Now that remote work has become the new normal for some companies, they are cutting back on office space to cut costs.
Yelp, McKesson, Affirm, Meta—the American companies that have embraced remote work are busy resizing their office footprint.
Meta Platforms, the parent company of Facebook, recently announced that it would consolidate its office space in New York and San Francisco. CEO Mark Zuckerberg declared he would cut 11,000 employees from its workforce, and much of the remaining staff chose to work from home. Meta no longer needs its offices on New York’s Park Avenue South or Broadway; there is no good reason to keep an individual desk for a surprise visit from a remote worker. The company will maintain collective desks that can be reserved or used when someone drops in.
Dave Wehner, Meta’s chief financial officer, expects to save a bundle on real estate expenses, but he must spend a lot on canceling leases and abandoning new spaces that will never be used. During the third-quarter conference call, the CFO disclosed $900 million in charges related to the consolidation of facilities by the end of the year. He added $2 billion for the following year.
Other expenses will pile up. For instance, remote workers get stipends to buy equipment. Having remote workers increases cloud access and creates potential vulnerabilities, so Meta and other companies need to adjust their cyber defenses.
These added expenses are costly in the short term, but there will be significant savings for companies once space reductions are fully implemented. Global Workplace Analytics calculated that if American employees were telecommuting half the time, their employers would save $500 billion yearly in real estate, electricity, absenteeism, turnover and other factors.
Reviews platform Yelp has offered employees the option to work from home permanently, and expects to save $10 million to $12 million a year over time. Healthcare-services expert McKesson booked more than $180 million in real estate charges for 2023, but once the shrinking of its footprint has been fully digested, the company will avoid $60 million to $80 million in expenses a year.
And let’s not forget the happiness factor; telecommuters save $2,000 to $7,000 in transportation and other costs, while savoring the flexibility of their work arrangement.