Space Management Metrics: Do Vacancy Rates Still Matter?

by James McDonald on March 6, 2018

There’s no question that space is one of an organization’s most valuable commodities. Real estate typically is among the largest expenses in most company budgets, second only to personnel. And with the cost of renting or owning space at a premium in many markets, the only thing more frustrating to a corporate real estate leader or facilities manager than running out of space is having too much empty space.

Consider this: If the average annualized workstation cost to a business is $18,000, the cost of having that one space left vacant for just two days a week is more than $7,735 for the year.

As a manager, it’s natural to want to keep a close eye on how efficiently your organization is using its space. However, the old standard measure of space utilization—vacancy rates—may not tell the full story. Here’s why, and what metrics to measure instead.

Where Vacancy Rates Fall Short

In an office space, the vacancy rate simply measures the percentage of unassigned or empty workstations compared to the total number. The reverse of this, the occupancy rate, looks at the percentage of workstations actually assigned or in use at any given time.

Part of the problem with focusing too heavily on either of these rates is that they fluctuate often, sometimes from one day to the next. The way employees work and use space has fundamentally changed. The days when an employee would be assigned to a cubicle, furnish it with a box of personal items and stay there for two decades are fading away. It’s more common for an employee to spend her morning working in a large, open space, move her laptop into a meeting room on another floor during the afternoon and end the day working in a nearby coffee shop. Many offices function like revolving doors with employees coming and going at all hours; in a recent Gallup survey, 43 percent of Americans said they work remotely at least part of the time.

The traditional way of tracking vacancy or occupancy rates by counting heads once a month doesn’t account for this. It also doesn’t factor in organization changes that cause shifts in space utilization, such as mergers or acquisitions.

New Space Utilization Metrics Worth Measuring

To truly understand how effectively organizations are using space, you need to dig a little deeper. First, you need to get a handle on the total cost of owning space—not only the rentable square footage, but other associated costs, such as taxes, depreciation and interest.

Divide those costs by the number of employees to determine the breakdown per person. Look at the percentage of space used by each department or group and the utilization of office space, meeting space and technical (non-office) space to determine how employees are actually using the available space. This can help you gauge how well your organization is meeting your employees’ needs.

For instance, if you notice a particular meeting room is only being used twice a week on average but another room is always full, it’s worth asking why. Perhaps the first room lacks video conferencing technology, so it’s only being used for informal brainstorming sessions when it could be used for much more. Or maybe it’s designed to accommodate 20 people when most of your meetings have fewer than 10. Adding a partition to divide one large room into two smaller ones might allow employees to make better use of that space while freeing up other areas.

Using Space Management Software to See the Full Picture

Until recently, many managers looked to outdated metrics to estimate space utilization and used only the most basic tools to track them. They would count heads once a month and type the numbers into a spreadsheet or review the most current count of employees on the payroll for each location, assuming each was taking up one work station each day. Pinpointing more accurate metrics requires real-time data, the kind that comes from occupancy sensors and badge swipes. Using an integrated workplace management system (IWMS) that includes space management software gives you access to this type of data. When space management metrics can be connected to other elements, such as floor plans and corporate directories, you’ll have everything you need to see the full picture of your space. This makes it easier to plan for the future and justify decisions to executives and employees.

To learn more about what metrics matter most to modern-day managers, check out our newly updated guide, 8 New Facilities Management Metrics That Matter.


James McDonald

James McDonald is a sports enthusiast, brother in Christ and once swam in a tank with the infamous TV sharks.

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