OFFICE SPACE TO SHRINK POST-PANDEMIC
A survey of more than 400 accounting and finance executives conducted by LeaseQuery showed that 61 percent said cost cutting has been a top priority to stay in business in 2020, with 31 percent saying they were “rightsizing” their real estate footprint due to COVID-19, and 22 percent saying they expect to reduce their real estate portfolio in 2021.
“Reassessing real estate and lease portfolios appear to be top targets for cost savings following the rise of the remote workforce, shifts in demand, and declines in traditional brick-and-mortar commerce,” said the November survey, which reported that 51% of the respondents represented public companies.
According to the survey, about one-third of the company executives said they asked for rent concessions in 2020, with the impact particularly pronounced in hard-hit industries such as restaurants (92%), and retail (54%).
When asked to describe how the pandemic and economic environment shifted their accounting and finance department’s priorities for 2021, 66 percent said cost cutting was a priority, followed by increasing flexibility (63%) and bolstering liquidity (45%).
LeaseQuery’s Lease Liabilities Index Report found that “the new lease accounting requirements resulted in average balance sheet liabilities to increase by 15x. Whether public or private, being or appearing overleveraged, could be a major flag to stakeholders or investors in a challenging economic climate, making it all the more important that companies understand their full lease portfolio and build in flexibility where possible.”
According to Moody’s analytics, the office vacancy rate could reach nearly 20% in 2021.
For a deep dive into the survey, please see: Leasequery.com/Lease impact report.pdf
An Audited Legacy of Quality
Weinberg & Company is consistently at the very top when it comes to the quality of our work– just check our legacy of stellar PCAOB inspection reports.
We thought we were building a leading, international accounting firm by providing Big 4 expertise with personal service at reasonable fees.
Turns out we were also building “An Audited Legacy of Quality.”
“We believe your capital is best deployed for your company’s growth, not for runaway accounting fees.”