New Office Leases Surge at the End of the Year
By Anastasia Bogomolov
2020 was a disruptive year for everyone and everything. For those who love to travel, for instance, the year forced plans to come to a quick and indefinite hold. For businesses, the majority of their plans, too, have had to shift or change entirely. Interestingly, many companies who’ve caught the travel bug in the form of business expansion projects — both within the U.S. and globally — appear to have largely maintained those goals.
In fact, according to data from ZoomInfo, company expansion maintained relative momentum, both nationally and internationally, through 2020. The beginning of the year saw plans take a fall following the aftershock of the virus in March. The wave continued with another dip in July for both markets. However, office openings rebounded considerably toward the end of the year, with over 50% of all new office openings occurring in September, October, and November.
Whether or not the climb toward the end of the year is due to a combo of pent-up demand and landlords struggling to make rent cutting deals, the fact remains: corporate office expansion is a thing in 2020.
The Case for Office Expansion
Recently, Amazon announced that it’s expanding its physical offices in six “tech hubs” around the country and adding 3,500 jobs. Even with work-from-home culture pervading and influencing our way of life, office openings appear to push forward on the national front, with 9% making the move to Texas and around 8% to Florida, according to ZoomInfo’s data of 539 companies that are expanding in 2020.
On the global front (in terms of costs and local regulations), a report published in the middle of the year by consulting firm Globalization Partners and CFO Research found that most businesses are undeterred by COVID-19 and are pushing forward with new or expanded international operations. What’s more, according to the report:
- Despite the pandemic-induced economic crisis, 45% of respondents are either currently expanding globally or slightly delaying their expansion and doing it within one year.
- 9% intend to expand internationally but remain in a year-long holding pattern.
- More than 50% of the respondents expressed interest in expanding or adding operations in the Asia-Pacific region (more on this in a few paragraphs).
Most businesses are undeterred by COVID-19 and are pushing forward with new or expanded international operations.
At times like these, market expansion (one of the four quadrants that make up ZoomInfo’s go-to-market framework) can hint at the health of a company’s financial state, partly due to the potential for sales increases and customer growth. Specifically, the report cites these top reasons for international expansion:
- Capturing market share (49.7%)
- Expanding sales presence (44.8%)
- Diversifying investments (30.9%)
- Ability to acquire top talent (29.1%)
- Reduction of costs (29.1%)
- Merger and acquisitions activity (27.9%)
- Adding an employee in-country near a customer or client (22.4%)
These are all solid reasons to expand if, of course, your teams are set up to succeed sans face-to-face interaction.
To help facilitate positive and productive outcomes, a new McKinsey study points to adopting “a people-centered approach to internal and remote leadership.” This strategy emphasizes the importance of applying empathy across t company-wide and leadership meetings with international teams.
Mike Henry, CEO of mining company BHP, tells McKinsey that prioritizing people and building strong relationships has boosted the company’s resilience. He says, “Against the backdrop of COVID-19, there’s a premium on getting out, demonstrating empathy, and engaging with people to understand what their concerns are.”
The message behind office expansions
While the pandemic has radically intensified the digitization of the business landscape and our future, business expansion is very much a thing of the present.
When it comes to expanding internationally — a tougher undertaking than expanding nationally — corporate offices are persevering as they push forward with new openings abroad. This is a promising development as companies seek to improve their standing and presence in new areas of the world despite the obstacles of COVID-19.
Anastasia Bogomolov is a Content, Data and Food Enthusiast; here to serve you (data-driven) stories.
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