Research shows that many businesses could use half the space they occupy
The reality of post-credit crunch economic fallout is creating challenging times for corporate occupiers. We are picking up notes of caution from the big occupational real estate departments, particularly in respect of relocations or significant changes involving high levels of expenditure.
Delayed decisions about property portfolios means corporate real estate executives must get smart with their existing space to deal with change. They are under pressure at board level to reduce and control overheads and are being challenged to deliver bottom-line savings.
This may have actually created a platform for change. There is now an opportunity to introduce and implement ideas that previously seemed too bold and were rejected by senior management.
It is possible to save 30%-40% on property costs while simultaneously increasing the effectiveness of the workplace and satisfaction of employees. By ensuring that the property portfolio is performing efficiently, property managers can contribute to the bottom line.
The cost savings result from reduced staff turnover, increased planning efficiency, smaller individual footprints, release of space, home working, reduced amenity demand, altered infrastructure maintenance, increased mobility and more effective use of existing portfolios.
Space metrics has always been an area that has fixated many corporate occupiers, but much of the published data can have a coach and horses driven through it in terms of providing genuinely reliable benchmarks. A recent industry guide from CoreNet Global stated that the current staff-to-space ratio in London was generally considered to be around 1:100 sq ft, but we believe this should be around half this to deliver real value to the business.
In Europe the numbers are even higher (graph 1), and not only for regulatory reasons. Where space is at a premium and competition is high, such as in the Middle East, introducing innovative workplaces is becoming more common as it means less space needs to be acquired and better working environments can be created. We expect more of this in markets that were previously considered very traditional in their occupational patterns.
But space ratios are only a part of the equation. For example, how well utilised is your space? Have you reduced your work settings to reflect laptop use? Can space be better used for human occupation if storage goes ‘electronic’?
The fact is that space within buildings is only 50%-60% utilised on any given day because of holidays, sickness, training, meetings out of the office and mobility within the office. Graph 2 above is typical, regardless of sector and nature of worker, and demonstrates that half the space can be occupied without changing the way people are already working, or that twice as many people can be accommodated without changing any of the infrastructure or fitout.
Evidence shows that smaller work settings are often the most popular, as they enable teams to work effectively together. And standardising furniture and providing a variety of work settings within a space reduces the need for physical alteration of the space.
We have also found up to 15% of our clients’ floorplates is taken up by filing and storage, rather than being used for the occupational needs of staff. This limits the amount of work settings and amenities that can be provided and creates an uninspiring work environment.
Where occupiers have reduced this and given space back to staff, they have found retention and productivity has increased, delivering large savings in the form of saved training and recruitment costs.
Reduced carbon footprint
Not only does the workplace provide opportunities to save costs, it is also a potential driver of sustainability initiatives within companies, reducing carbon footprints of buildings and limiting the need for travel by connecting a dispersed workforce effectively. The time will soon come when the carbon footprint of real estate portfolios will directly affect the amount of tax paid, so ensuring the smallest output now will also bring long-term savings.
Shelley Frost is head of European corporate consulting at Jones Lang Lasalle