From a cost perspective it only makes sense reduce the in office headcount and that’s reduce the space then you have funds that can be used for things like bonuses more infrastructure etc.
I guess "it depends." There are so many unique work situations that one size doesn't fit all. I lived in Manhattan for many years and was able to walk, train or cab it to work. Then I moved to the burbs and rode the rails for many years. Now my office is 17 miles away in mostly moderate traffic. I'm in a hybrid work situation and would be more than happy to make it more home and less office. However, productivity has increased since office return two weeks ago as I don't have to play zoom tag.
Point being I don't envision (although I could be wrong) major corporations on the east coast letting go of tens of thousands of square feet of office space. Even NYC Mayor Adams wants a return to office, as without that, Manhattan (and maybe NYC) will be a shell of it's former self....and Broadway woes aren't helping.
I don't see business who retrench on office space, using those new found funds for more compensation, which in today's day and age is really performance based. Companies and people have adapted to a new work-from-home norm, but for many types of jobs, departments, and companies, it's not a holy grail. But it's nice to know in some other catastrophic event, it is a doable thing.
And finally, people and companies have to be flexible. Pandemic showed us it is possible to fully WFH and that clearly is a good side benefit both for existing jobs and a draw for a potential new job.