How much of your office do you actually use?  And I don’t mean now-I mean before Covid hit.  A recent study suggests that office occupancy may not have been used to the extent previously thought.  Listen to Bob & Jan talk about this on today’s podcast.

Before Covid, this study by VergeSense found that office spaces were greatly underutilized before Covid.  And not just a little bit.  We’re talking only 30% utilized.  That’s shocking, right?  So I began to question this study and do a little digging which is when I found out that VergeSense’s business is office utilization and transformation consulting.  You could say they might have a dog in this race.  But in further investigation I found that they actually use deep-learning sensors which count people as they move throughout the office.  They also have an impressive list of clients like Cisco, Royal Bank of Canada, BP, Genentech and 26 Fortune 500 companies.  Their website also says they have worked on 40 million square feet in 29 countries.

I’m sure there is a wide variance in the utilization of space from one industry to the next and from one company to the next.  For example, we have clients which pack people in their offices with 7-9 seats per 1,000 square feet while others may only have 2-3 per 1,000 square feet.  But then many of those people travel, work from home occasionally, are sick, etc.  You have to think that all that plays into the 30% utilization stat.  Remember, the 30% state was BEFORE Covid.  The study states the average utilization in January of 2021 was only 7.9%.

Kastle Systems installs and manages electronical entry systems in office buildings.  They say that the average occupancy for 10 large cities in the US is only 24%.  Dallas has been at the top of the list with occupancy around 40%.  But 7.9% is only 26% of 30%, so this is fairly consistent with the VergeSense numbers.  The study also says that office space is being used more collaboratively since the pandemic with a 15% increase in the amount of overall utilization dedicated to collaborative work.

I can totally see that as companies let their employees work from home more and require they only come into the office when they need to work together on something or meet with a client.  It wouldn’t surprise me to see the that number continue to go up in the future.  So, is the answer that we just need to build out the office space differently?  Utilization and allocation are two different things.  The study points out there is a mismatch between how much space is allocated for different uses and the utilization of those spaces.  The 83% of office space allocated for individual work was only utilized 28% while the 17% allocated for collaborative work was used 35%.  It would appear that companies  were getting a better return on their collaborative office space investments than individual space investments before the pandemic.  And that differentiation has only increased during the pandemic.  And it will likely increase in the future.

So, what’s the take away?  Be careful how you finish out your office space and ask yourself and your team some hard questions.  Such as:

  • Do we want to pay for individual offices and cubes so employees come to work and sit alone sending email to other employees and clients?
  • What activities can only be done in the office?
  • Who need to come to the office to do their job and how many days a week?
  • Who wants to come to the office versus stay at home?
  • Who should get a dedicated private office, dedicated desk, cube or hot desk?
  • How can we arrange the office to encourage and facilitate collaboration among employees and with clients?
  • Can the office be rearranged quickly, easily and cheaply as our business changes and we learn what works?

It sounds like flexibility will be more important than ever as companies experiment and learn what’s best for their teams.  Build out your space with as much flexibility as you possibly can.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate (also known as a tenant rep) with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.