas tanks or paying for bus and train fares, clothing, lunch, etc., when they used to travel to work.
TREND FORECAST: In traditional centers such as London, New York, and San Francisco, office rents will sink lower… well below pre-COVID War levels. Landlords will continue to cut rents to lure tenants, but many building owners will either sell or surrender their buildings to creditors.
As we often have said, the result will be a smaller tax base for many cities, resulting in reductions in services and, ultimately, in the quality of life.
For many people, but not all, cities where this occurs will become less desirable places to live.
As an antidote, cities will experiment with new ways to streamline costs and offer services, becoming laboratories of innovation.