Another large user of office space across major U.S. markets is downsizing in a major way.

Omnicom Group, a global holding company that owns dozens of marketing and advertising firms, has begun a "massive" consolidation of its office space, at least in the U.S., Ad Age reports. Across its office portfolio, Omnicom owed more than $1.1B in future rent payments at the start of the year, with $240M due in 2023, according to its year-end Securities and Exchange Commission filing.

Omnicom has U.S. corporate offices in Midtown Manhattan, Stamford, Connecticut, and West Palm Beach, Florida, but its agencies are spread much wider. The company boasts a client roster of more than 5,000 across 70 countries on its website.

Those offices still aren't used to nearly the same extent as they were before the pandemic. Across its offices, Omnicom only averages 12% occupancy, a spokesperson told Ad Age.

For years, Omnicom agencies remained independent from each other, but office downsizing will likely force multiple brands to share space in locations like Los Angeles, New York and Chicago, Ad Age reports. Some New York and Los Angeles-based agencies have already shrunk their footprints from as many as four floors down to just one.

Omnicom adjusted its hybrid work policy across its agencies to require employees to work in person three days per week during the first quarter, CEO John Wren said on the company's fourth-quarter earnings call in February. Its consolidation strategy will leave enough space for 60% to 70% of employees to work in the office every weekday.

Over $500M of Omnicom's leasing costs will come due after 2027, according to the company's SEC filing. One consolidation the holding company already executed in 2020 saw it put nearly 150K SF up for sublease at Hudson Yards. Omnicom also shrank an office lease at the Harwood Center in Downtown Dallas by 157K SF when it was up for renewal in 2019.

Six months after Omnicom signed its smaller lease at the Harwood Center, a loan against the property was sent to special servicing. With so many tenants like Omnicom downsizing in urban cores and precious few looking to expand, more and more office buildings are losing cash flow at a bleak time for refinancing, driving their valuations precipitously downward.