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Even with vaccines, most CEOs still see a need for less office space

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Good morning. David Meyer here in Berlin, filling in for Alan.

As someone who has worked from home for nearly a decade now—it’s not for everyone, but I like it—it feels like half the world has joined me over the last 10 months. And that, it seems, is not going to change anytime soon, even as populations get vaccinated.

At least, that’s a prime takeaway from the latest research Fortune has done with Deloitte, surveying CEOs about their remote-work plans.

The last survey round, back in September, showed three-quarters of CEOs thought they would need less office space in the future. And in January, despite the intervening period featuring excellent news on vaccine efficacy plus the subsequent commencement of inoculation drives in many countries, the figure had barely shifted.

A comparison of the two surveys’ results suggests a slight increase in CEOs’ forecasts for people returning to the office—the proportion of respondents predicting a need for “a little less” office space went up from 48{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} to 56{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00}, while “a lot less” dropped from 28{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} to 20{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00}—but the overall prediction of needing less space remained nearly constant.

As Fortune‘s Lance Lambert notes in his piece on the latest results, that’s not good for the commercial real-estate (CRE) sector, which is already seeing many tenants shutting down as lockdowns drag on—a situation that’s obviously also worrying the banks, particularly smaller ones, that may not see their CRE loans repaid.

Another worry: the physical and mental health effects of working from home. The U.K.’s Royal Society for Public Health reported yesterday that, of those who switched to home-working in the context of the pandemic, two thirds felt less connected to colleagues, nearly half were taking less exercise, and 39{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} were developing musculoskeletal problems. Remember to exercise, folks!

However, I think the work-from-home movement could have some real benefits, once this pandemic has passed.

One reason I love living in Berlin is its decentralized nature—while there is a geographical center to the city, the populace does not concentrate there during working hours, and as a result every neighborhood consistently retains a pulse. That’s good for neighborliness (believe me; I used to live in London so I know what the alternative looks like), and very good for small businesses. If the same forces that lead to less office space also end up having this effect, I’d count that as a win.

News below, and enjoy your weekends.

David Meyer

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