Know your office space utilization to navigate real estate needs

6 mins


Are you coming up on a lease renewal? Or do you have options in your existing one? You’ll need to get your arms around office space utilization to assess what (and if) you can downsize.

Companies are in a tough spot right now

Global economic market conditions have a lot of businesses looking to cut costs. At the same time, employers are struggling to find and retain talent, and they’re being pressed to offer a different kind of working arrangement (flexible or remote).

While the pandemic might have been the catalyst for a shift in working arrangements, people have experienced a different way of work now, and it’s become a major factor in job satisfaction.

With the “great resignation” causing a war over talent, it’s undeniable that flexible work arrangements are an attractive draw for employees. In fact, A recent Robert Half survey found that half of professionals working from home would look for a new job if they were required to return to the office full time. So, if you don’t have a flexible work option in place, it’s definitely time to think about one.

Due to all of the above-mentioned circumstances, corporate real estate needs have already changed drastically, and it’s expected they’ll continue to change over the next year or so as companies figure out what to do now that it’s safe for employees to return to the office.

Corporate real estate is a huge expense

Corporate real estate is a huge expense line item, and if office space isn’t being effectively used, it should be addressed as soon as possible.

Why? The average company’s workspace amounts to the second largest overall expense and the single largest fixed cost it manages over time. Every square foot of office space also comes with additional operating expenses (heating, cooling, cleaning, lighting, insurance, etc.). It’s said that for every $100 million spent on real estate, most companies are spending an additional $40 million in operating costs—so any wasted space adds up to a lot of wasted spend.

The vast majority of companies aren’t utilizing the space they pay for

Let’s talk about office space utilization, which is the measure of a building’s occupancy divided by its capacity. The average organization has 30-50% more real estate than it needs, according to a recent Accenture report.

How to calculate office space utilzation

That stat seems to align with another study’s findings on use of individual workspaces inside the office —a recent Herman Miller study revealed that 77% of the time private offices are unoccupied, and 60% of the time workstations are not occupied. So, I don’t think anyone would be surprised to learn that around 44% of companies expect to downsize their office footprint after the pandemic.

Companies are finding ways to shrink their release estate footprint (and expense)

As mentioned above, office space is incredibly expensive, and in many cases, no longer being used in a way that can justify the significant cost. That’s why so many companies are looking for ways to reduce their office footprint.

Larger organizations are making moves to spare some of the expense, including United Airlines, who has dumped nearly 150,000 square feet of office space, and Salesforce, who is attempting to sublet 50 percent of its 450,000 square feet at 350 Mission Street in San Francisco.

Businesses—especially those coming up on a lease renewal—should carefully assess what space they truly need, and then figure out what to do with the space they don’t. While some organizations have gotten creative, options could include repurposing the space, exercising options in their lease agreements, subletting the space, or dumping it altogether.

Assessing office space needs with ServiceNow

Companies who use the ServiceNow platform may have a head start on this exercise. Organizations using ServiceNow’s Workplace Service Delivery Suite have a built-in tool to manage spaces and collect insights around office space utilization. These insights provide building managers the necessary data to assess what kind of space they actually need (or don’t need) right now, and in the future.

ServiceNow’s Workplace Service Delivery Suite provides two things to enable the exercise of downsizing a real estate footprint:

  • Reporting insights around overall space utilization – This allows an organization to analyze capacity trends over time for better planning.
  • Space management tools for building managers – To manage utilization of spaces based on their status and workforce needs. This can be very helpful when you’re making a shift in what space is available to be used and reserved.

Workplace Service Delivery provides building (or facility) managers the tools and visibility to measure, define and maintain space lifecycles to plan for future, makeshift spaces, and changes to existing locations. Standard reporting features in WSD’s Reservation Management tool give you data to make informed decisions with, including:

  • Reservations per location per month
  • Peak Reservation Hours
  • Location Reservations per day this week
  • Location Reservations Today
  • Checked in Today
  • Checked Out Today
  • Number of reservations in each check-in state (Checked Out, No Check Out, No-show)
ServiceNow office space utilization dashboard
Figure 1: Example of a space utilization dashboard in ServiceNow

 

Using office space utilization insights to define new space requirements

So, if you have a way to collect these office space utilization insights, what’s next? When you look at the data points provided by ServiceNow Workplace Service Delivery, for example, here are some questions to weigh it against to steer decisions regarding corporate real estate needs:

  • What is the company’s long-term plan for flexible work post-pandemic? Full-time remote, part time remote, optional?
  • What is your employee-to-desk ratio today? And do you want that to change in the near future?
  • Does the organization envision a tight employee-to-desk ratio which would require workers to book a workspace for a visit to the office?
  • What are the company’s growth plans on a 1-, 3- and 5-year horizon? (is the organization planning on doubling their employee base?)
  • What rooms/floors/buildings are sitting empty more than 70% (choose your own threshold) of the time?
  • How many people make up the typical group size in a meeting room? (and weigh that against your average capacity of a meeting room, i.e. 4, 6 or 12 seats)
  • What specific teams or departments book the most time/space in office? Are there specific teams that need office space more than others?

Bottom line: office space is too expensive to sit empty. If you feel like you’re not utilizing the office space you currently have, or if you’re reassessing your overall space needs, ask Plat4mation how ServiceNow Workplace Service Delivery can help you better manage how space is used, and generate data for you to assess what space you actually need.

Contact person

Liam Crampsey
Platform Consultant

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