Space & Move Management

Space utilization: How to improve the use of CRE

Darin Herle
November 18th, 2021

Space utilization has many corporate real estate (CRE) and space management benefits for any organization.  

Optimizing how space is being used can future-proof the office. That’s because when directors of real estate set space utilization goals, they can also improve productivity and employee experience for occupants, in addition to many more benefits. 

In this article, we explain the ins-and-outs of space utilization. We also review tips and best practices for better space planning. 

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What is space utilization?

Space utilization is the amount of utilized space in an office.

This is different from space allocation, which is simply how workstations are assigned to workers. 

And it’s more than the occupancy rate alone, which is just one benchmark of office space utilization.

Best handled with space management software, space utilization focuses on how space is being divvied up and actually used by employees across a facility over time. Tracking space utilization using software can pinpoint data on where people gather and other important space utilization metrics. Real estate and FM teams can collaborate to use reports and analytics derived from this software to make better decisions for both staff and employers.

Ultimately, understanding current office space utilization information provides insights to real estate and management teams about the habits that are shaping a workspace and its floor plan. These insights in turn can be used to craft a much more efficient office. 

use of space

Why is space utilization important?

Corporate real estate costs are typically a company’s biggest expense after payroll. 

Meanwhile, the average space utilization rate across industries before the pandemic was only 60%, and sometimes quite lower. 

Now that offices have shifted to various hybrid work models with more people working remotely, more and more desks, conference rooms, and cooperative spaces—ie.: more square feet—may be sitting empty for much of the time. 

Following space management best practices to improve space utilization can help stop this metaphorical bleeding of wasted real estate.

Ideally, improved space utilization also offers the following six main benefits. 

1. Maximized space use and minimized costs

The most obvious advantage of tracking space usage is the insight on how much space isn’t in use. Companies often overestimate the space occupancy of their facilities.

FMLink reports that one medical facility in southwest England expected staff to increase by 28 percent. They therefore thought they needed to expand their space to accommodate them. But after completing a survey, they discovered they were only using about 38% of their current facility. Instead of adding more space—and increasing their real estate budget—they just needed to use their space better.   

In this case, tracking space saved large, costly, and unnecessary changes and moves.

Just as important, when companies understand how their space is used, they can either reduce their overall square footage, or repurpose how they are using certain spaces. 

In either scenario, the result is usually cost savings along with a better use of space. 

2. Better sustainability

Along with saving on real estate costs, office space utilization can also support sustainability efforts. Using less space is cheaper, of course, and it’s also better for the environment. 

For companies concerned with the triple bottom line—people, planet, and profit—using their space better is a great way to reduce their carbon footprint in a responsible, sustainable way.

3. Improved productivity

Another benefit of space tracking is finding the connections between the way people use the space and its effect on productivity.

According to the Wall Street Journal, one Bank of America call center gave employees space utilization sensors that tracked their movements and recorded the tones of their voices when they spoke. 

Not surprisingly, they found that workers who bonded with their coworkers and worked together in teams were more productive. To better encourage this relationship-building in the office, the company had workers take breaks in groups, instead of individually. This seemingly simple hack to space utilization increased productivity by 10%. 

The WSJ also reported that one tech company, using space utilization tracking, concluded that the size of the cafeteria’s lunch tables also affected productivity. Workers who sat at the 12-person table were more productive than their peers who sat at 4-seaters.

What this means is that improving space utilization rate can also improve overall productivity.

4. Better employee experience

Like the Bank of America example shows, when real estate directors know how employees are using the office, they can better design it to meet their needs and preferences. 

Moreover, we know that all generations in the workplace are clamoring for more flexibility. A new survey by LinkedIn suggests it’s the highest priority for most workers.

As we’ll cover below, good space utilization also supports flexible working, further enhancing employee well-being and the workplace experience.

5. Better flexible working

There’s now universal consensus that for most industries, the post-pandemic office will remain flexible and/or hybrid in some capacity. 

Of course, while the hybrid office looks great on paper, implementing it presents a bigger challenge to both today’s FM in addition to corporate real estate management teams.

That means space utilization and management, as part of a robust Integrated Workplace Management System (IWMS) system, is critical to supporting a range of flexible working practices and work environment types

When managers have data-driven insights into how people are using the space, they can provide better visibility and guidance to the occupants on how and when they should be coming to the office. This in turn can improve both agile working and other flexible working models. 

6. A future-proofed office

Ultimately, space utilization is at the heart of how companies can optimize the workplace. Measuring space utilization is an important part of gaining the knowledge to make informed decisions. When leadership teams have access to real-time data and user-friendly analytics, they can better forecast, track, and measure how people are using the space. This can help them create better workflows, reduce space costs, and provide better move management, to the benefit of employees and employers alike.

calculate space utilization

How do you calculate space utilization?

What rooms are most often in use in your workplace? Knowing this, and similar space utilization tracking information, can give you insight into habits that are shaping your workplace. This can also help you pinpoint data on where people gather. 

Space utilization is traditionally determined by dividing a building’s occupancy by its capacity.  

That said, there’s no specific formula to determine what space utilization strategy will work best for every building or scenario. 

In other words, different companies will have different needs and goals. They will therefore want to track different metrics to measure how they’re using their space.

That’s why directors of real estate and management teams should choose office utilization software that measures a wide range of data. This can include daily peak utilization, total square footage, average peak utilization, total visitor traffic, high traffic areas, occupancy, density, capacity vs. occupancy, cost per person, square footage, peak frequency, and specific usage areas.

space utilization best practices

Best practices for space utilization in the office

As we’ve covered, it is only possible to properly track and improve space utilization when there is good software and data. With this data, it is possible to make continual and insightful adjustments to space utilization. 

Beyond this, there are several best practices to follow to ensure the best possible space utilization for any given organization. 

First, companies may want to consider using occupancy sensors, which can make flexible room booking and desk booking much simpler. 

While not absolutely necessary, IoT sensors can provide a more indepth picture of how employees are actually using the office, just like the Bank of America example illustrates.

Second, adopting flexible working models like activity-based working, office neighborhoods, hot desking, and agile working, are all proven ways for employees to use a shared office space more effectively. 

Finally, one of the keys to the success is to communicate the reason and expectations for any changes to staff clearly and directly. 

For this reason, it often makes sense for real estate directors to recommend that FM managers collaborate with their HR counterparts to ease any internal concerns employees may have about their movements being tracked. 

space planning concerns

Addressing space utilization concerns

No discussion of space tracking is complete without a discussion of employee concerns. Especially when using tools like badges or sensors. If the topic of space tracking isn’t presented carefully, employees may feel like they’re being spied on or micromanaged. This may cause them to change their behaviors. This means you won’t be collecting data about how they normally use their space. 

Like we’ve covered, it’s crucial to speak with employees about how these devices work. Ensure they understand what kind of information they are actually collecting.

However, once they understand the potential cost savings associated with better space utilization, it’s often a no-brainer. 

data-driven decisions

What is data-driven decision making? 

Data-driven decision making is how smart organizations stay flexible and productive. It’s how they’re able to weather storms like an unexpected global pandemic. 

Feelings and hunches about how to improve your office space are great. They can give you a jumping off point. But until they’re backed up by data, they’re just that—hunches. 

Using data to drive decision making leads to better outcomes, including cost savings and ultimately happier, more engaged team members. When leaders use data to inform their space utilization decisions, they can dramatically improve their workspace. 

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Photos: fauxels, Cadeau Maestro, Tima Miroshnichenko, Croissant, Christina Morillo, Karolina Grabowska