Space Utilization in Commercial Real Estate


Office density refers to the space per workstation that is calculated on a net rentable basis (this excludes support spaces). A higher office density correlates to lower space per workstation (or space per employee), whereas a lower density means more space per workstation. As a business owner, more often than not a company's real estate is one of their largest expenses aside from paying their employees. Measuring office density aids in properly assessing the efficiency of your office space and determining if you are paying too much for underutilized space.

Space utilization normally refers to getting rid of extra space which can be achieved by terminating leases, subletting, and selling off non-productive assets or even combining locations. There are three main metrics which occupancy costs are measured:

·        Square feet per employee

·        Cost of occupancy per employee

·        Percentage of sales or revenue and occupancy costs.

These metrics may differ based on the nature of the business, however once the process of getting rid of your extra space aligns with your metrics it’s time to start looking at how your commercial space can be most efficiently utilized.

How To Best Utilize Your Space

Most business owners are continually looking for ways to do more with less office space in order to save on costs. Studies show that the average office space is being utilized at 48% after factoring in sick days, holiday, and travel rates of employees.

Open office floorplans, ones where managers relinquish their private offices in exchange for a more open environment, have been trending lately. These open office floorplans have been on the rise lately due to their perceived cost saving, enhanced collaboration and increased utilization rates (reports show 80% or higher).

While attempting to maximize your office space efficiency it’s important to take into account the future of your business. How many workers do you currently have? Do you plan on expanding during your lease period, what type of office equipment do you need and will it all fit?  Understanding your needs as far layout of your commercial property is vital to properly utilizing your office space and maximizing the investment in your company.