What is Office Space Utilization?
Office space utilization matches office space supply with the demand and needs of employees.
Office space utilization analysis refers to how often employees use buildings, floors, or space types. You can do this at a high level by comparing the number of employees in a given space divided by the capacity, called the space utilization rate. Or you can compare average or peak attendance over time. Regardless, office space utilization rates provide insight into which spaces employees use and which are not.
Why is Utilization Important?
Space is one of a business’s most significant expenses. So if only 30% of your workforce is coming to the office, your paying out needlessly for vacant space! However, data about under-utilized spaces can inform a strategy to repurpose the space, sublet it or change infrastructure to encourage usage.
Tracking building space utilization is crucial as the adoption of Hybrid working will only increase, which means matching supply and demand is more challenging than ever.
What is happening for most businesses is a gap between what they have planned for and the reality of their situation. For example, with hybrid working arrangements, employees may agree to 3-days in the office, but they average 1.6 days a week. So utilization data will help you identify where the disconnects are occurring and arm you with the data to open discussions to correct it.
Furthermore, Utilization means “the effective use of something”. So, gathering data on the actual usage of space and comparing it to its intended purpose is also a utilization factor. Doing so can tell you whether to alter space facilities to cater to different use cases (activity-based working).
Examples of space utilization metrics
Office Space Utilization Metrics Table
The number of attendees/Max Capacity
This will give you a decimal or percentage to indicating how "full" your building is.
May over or under-inflate your utilization rate depending on how you measure number of attendees
Average number of employees in a building
Operate at a reduced capacity
Will not have enough space for peak capacity
The highest Number of employees in a building at any time
Will always have capacity for everyone
You will have vacant space most of the time
Data obtained from booking systems
Gain booking trends by departments
Difficulty getting employees to book
Data from sensor systems, usually in form of heatmaps
Able to see building flow
Expensive to implement
How your focus affects which metrics you concentrate on
The idea around office space utilization is to flatten peak attendance and to find the gap between what you think you know and what is happening. So the end goal is the same, and the space metrics are the same, but the journey can differ.
This focus looks at the attendance vs capacity levels for a floor or building – In this instance, business unit usage isn’t relevant. Your priority starts with high vacancy areas.
Rather than looking at vacancy by floor or building, you look at business units to see what space they are paying for but not using.
What's the difference?
Well, the two approaches may give you very different outcomes. For example, say you have a high vacancy in countries with low CPA; is that valuable?
On the other hand, what may be more beneficial is targeting areas of high CPA and vacancy by business unit. Either way, both give you a vacancy cost referred to as opportunity.
Which should you choose, peak or average attendance?
It depends on how aggressive your cost-saving strategy needs to be and how much value your teams bring. For example, if you have a trading team bringing in millions of revenue, is it worth risking them not having a desk?
Ultimately, it comes down to you’re risk tolerance. If you are risk averse, planning for peak attendance might be for you. On the other hand, if you’re pushing cost saving above all else, then average attendance might be for you.
In reality, businesses tend to do something between average and peak, which we call the design point. Arbitrarily, companies aim for anywhere between 80-95% of their peak attendance as their Utilization Benchmark.
Office space utilization matches office space supply with the demand and needs of employees. Office space planning metrics are essential to every business to identify under-utilized space which could be sublet or repurposed, especially since working work patterns have changed.
Attendance (peak, average or somewhere between) tends to be the metric businesses will look to when assessing their space’s performance. Ultimately, what metrics are right for you depends on how aggressive you want to be with space saving and how much value you place on individual teams and employee experience.