CFOs Look To Further Trim Real Estate Costs

According to a survey released Monday, chief financial officers are targeting real estate expenses for further cost cuts heading into the second half of the year in the latest indication that the expansion of remote work is here to stay.

According to survey respondents, real estate costs will be among the leading areas targeted for cuts for the rest of this year, and as budgets are put together for 2021. Research and advisory firm Gartner released the survey results.

The interviewed CFOs said that heading into the second half of the year, their organizations plan to trim real estate expenses about 8%, which is the deepest cut behind only the 11% retreat in marketing budgets. Executives said that real estate budgets have already been cut around 8% in the first half of 2020, while marketing budgets have been trimmed 14%.

For next year, real estate costs topped the list for planned cuts, with CFOs expecting to trim the budget for the category by 3.4%. “Our latest data shows that CFOs are planning for multiyear impacts to their financial plans as a result of the pandemic,” said Alexander Bant, practice vice president, research, for the Gartner finance practice, in a released statement. “It’s notable that real estate topped CFOs’ lists for planned cuts to next year’s budgets, suggesting remote work is here to stay and some level of downsizing is expected.” Gartner interviewed some 103 CFOs in late May among other senior finance executives, for the survey’s results. The executives represented companies from around the world, with revenues between $500 million and $20 billion.

CFOs are looking beyond cuts to marketing and real estate budgets this year to offset the impact of Covid-19. According to the Gartner survey, CFOs will seek to trim budgets in other expenses housed in the selling, general and administrative, or SG&A, category in the second half of the year. CFOs are projecting more cost cuts this year of 5% or more to human resources, sales, supply chain, finance, information technology and communications, according to Gartner.