Transforming Your Approach to Space*
10 High-Impact Moves to Reduce Total Cost of Occupancy
Revisit your space standards to reflect hybrid work realities and prioritize capital spend accordingly, with data-based decisions.
While “portfolio optimization” may often appear at the top of a list of cost savings strategies, understanding business goals and priorities is a key first step. Before shedding significant amounts of space, Corporate Real Estate & Facilities (CRE&F) leaders must first examine how hybrid work impacts the demand for space across the portfolio.
This process begins with establishing new space standards based on hybrid work styles and utilization patterns.
It’s likely that less private workspace (i.e., “me space”) and more shared, collaborative team space (i.e., “we space”) will be required in your future workplace. CBRE’s Occupancy Management benchmarks reveal a 40% increase in collaboration or ”we” space across the globe since 2021.1
Traditionally, utilization data collected through badge swipes and sensors could measure how efficiently a space is used, with the added benefit of appropriately setting service levels within the occupied space.
From Q2 2022 to Q2 2023, global average office utilization was 35% (31% Americas, 40% Asia-Pacific, and 36% EMEA), which is a 45% decrease from the pre-pandemic global average of 64%.
However, since 40% of organizations expect office attendance to rise over the next year, today’s utilization rates may not provide CRE&F leaders with a good benchmark for the future. Moving forward, new utilization data will be needed to understand post-pandemic work styles and habits. Having the ability to monitor these increasing levels of utilization in real-time—by location, day of the week and hour of the day—will be incredibly beneficial in this “living lab” of the new hybrid workplace. CRE&F leaders can then make informed, data-based decisions to revise design standards, reduce underutilized space and prioritize capital spend to create a more efficient portfolio.
How to Begin?
- Most CRE&F departments do not have building utilization sensors unilaterally deployed across their portfolios. As a starting point, CBRE Institute recommends collecting data from existing sources such as badge swipe and Wi-Fi/network connection data to extrapolate median and peak utilization levels across days and sites. In fact, these are the two most common means CBRE clients use to measure office utilization (91% and 32%, respectively1).
- The sophistication of insights and strategy—across an entire workplace or portfolio—may require more accurate and detailed data than existing sources can provide. Occupancy sensors harvest and provide this data, but their selection and implementation is complex. A comprehensive program to select, implement, manage and analyze sensor data delivers each organization deeper and more advanced insights and outcomes.
Understanding how hybrid work impacts the demand for space will allow CRE&F to make smart, insightful changes to space standards. This knowledge will help mitigate the risk of giving up too much space only to have to re-lease at higher rates, while equipping companies with the right data to thoughtfully consolidate locations to drive occupancy cost reductions.
CBRE conducted a three-month sensor-based utilization study that identified an average daily peak utilization rate of 59%—26 points lower than the daily utilization rate of 85% that had been calculated using access control data for the same period of time. Using the more accurate peak utilization data, CBRE identified an opportunity to consolidate the existing space from 8 floors to 6, with a potential annual savings of £240K.
1 CBRE’s 2022 Workplace & Occupancy Benchmarking Program.
* Updated strategies and lessons learned since publication of the 2022 report.
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