Even before the events of 2020 changed the way we live and occupy real estate, it's likely that your office space wasn't perfectly sized for your company. Pressures like economic growth and the gradual move away from too-efficient spaces put many companies in a situation where they needed to reconfigure their space. Then, when COVID-19 hit, everything changed. Regardless of your organization's position on remote work, it's likely that your office space, its utilization, and its configuration will be very different from the way it looked just a short time ago.
The first step in right-sizing your office is to figure out how your current office space is working for you. The basic metrics are simple:
How many workspaces do you have?
How many square feet do you have?
How many workspaces are you using?
How many workspaces do you see yourself using as your company returns to its new normal?
While it might be natural to think about your company's usage in square feet, ultimately, buildings hold people, and what's changing is how people use space. By counting workspaces, you can gain a firm sense of how many people you will need to house in your new office.
Once you've established a headcount, take a look at your current ratio of square feet per workspace. If you have 175 square feet per workspace in your current office and see needing to serve 50 people, you will nominally need 175 times 50 -- 8,750 square feet (assuming nothing changes). Next, ask yourself this question: Is our office space configured right? How will we change it to meet the needs of a future workspace? Will we provide more space for private concentration? More collaboration areas so that people can make their time in the office productive? Fewer relaxation spaces to make the office more productive? Or more to make it more effective at building company culture? Your answers to these questions will help you adjust your baseline for square feet per employee, letting you come up with an estimate of how much space your company will actually need moving forward.
Realign Your Current Needs
Once you understand how much space you will need to accommodate your future workforce and their future work style, you can start to attack the challenge of your current portfolio. Some of your spaces will work well for the future as-is or with reconfiguration. Others, however, will need more serious change. You might need to shrink them, move them, or abandon them. Ultimately, it's not only about right-sizing a space -- it's about right-sizing your entire portfolio.
Your company's space strategy is going to have to be unique to it. However, there are a few ground rules to keep in mind:
It's easier to vacate spaces if their leases are nearing their expiration date. As you look at consolidating your portfolio, try to shut down spaces whose leases are ending anyway, since that eliminates the need to renegotiate or buy-out leases.
Everything is negotiable. If you do have to make changes to existing spaces with long lease terms remaining, you aren't stuck. Most landlords will work with you to come up with a plan that either avoids future vacancy or minimizes its impact. Some might let you partially vacate your space, while others might offer you a discounted buyout if you need to completely move out. The only way to know what you can do is to ask.
Don't let a good crisis go to waste. This is an opportunity for you to remake how your company uses space, and how it spends money on space. Whether you return to a traditional five-day week, you go virtual, you create a hub-and-spoke block of offices and satellites, you introduce hot-desking, or many any other change to your offices, now is an excellent opportunity to be strategic.
Optimize Your CRE With Our Patented Software
When your space is right-sized, the next step is to optimize it. Operations vary from space to space and as you settle in, you can use our patented software to compare multiple benchmarks across your entire portfolio. As you analyze the performance of your company's stable of offices, you will see which locations have the best cost controls, which ones have the highest space utilization, and which ones have the best productivity.
In addition, the optimization process looks at your spaces in the larger context of the markets in which they are located. That way, you can benchmark your cost of occupancy against the rest of the market to make sure that your rent is in line with what other tenants are paying.
As you can tell, right-sizing your space is an important part of a much larger process. As you complete it, you will end up with the best possible space at the best possible price, and with certainty that this is the case. This process starts with a simple first step -- reach out to iOptimize Realty® to see how we can help!
Here are a few other articles we think you'll enjoy:
The 3 R's of CRE - Part 2: Renegotiate
The 3 R's of CRE - Part 3: Relocate
3 Reasons Why Relocating Your Business to a Low-Tax or No Tax State Could Be a Smart Move
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