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Re-evaluating Office Space Utilization

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In these uncertain economic times many businesses are re-evaluating their use of their office space.  Office space accounts for a large portion of most businesses operating expenses and figuring out and implementing how to reduce the cost leads to bottom line gains. On average each employee requires an average of 200 to 250 square feet of space. If you are in a market where the cost of space is $30.00 per square foot per year, your annual cost per employee will be around $7,000 each, not including all the other expenses related to on-site employees such as phones, furniture and office equipment.

Many companies, both large and small, find that they are operating at a 50% to 75% office space utilization rate. In other words, on average up to half of the space they are paying for is not in use.  It is not always the same space that is not in use, but the net result from employees working outside of the office, whether on sales calls or working from other locations, results in very high excess office space capacity.

As the workforce continues to shift to a more mobile knowledge and technology based worker, more options are available to better satisfy employees while reducing the cost of housing them on site.  One of the big hurdles in making this change is trust. When employees are working outside the traditional office, management becomes uncomfortable with their supervision, not sure if employees are truly doing what they should be doing. Getting over this is a big deal.  Putting procedures in place to increase management comfort and confidence levels will allow operational changes within the organization that will have positive outcomes for all.

What are the options to improve utilization?

For a larger company, providing office space to employees on an as-needed basis instead of the traditional private use basis is an option. The first step is to identify those employees who are currently working outside the office and how much time they spend in that capacity. This option works best with sales organizations, ones in which employees travel frequently or those who could take advantage of employees telecommuting (a misnomer now since it is more like a virtually VPN connected scenario rather than a telephonic one).  It is important to evaluate office use requirements based upon peak usage times rather than average usage to determine what the realistic savings could be. A key to planning for peak demand is having a well organized set of procedures for when capacity does fill and a reservation system that does not make the employee feel like a nuisance, but that they are doing a service to the company.  The transition from the conventional office where everyone has a permanent place to that of an “Office Hotel” is becoming more popular.  It is not be an easy task implement, but can lead to both cost savings and increased employee satisfaction.

Another option available to organizations of all sizes is the use of Executive Suites.  These are businesses that are involved in the business of providing office space and office services to outside businesses.  Typically what you will find is a floor of a building dedicated to offices of varying sizes which are available to rent on a flexible term basis.  Not only do they provide office space, but they also have a full staff available to perform any duties their clients need on as usage basis.  In addition they also provide access to all of the usual office equipment, telecommunication systems, High speed Internet access and furniture one would expect in a fully outfitted office. This can significantly reduce the overhead cost associated with the traditional office.  If you are interested in comparing costs, try out our Executive Suite vs. Conventional Office Calculator for an impartial comparison.

Either of these options presents you with the ability to improve the bottom line by reducing the cost of office space.

Other useful links:

Small Office Alternative
Office Space Calculator
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Executive Suites , General , Office Space

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