Think One Empty Desk Is No Big Deal? Think Again.
Desk utilization matters. For most organizations, real estate costs are the second largest expense on the books after salaries. Those costs are only going up, making good space management more important than ever.
If you want to achieve big savings, you have to start by thinking small—that is, considering the average cost of office space per employee and the impact it can have on your real estate budget.
The Cost of Office Space Per Employee: A Conservative Estimate
To determine the cost of one vacant desk or workstation, you first need to know the annual cost of renting office space. Commercial real estate costs vary widely depending on location—ranging from a high of $83 per square foot in Midtown Manhattan to just $17.93 in Louisville, according to JLL’s Q3 2018 office outlook.In the third quarter of 2018, the average asking lease rates across the United States was $34 per square foot.
Of course, you also need to factor in the cost of utilities.
The 3-30-300 rule illustrates the relationship between utilities, rent and payroll, which adds another $3.40 per square foot. Now you need to consider the size of the average workstation. According to JLL, the average workstation is between 40-50 square feet—about half the size it was a decade ago. Let’s assume yours is somewhere in between—45 square feet.
Now we’ll do the math:
($34 + $3.40 = $37.40) x 45 = $1,683.
That may not seem like a lot. But that’s not accounting for furniture, technology or other amenities that are part of the space. It also doesn’t factor in the cost of maintaining that space and related spaces, like the restrooms, employee break room and equipment such as printers and copiers.
The Average Annualized Cost of One Workstation
Research by workplace consultant Abintra estimates the average annualized workstation cost to a business is much higher, approximately $18,000.
The average number of possible working days of the typical employee for an entire year is 242 days. Using this number, the cost associated with this potential yearly wasted capital amounts to $7,735 for the year (104 workstation days ÷ 242 possible working days x $18,000 annual cost), just for that one employee. If you have just 10 workstations that aren’t being used, that adds up to a whopping $77,350 in wasted resources.
That could pay for an extra employee!
If that example seems extreme—you’re thinking, “there’s no way we’d let 10 desks sit empty all year”—consider what happens when you have a remote work policy in place. Suddenly the majority of your workforce is working at home once or twice a week—leaving a lot of desks empty.
How To Improve Desk Utilization
Today’s facilities managers and workplace leaders are all looking for ways to save money by improving space management. Moving to a more agile work environment, such as activity-based working (ABW), can significantly improve space utilization and reduce wasted space. It’s one reason why more than 50 percent of workplace leaders say they plan to move to a free-address model of unassigned seating within the next three years.
This is something to consider as your company grows, especially if you already have a number of employees working remotely. However, this model will only be successful if employees have an easy way to reserve workstations when they need them. A workplace app removes uncertainty from unassigned seating (and keeps employees from fighting over the coveted window seats).Technology such as the Hummingbird EX app gives employees access to the space and resources they need to be productive, while relaying valuable space management data to workplace leaders.
Space management software allows workplace leaders to view and modify floor plans in real time, ensuring they always have an accurate picture of space utilization. Move management software works in conjunction with space management software, making space planning easy. This technology allows workplace leaders to create move scenarios that make the most of every space while ensuring employees can work comfortably.
To remain profitable as real estate costs rise, forward-thinking organizations need to rethink their approach to space management. By adopting more flexible workplace strategies, they can save tens of thousands, even millions of dollars each year.