US companies start cutting office space

American companies are downsizing their office spaces as they allow more employees to work from home to cut costs.

The trend poses a growing threat to the bottom line of owners of traditional office buildings.

A Reuters analysis of quarterly earnings calls revealed that over 25 large companies plan to reduce their office space in 2021, which reduces the second-largest expense at corporations.

Financial services company State Street Corp. plans to nearly duplicate the number of workers assigned per office before adding additional space with a significant portion of its staff working from home even after a vaccine for COVID-19 emerges.

Bedding company Sleep Number Corp.plans to slow the growth of its total square footage as more consumers shop online.

Regions Financial Corp. said it is confident that its overall office square footage will continue to decline as some workers get to share desks via modified scheduling or stop coming into the building as they work from home.

In June, Morgan Stanley forecasted that work-from-home policies would increase office building vacancy rates in New York from the current 8.7 percent to up to 12 percent in two to five years, while San Francisco will reach up to 9 percent from the current 5.8 percent.