Office real estate is at a critical juncture: the market will either get better or worse. With over 74% of companies turning toward a hybrid work model, what future does real estate have and how can companies capitalize on it? Employees want the flexibility to work from home at least part of the time. However, most still value in-office experiences and having the option of working on site. Truth be told, the majority of companies want their employees to be in the office at least part of the time to foster collaboration. Meeting part way, many companies are transitioning to hybrid work by letting their employees work remotely for a portion of their workweeks. Hybrid work is a spectrum, not an endpoint. Some companies follow a “remote first” model and others follow an “office first” model. Some organizations land somewhere in the middle. While the concept of hybrid work isn’t new, the pandemic has made it “normal.” With the Great Resignation to boot, companies have been more or less forced to adopt a hybrid model.
However, with a hybrid structure employees are going to need a workspace. While the face of offices has changed, most becoming more flexible in 2022, they have remained pivotal in most work structures. Instead of becoming obsolete, corporate real estate has transformed. Look at Google, for example. Instead of giving up the majority of its office spaces, Google has instead invested millions of dollars in morphing its offices into campuses. This investment is in line with Google’s current hybrid work policy where their employees work three days on-site per week. For those companies who don’t have millions to spend on revamping offices, there’s always the option of renting.
Office demand rose 20% between February and March this year and was up roughly 8% from one year ago. While the general vacancy rate has been rising for the past five years at least, it rose drastically in 2020. Now, however, we’re seeing the first decline in vacancy rates in half a decade. The demand for office space is only two-thirds as high as it was before the pandemic. While vacancy ratios drop, rental rates have been creeping up. Still, there’s a good chance that we’re reaching the new “normal” — the plateau of change, drops, and increases. For the past two months, occupancy rates have been hovering around 43%, suggesting a new “normal” for hybrid offices.
Calculate and predict space utilization
Now for some space utilization metrics. Hybrid or not, the general 3-30-300 rule of thumb still applies as a benchmark. Per every square foot of office space, companies pay
- $3 for utilities
- $30 for rent
- $300 for payroll
With these values in mind, companies pay an average of $33 per square foot of unused space per year. While $33 looks like peanuts on its own, let’s see how much of an impact each wasted foot can have…
To start, we need to multiply the number of employees by how much each one costs in office space. Consider a company of 100 employees. In 2020, the average office space required per employee was 196 square feet. This number jumped from a maximum of 150 square feet pre-pandemic before physical distancing was a concern. With an average office occupancy rate of 43%, that leaves an average of 57% unused space on any given workday. An office of 100 employees equates to 19,600 square feet total. With a hybrid model, up to 11,127 of that square footage may be underused daily. Multiply that by $33 we get up to $368,676 per year on wasted real estate. For more help on calculating your office space, check out our article, “How to optimize workplace space utilization post-COVID.”
Of course, this equation is hypothetical. The best way to measure space utilization is to have onsite tools that document it for you, helping you make informed decisions. Consider the Joan office management system, for example. The well-rounded space management software helps manage room booking, desk booking, and workstation bookings. What’s more, companies can now make virtually anything bookable through the app. Joan meeting room displays help employees check room occupancy in real-time and book rooms on the fly. The best part? The Joan solution records data and statistics from every corner of the office, helping facilities managers forecast space planning.
4 things you can do with the results
The more things change, the more essential user statistics become. As companies navigate the new reality of hybrid work, the more they understand, the more successful they’ll be. Here are four ways space utilization data can help capitalize on your work environment:
Find out which rooms are under or overperforming
With practical data about your office and not just hypothetical sources online, office managers can learn which rooms are under or overperforming. Are the larger rooms more popular than the smaller ones? Are the larger ones being used to capacity? How popular are the huddle rooms? Are the West conference rooms used more than the East?
Discover which desks are the most popular
With hybrid work in play, most companies are offering flexible floor plans. Joan analytics can show which desks are the most popular. Breaking it down even further, office managers can identify why certain workspaces outperform others. Does one station have three monitors? How about easy access to the washrooms? The kitchen? Do employees prefer desks in natural daylight or the dark?
Distinguish good investments from bad
Taking office statistics to the next level, Joan is promoting a “book anything” initiative that makes pretty much anything in the office, and out of the office, bookable. Companies are adding all sorts of assets to the Joan booking app including company cars, parking spaces, gaming consoles, shared spaces, and office tech. With usage statistics, companies can find out which investments have a high utilization rate and which don’t.
Rent out your assets
Talking about capitalizing on real estate, have you heard of room hotelling? There’s been a growing number of companies offering bookable workspaces… and you could be one of them. Not only workspaces but other underused company assets.
For example, a company’s office lease comes with 60 parking stalls. However, these days, only about 43 employees work on-site each weekday. With the Joan app, the company can lease the spare parking spaces out to other tenants or outsiders, all the while documenting who used each space and when.
Book anything? Book everything
It’s time to weed out underutilized space. In some cases, the answer is to repurpose spaces into something that better supports the office. In other circumstances, it might be best to toss the space, desk, or asset altogether and invest in something worthwhile. We’ve seen how much money wasted space can cost a company. Investing in the best tools can help organizations capitalize on office space utilization. With the right information, companies can invest in the right spaces, improving office performance and enhancing the employee experience.
With most offices returning to the office in some capacity or another, we’re at an age where there’s no such thing as too much information. The more assets you plug into a monitoring system, the better your new, modified office space will perform. Take care of your wasted real estate by understanding how to transform it into an effective space. Joan supports any and all assets from the kitchen blender to the company pet. Get creative! In fact, the more out-of-the-box you think, the more you’ll learn about your office.
In the meantime, contact our Sales team for more information. We’re looking forward to collaborating with you!