How To Calculate And Optimize Your Office Space Utilization Rate

By: Tom Bell on July 26, 2021

To understand how your office space is being utilized,  you can start by doing a basic space utilization rate calculation:

Number of employees ÷ Total workplace capacity

Occupancy metrics will give you a good idea of peak usage times and other variables that will affect your understanding of how the space is being used so that you can take measures to improve efficiency and productivity. 

When looking at office space efficiency, you want to get the best out of your square footage; this means, reducing unused space, implementing policies to increase utilization, and improving the functionality of your real estate to make it a place that workers want to operate in. It is also worth noting that just because an office is in use, it’s not necessarily efficient: a large amount of unused space in an office layout will result in higher costs, affecting profits.

The first step in becoming more efficient with your available office space is understanding the utilization rate for the area you have available - this could be done by building, floor, department, or even individual rooms. Taking the office space optimization equation (Number of employees ÷ Total workplace capacity), you’ll come up with a percentage that indicates whether opportunities exist to implement change.   

The best part about utilizing your office space efficiently are the many tangible benefits, which include increased productivity, lower absenteeism among staff, and improved workplace culture for your company. The process of optimizing your office space, however, can be time-consuming and often requires outside help to ensure you generate the right metrics and then take effective action.

 

Why is office space utilization analysis more important now more than ever?

One of the most important considerations for businesses is cash flow. A trend has emerged in recent years where companies are looking to optimize their expenditure on real estate and optimize office spaces with as little money spent as possible. Business leaders look for low-cost options that allow them to make quick decisions without spending time researching each option; they want solutions that offer maximum flexibility within current building structures.

Office space is also adapting to accommodate the growing number of remote workers and flexible schedules. In the past, nearly everyone worked from the office every day. Today, 70% of people do remote work at least one day a week, this figure is likely to increase as many have embraced the hybrid model of working from home and visiting the office for more specific reasons, like client meetings and collaboration with colleagues. 

From 2005 to 2017, there has been a 159% increase in remote working hours. To limit wasted space, help lower energy costs and save money for clients, a flexible layout is often considered to be ideal. Creating efficiency with large-scale open spaces where employees can choose their own environment and work to their own schedule encourages more productivity, better performance, and less staff turnover. Your journey to achieving this for your own business starts with a thorough analysis of accurate data. 

Examples of how leveraging space utilization metrics can help:

Office space occupancy rate is an important metric to consider as it shows how many people occupy an office space at any given time. This can significantly improve how you schedule incoming and outgoing traffic of employees and identify peak use times. For example, if you’re trying to understand the occupancy rate for desks within your office space, you’d use the following formula:

Number of occupied desks ÷ Total number of available desks

For example, if you have 100 desks but only 50 get used throughout the day, that’s a 50% space occupancy rate, giving you plenty of room to review how you can optimize your estate.

A common metric used in office space utilization analysis is the office space utilization rate. The formula for this is as follows:

Number of employees ÷ Total capacity x 100 

This will help you to understand, for example, how many desks you can fit into your office space and get maximum value from your premises – of course, in light of COVID-19, it’s important to consider what will create a safe and comfortable environment for your employees. Understanding how much office space you have is necessary in order to design people-centric spaces, as there's a cost-benefit in that too!

Not all metrics are relevant to every company, so it’s important to carefully discern between the types of utilization data available and the occupancy trends most likely to apply to your setup. 

 

What do the average office space utilization metrics and benchmarks look like?

Perception vs. reality –– there are marked differences when it comes to office space utilization. Due to lack of visibility and accurate data, some companies assume it's not necessary or urgent to improve space utilization, thinking their offices are being put to good use.

A 2018 report shows that the majority of organizations have average space utilization rates of 60-70%. Globally, it is estimated that 42% of commercial office space sits underutilized. On a more granular level, other studies show that conference room and desk occupancy utilization is at 50% and under.

