In 2025, something happened in the U.S. office market that hasn’t happened in at least 25 years: more office space is being removed than added.
According to CBRE data reported by CNBC, 23.3 million square feet of office space across 58 U.S. markets is set to be demolished or converted to other uses this year. In contrast, only 12.7 million square feet of new office construction is expected to be completed in the same period.
This marks a historic inflection point: the total footprint of office real estate is now shrinking—not because of a crash, but because of a correction.
For decades, the default assumption was that office supply would keep expanding alongside economic growth and headcount. But today’s leaders are recognizing that bigger no longer means better. They’re embracing something more intentional: right-sizing.
The Office Footprint Is Shrinking—On Purpose
For four years, companies have been in limbo, unsure whether to hold onto empty space in hopes of a full return or accept that hybrid work is here to stay. Now we have our answer.
From San Francisco to Chicago to New York, organizations are exiting legacy leases and consolidating space. Yes, some are still leasing—but they’re doing so more selectively, often in high-quality buildings with better amenities and more flexibility. The overall trend is clear: more space is being given up than acquired.
This is not abandonment. It’s optimization. It’s office right-sizing. Take Karger for example, who used Kadence to reduce office space by 80%.
A New Hybrid Reality Is Driving This Shift
According to the Q2 2025 Flex Index Report, 43% of U.S. companies now operate on a structured hybrid model—requiring a set number of in-office days each week. Meanwhile, just 33% require employees to be in the office full-time, a number that’s barely budged from 31% a year ago.
Flexibility is especially dominant among smaller firms. 70% of companies with fewer than 500 employees are fully flexible, allowing employees to choose when—and whether—to come in. At the other end of the spectrum, 70% of enterprises with over 25,000 employees have adopted structured hybrid. Predictability at scale requires coordination, but not permanence.
Even in the Fortune 500—where some companies have issued firmer return-to-office mandates—structured hybrid is still winning out. The average number of required in-office days has increased from 2.3 to 2.9 days per week in recent quarters. But that still falls far short of a five-day mandate. It reflects a new rhythm: less density, more flexibility, and far fewer people in the office at any one time.
This new cadence makes the traditional office footprint unsustainable—and unnecessary.
Why This Isn’t Just “Downsizing”
“Downsizing” implies retreat. But what we’re seeing is intentional. It’s not reactive—it’s strategic.
Companies are right-sizing their office space to better match how work happens today: part digital, part physical, and fully dynamic. The modern office is no longer a sea of assigned desks—it’s a space designed for connection, culture, and collaboration.
Right-sizing isn’t just about lowering office costs. It’s about freeing up capital to reinvest in better tools, better spaces, and better employee experiences.
Data Turns Real Estate Into Strategy
To get this right, companies need data—on how often people come in, which teams are co-locating, and how space is being used. Gut feel isn’t enough when millions of dollars are on the line.
That’s where Kadence comes in.
With Kadence Sense, you get real-time visibility into attendance patterns, occupancy trends, and team behavior. Insights Plus helps translate that data into confident decisions: which offices to keep, how to reconfigure space, and where to reinvest.
Our customers aren’t cutting space because they’re uncertain. They’re making smart, data-backed moves that align their real estate with their workforce—not the other way around.
A Turning Point for Work and Workplace
This 25-year milestone isn’t about the death of the office. It’s about the end of the bloated, inflexible office.
The companies that thrive next won’t be the ones with the biggest footprint. They’ll be the ones with the right fit between people, purpose, and place.
Book a demo with our hybrid experts to see how Kadence helps you right-size with confidence.
