Aug 11, 2014

4 Ways To Optimize Your Commercial Real Estate Utilization Rate

By Don Catalano


CRE, Commercial Real Estate, Commercial Real Estate UtilizationThere are two ways to squeeze better ROI out of your company's commercial real estate portfolio. You can cut costs, or you can squeeze more productivity out of your existing space. Looking at your commercial real estate utilization is key to the latter strategy.

Commercial real estate utilization measures how much of your space you are actually using. While this metric can be simple to calculate -- especially if you have a portfolio with multiple vacant spaces -- calculating it in a more functional portfolio can be more challenging. Here are some ways to look at -- and optimize -- your company's utilization.

1. Start With RIFfed Spaces

If your company has recently been through reductions in force, you can quickly identify underutilized spaces by looking for the locations that were most impacted by the RIFs. For instance, if your Omaha location got cut from 200 to 100 employees, it's reasonable to expect that as much as 50 percent of the space is newly vacant. Bear in mind, though, that you probably won't get an exact 50 percent reduction. Usually, smaller spaces are less efficient than larger ones since, for instance, you still need restrooms, a reception area, a server room and other shared spaces that don't always scale evenly with head counts.

When you have a space with a low commercial real estate utilization rate, look into RIFfing it, as well. If you can't get your landlord to renegotiate a lease on less space, consider splitting it up and subleasing out the unused portion. A more long-term option could be to give up the space and have the remaining employees work from other locations or from virtual offices.

2. Count Vacant Spaces

Even if you haven't been through a large-scale RIF, there's a good chance that you have spaces with extra room. Between the decreased use of administrative staff and the tendency to outsource many business processes, you might be carrying more empty desks than you realize. Use floor plans to identify which spaces are occupied, which aren't, and what your utilization rate actually is. Then, you can figure out which locations to consolidate.

3. Benchmark By Square Footage per Employee

One of the easiest ways to identify spaces that have low commercial real estate utilization is to use your facilities management software to calculate how many square feet of space each employee uses. For example, a full 20 person office that takes up 4,300 square feet might have the same utilization in terms of workspaces as a 20 person office in 3,800 square feet, but the efficiency on a per-square-foot basis is much lower.  If you can add additional employees, reconfiguring furniture or doubling-up in offices can quickly boost your utilization.

4. Rethink Your Office Space

Ultimately, fixing your commercial real estate utilization may take a completely new approach to how you use your space. Moving towards hybrid open floor plans that reduce assigned space per employee while also adding flexible private spaces can let you increase productivity and create an office that is fully used.

Try our Office and Warehouse Optimization Calculators:

Office Optimization Calculator

Warehouse Optimization Calculator


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Don Catalano

Don Catalano