The Recent Birth and Ongoing Decline of ‘The Office’

Across the world, technology is steadily reducing the relevance of ‘The Office’ for white collar workers. As demand for office space in big cities reduces and as work shifts in two directions: a) to ‘Work From Home’; and b) to white collar gig work, demand for residential and commercial space in Tier 2 cities will grow. This will have big implications for the real estate investments of Marcellus’ clients. Secondly, the altered nature of work will compel white collar workers to save more and inject more structure & planning into their financial savings. That is where Marcellus’ free financial planning service comes into play.

“The office is dead. It’s not dying or on life support, it’s just dead….When teams became spread across the country, the purpose of the office died and it accelerated a shift that was bound to happen anyways.”  — Jeffrey Smith, a tech professional (1)

The office is only 300 years old

Modern humans have existed for approximately 300,000 years. The office, in its current form, is only around 300 years old i.e. for 99.9% of human history, we have not had to ‘go to office’ to earn a living. In fact, the first purpose-built office building in the world was inaugurated in London in 1726. Named the Old Admiralty (now the Ripley Building – see exhibit below), it was built for the Royal Navy and was the world’s first dedicated office.

Now, however, a confluence of factors are resulting in the demand for office space reducing globally. Globally, office attendance has stabilized at ~30% below pre-pandemic levels, leading companies to downsize their footprints. (3)

As demand for offices reduces further in the years to come due to the factors discussed below, it will have a significant impact on the economy and on your investments. 

Challenge #1 for the office: Tech advancements take away a part of the ‘use case’

Part of the reason people go to office is that expensive equipment, which only the employer can afford to purchase, is kept there. For example, in the late 1960s, buying a photocopier was a massive capital investment (so much so that the cost of a simple copy was $0.25).

While exact “inflation-adjusted” figures are difficult, a basic, entry-level, personal-use copier today costs roughly 5%–10% of what a high-end, dedicated photocopier cost in the 1970s in real terms, and provides far superior functionality. (4)

As the cost of office equipment has crashed, many employees can now afford to have similar (if not exactly the same) equipment at home thus removing the need to go to the office to access the photocopier or the computer or fax machine.

Furthermore, instead of 2D video calls, virtual reality VR allows employees to meet in 3D virtual offices (5) . VR is reducing the need to go to the office by enabling more immersive remote work, enhanced virtual collaboration, and efficient training, with 70% of IT companies in some regions like Bengaluru projected to adopt virtual office solutions by 2026. By 2026, VR has evolved from a novelty into a practical tool, with over 53% of companies worldwide using it for employee training and 77% planning to increase investment. (6)

Challenge #2 for the office: Flexible work hours is working well for knowledge workers

Remote work did not begin with COVID-19 — but the pandemic forced a global experiment that no corporation would have voluntarily designed. The results are now well-documented across multiple independent research programmes. To be specific the average college educated office worker works from home 1.3 days / week and evidence strongly suggests 2–3 office days per week as the productivity and retention optimum. (7)

Hybrid work models are decreasing the total amount of space companies require, with a forecasted 8.7% decline in office demand in major global office markets (G5) by 2030. (8)

Challenge #3 for the office: Routine, cognitive office jobs are being AI-ed out

In our bestselling book, “Breakpoint: The Crisis of the Middle Class & The Future of Work”, we have discussed in detail how hiring of white-collar workers has reached a standstill in India over the past 3 years as AI begins to automate a range of tasks.

Every previous technological shift that threatened the office ultimately reinforced it, because the tools changed while the underlying logic did not. AI is structurally different: it targets the core cognitive activities of office work itself — drafting, analysing, summarising, coding, processing — rather than physical or peripheral tasks.
A 2025 study cited in the PricewaterhouseCoopers (PwC) report shows entry-level employment in AI-exposed occupations has fallen 13 per cent, while experienced roles are stable. That matters because entry-level hiring is what fills office seats. One quote from the PwC study stands out: “AI is a solid replacement for a junior analyst.” That is where the office impact begins. (9)

Increased AI automation, particularly in the IT sector, is limiting hiring and lowering the need for large, traditional offices. “Fresh graduates and junior analysts are the biggest users of office desks. When those roles shrink, the need for large, dense office floors reduces.” (10)

Investment implications

Substantial reduction in office use by 2040: Britain’s Industrial Revolution (c.1760–1840) created clerical work as a mass profession. Factories needed workers to track orders, manage payroll, write contracts and handle insurance. The office became the administrative shadow of the factory floor. That is how 300 years ago the office was born. Now, however, as AI increasingly takes over routine cognitive tasks, time tracking orders, managing payroll, writing contracts, etc it makes logical sense to believe that demand for office space will gradually reduce. You can see the impact of reduced office space requirements in the AI capital of the world – the USA (see exhibit below).

• Save more money to buffer themselves from lean periods (which are all but inevitable in most forms of freelance work)
• Pay for their own medical insurance and life insurance (benefits that are currently offered by many employers in India)
• Inject structure & planning into their financial lives (a service that employers effectively provide to white collar workers by giving them structured career development).

Note: This tool provides guidance on asset allocation and does not constitute a financial plan or investment advice.

^Sources:
[1] https://medium.com/@jefferysmith/the-office-is-dead-long-live-the-office-6eb370209b39
^[2] https://c8.alamy.com/comp/3DW34XB/the-ripley-building-old-admiralty-building-1726-by-architect-thomas-ripley-with-entrance-screen-added-by-robert-adam-in-1788-whitehall-london-uk-3DW34XB.jpg
^[3] https://www.forbes.com/sites/jenamcgregor/2023/07/12/demand-for-office-space-could-fall-13-by-2030-and-thats-not-the-severe-forecast/
^[4] https://en.wikipedia.org/wiki/Photocopier
^[5] https://www.red-thread.com/blog/5-ways-virtual-reality-will-change-the-workplace/
^[6] https://www.linkedin.com/pulse/70-bangalore-companies-use-virtual-offices-2026-market-kulkeet-singh-1ja0c
^[7] Stanford WFH Research Group / Survey of Working Arrangements and Attitudes (SWAA), December 2025. Stanford SIEPR policy briefs (siepr.stanford.edu)
^[8] https://www.mckinsey.com/mgi/our-research/empty-spaces-and-hybrid-places
^[9] https://www.ndtv.com/business-news/ai-impact-on-real-estate-automation-hybrid-work-cutting-demand-for-office-spaces-11434993
^[10] https://www.ndtv.com/business-news/ai-impact-on-real-estate-automation-hybrid-work-cutting-demand-for-office-spaces-11434993
^[11] https://www.ndtv.com/business-news/ai-impact-on-real-estate-automation-hybrid-work-cutting-demand-for-office-spaces-11434993
^[12] https://www.ebsco.com/research-starters/power-and-energy/energy-use-transportation
^[13] https://www.bbc.com/news/articles/c5yrq1090p8o