Real estate is the second highest cost for businesses, after salaries. Because most commercial leases last between five and ten years, real estate is also one of the hardest investments to manage. But how do you know if you’re paying extra for unused office space and what can you do about it? In this article, we look at the benefits of carrying out a space utilisation study and asses what you can do if you find out you are paying extra for unused office space.
What is a space utilisation study?
Put simply, a space utilisation study explores how and when people use different spaces in an office. Generally, a team of auditors observe your workspace over a two-week period, reviewing when desks, meeting rooms and breakout spaces are used. This information provides businesses with valuable insights on how they can optimise space inefficiencies and create an environment that works for employees and the organisation.
What to do if you are paying extra for unused office space
If you carry out a space utilisation study and find there are areas of unused office space, there are several things you can do. You could consider relocating to a smaller office, refurbish your current office space, or rent-out your unused spaces to free-lancers and start-ups (this option may require refurbishing your current space, too). Which option is right for your business will depend on further analysis of the space utilisation results, as broken down below:
Option 1: Relocate to a smaller office
If you have large amounts of unused office space, it might be worth relocating to a smaller office. Afterall, having too much office space can negatively impact your profitability and adversely affect your company’s culture. But, before you make this decision, consider whether or not your current space could be optimised to suit your organisation’s needs. Also, predict your headcount growth for the remainder of your lease and workout whether you are likely to grow into the space. You don’t want to relocate office only to see your team expand and have to move again.
Having said this, don’t be afraid to relocate to a smaller office if it is the best option for you. A workplace consultant can help assess your options and a design and build specialist can office space plan your new workspace so it works for you, even with less floorspace. For more information, read our article: Ten Steps to the Perfect Office Relocation.
Note: make sure you review the terms of your lease to assess your ability to break before considering this option.
Option 2: Refurbish your current office to optimise unused space
It’s no secret that people need different types of spaces to complete different types of work. If there are spaces in your office that are underutilised, it might be worth analysing why these spaces are underutilised. Do they provide employees with the tools they need to carry out a specific task? Is the space drab and uninspiring? Are there effective heating or air-conditioning systems in place?
If the answer to any of the above questions is no, then you should probably refurbish the unused spaces to make them more appealing to employees.
It’s also worth comparing the underutilised spaces with over-utilised spaces. Is your team in need of more meeting spaces, collaboration spaces or high-concentration spaces? If this is the case, it might be worth refurbishing your current office to create more in-demand workspaces. Explore the pros and cons of an office refurbishment in more detail to help you decide if this is the right option for you.
Option 3: Rent-out your unused spaces to free-lancers and start-ups (this option may require refurbishing your current space, too).
Co-working spaces provide a professional environment for free-lancers, start-ups and small businesses to work-in without the long-term commitment of more traditional lease options. But, it’s not only co-working spaces that can offer this flexibility. Businesses with unused office space can offer their extra space to those looking for flexible lease option. In other words, use a space utilisation study to define your unused commercial space and rent it out as coworking space. If you know your meeting rooms are never used after 4pm, rent them out to free-lancers or start-ups!
Note: Make sure you check your lease before renting out extra space, as it may prohibit you from sharing or sub-letting the premises.
How to make sure you won’t pay extra for unused office space in the future
Renting office space has always been a costly conundrum. As your business expands or contracts, you will unavoidably have too much or two little space. As most commercial leases lase five-to-ten years, searching and space planning a new office is all about planning for the future. Want to find out more? Speak to one of our workplace experts.