The cost of unused real estate

Published on September 2018

Reading time: 7 minutes
Workstations in Central London cost £17.5k pa and with the average utilisation rate rarely going above 45%, businesses could be losing as much as £5M in unused office space annually.
It’s no secret that technology impacts where we live and how we engage with our physical space. While ‘smart cities’ emerge on white papers alone, improving quality and decreasing size and cost of sensors and the development in IoT data management and analytics is enabling real time granular monitoring of real estate assets.

Average desk space in London

These developments are gaining commercial traction by focusing on the most glaring wastage of desk space. In a study by Cushman & Wakefield, it’s estimated the average cost per desk in Central London is £17.5k (approx $22.7K), ranking the second most expensive location in the world.
With peak office utilisation averaging at 45%, it’s astonishing that commercial real estate wasted assets could be as much as £5M. A lot of this waste is publicly owned but a lot of it resides on the balance sheets of private companies. The case for saving public funds and increasing shareholder value is a strong one.
Some of the challenges we hear from customers relate to bad behaviour. For example:
  • Block booking meeting rooms but not using them
  • Rooms used by 1 or 2 individuals leaving larger groups with nowhere to hold meetings
  • Not reporting leaves and absences to facilities teams
  • Resisting giving up space
Rarely are these behaviours intentional but arise because of shortcomings of existing solutions and lack of visibility of workspaces. Greater visibility of desks and meeting rooms could address these issues whilst saving time and improving the experience for employees.

Embracing data and tech to improve space utilisation

Current real estate and facility management teams as well as the emerging genre of workplace consultants are well aware of these wastage and are increasingly adopting technology to measure the utilisation of desks and meeting rooms, comparing the variations and formulating workspace designs accordingly.
The low hanging fruit of the investment is an immediate identification of under utilised spaces. This leads to consolidation of existing footprint or accommodating more people within existing space.
However, occupancy data gives much deeper insights into the collective behaviour of your workforce over changes in seasons and weather and more importantly over changes in policy and approach.
There are some tactical ways businesses can manage space utilisation but only the tip of the iceberg has been revealed.
Comparing trends across geographies, building location, floors and departments overlaid with data on length of occupancy, growth rate, fixed vs flexible seats and rental costs can help design strategies, policies and communication specific to different audiences and in line with company culture, vision and strategy.
It is less of a priority to reduce rent in Warsaw than it is in London just like it is useless to tell the finance department to reduce late sitting while it is invaluable to know how much desk time increased for the sales team when a new CRM is implemented.
Over time these ‘curated’ policies can be tested, refined and scaled.

Want to find out more on how to increase workspace utilisation?

Learn more about how to get a complete picture of workspace occupancy in this short webcast on 5 ways to increase desk utilisation or contact us to speak to our team. 
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Topics: Facilities & Workplace trends, Measuring space occupancy

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