Recession Forces the Companies to Cut Costs by Paying Lesser for Office Space
The recession is having a chain reaction in the real estate sector. Many property developers have reduced the rent on their new properties in order to attract new lessees. In addition to that, other companies are looking forward to cutting their cost and are thus trying to rent these low priced offices even though their earlier leases have not yet over.
As a result, companies are trying to get out of their old leases, which have higher rents. An example of this is KPMG, an accounting firm, which has 6 years of its current lease left but is looking forward to renting a new office. They want a low rent building in order to cut their cost. They also want a larger office space of around 80,000 sq ft so that they can accommodate deskspace for an additional work force of around 100 more employees.
Another example of this is Hill Dickinson, a law firm, which is also rumoured to be interested in moving to a cheaper office, even though their existing lease will not expire for more than a decade to come.
These attempts are a reflection of the underlying troubles of recession due to which companies are desperately trying to reduce their expenses. KPMG had started the process of cost cutting with reducing their employee work days to four days per week and sacking around 200 employees. Now it is looking for a cheaper office space.
However, the rumours are not always true. Price Waterhouse Coopers were also supposed to shift to a new and cheaper office but the move has not taken place yet.
