Morgan Stanley Will Edge Away From Real Estate, CEO Says

Financial services giant Morgan Stanley is going to occupy less office space in the post-pandemic future, CEO James Gorman said during an interview with Bloomberg TV April 16. 

"With 90% of our employees at home, we've had almost no issues from our plant," Gorman said. "That's a remarkable testament to the tech and ops teams.

He didn't specify how and when such a reduction would occur, however.

"Clearly, we've figured out how to operate with much less real estate," Gorman said. "Can I see a future where part of every week, certainly part of every month, for a lot our employees will be at home? Absolutely."

Morgan Stanley currently employs about 80,000 workers, many in densely populated financial centers such as New York and London.

Morgan Stanley would hardly be alone in having less need for office space: a permanent shift toward working at home is a highly possible long-term impact of the coronavirus pandemic, according to a recent survey of chief financial officers by Gartner Inc.

Nearly three-quarters of the 317 CFOs and other finance executives (74%) surveyed said they will move at least 5% of their on-site workforce to working at home after the pandemic. Most said they see it as a cost-control measure.

Some CFOs have already taken steps to cut real estate expenses, the survey noted. Some 13% of its respondents said they have cut real estate expenses, and another 9% are planning to do so in the coming months.

The amount of time employees work from home has been creeping upward for some years, but it has taken the pandemic to persuade many previously skeptical managers that it is a good idea.

"That skepticism will go away because companies recognize that remote work does work,” Emergent Research Partner Steve King told Recode. 

Even if there is a movement toward more workers at home, the long-term impact on office space demand isn't clear. The trend could indeed result in a lower demand for office space, USC Lusk Center for Real Estate Chair Richard Green said during a Bisnow virtual town hall webinar.  

On the other hand, Green said jobs that do require a physical presence could lead some companies to take more space, in order to adhere to new social distancing guidelines.