Company size plays a role in how efficiently space is utilized within organizations. Fortune 500 companies tend to use office space more efficiently than smaller businesses – 74% of them expect to reduce office space in 2021 as a response to increased remote working practices post-pandemic. From 2013 to 2017, the average occupancy rate for large offices has been 88%, while the same statistic for small offices has only been 70%. In fact, some data shows that as much as 25% of all available office space sits empty at any given time.

 

How to calculate office space utilization

First, you need to understand the difference between office space usage and office space occupancy. Office space usage is the amount of time that people are physically in an office.  It's calculated by dividing square feet occupied by total square feet within each category (e.g., cubicles, open spaces). 

Office space occupancy is the number of people at any given time who occupy your specific type of office space. You can use this metric as a baseline for designing future office layouts or optimize your current workspace according to employee job functions and requirements. 

If you want to optimize based on workstation locations instead, then you should look at desk utilization metrics. Another way to calculate office space utilization rate is through a ratio that compares how much space a company occupies per employee against some industry-standard average value.

Important questions when calculating office space utilization:

1) Which conference rooms are most popular and what makes them preferable to others?

2) What equipment is in the most popular conference rooms? Is it worth investing in similar tools and technologies for other spaces?

3) What spaces in the office are not generally used? What spaces can be eliminated?

4) Are ad-hoc meetings a regular weekly occurrence? Would more informal workspaces for these meetings be appropriate?

5) How are your employees using their workstations?

6) In the average week, how many meetings end up being no-shows? Could the same number of meetings be hosted with fewer conference rooms if our attendance rate was higher?

7) How does office space usage vary by day, week or month? Are there any trends?

 

The office space utilization metrics you need to know:

Capacity and occupancy: the number of people that can be seated in a room based on the number of seats and an architect's recommendation for maximum capacity.

Shut-out factor: the portion of available time that one or more rooms are blocked because no space is available.

Immediate occupancy rate: how quickly a given room can be occupied after it has been cleaned up.

Space-specific utilization: the average capacity per hour in a specific room or area, as well as how many hours an area is used throughout the day.

Room turnover rate: whether rooms at your company are considered clean/dirty after each use.

Capacity vs. occupancy rates: usage based on maximum capacity for space efficiency to optimize areas and improve workflow. This can be done by using floor plan software with a built-in formula for calculating usage.

Density: the number of people per square foot in your workspace.

Room usage: the number of hours a room is used, availability, and downtime for that room.

Open space performance: for open space environments, specific metrics usually include average density, sensitivity to noise, and privacy, as well as optimize common and collaborative areas. 

Percentage overcapacity: describes the number of employees who need to leave a work area for any given period in order to optimize occupancy or reduce wait time during peak periods such as lunchtime or before/after meetings. This includes estimating how many offices need to be freed up by employees leaving early.

Cost per head/seat: the average annual cost to lease, decorate, and furnish an office space per team member in order to optimize layout design within a given budget.

Mobility ratios: another ratio based on the number of employees who work from home at least one day in a given month. This helps optimize office space if the majority of your workforce is mobile.

Workstations per employee:  average number of workstations you use for each person – including cubicles, desks, tables, and chairs within your workplace. You can optimize this to optimize space efficiency or reduce downtime during peak periods.

These are just some examples of how you can calculate your office space usage. In general, the main goal is to optimize both capacity/occupancy ratio, along with utilization rate, based on workstation location and employee job functions throughout the workday and week. 

Ensuring flexibility in open space environments leads to better utilization ratios and worker productivity, and a higher level of satisfaction with their workspace. Optimize by providing options for various types of work arrangements such as teaming up, networking (e.g., "hoteling" where workers share desk spaces), personal offices. This can be achieved by using office space planning software as well as productivity metrics to optimize efficiency during the real-estate process.  So don't forget to add these metrics to your list.

 

Use space utilization sensors to gain insights

Understanding the metrics and what they mean is just one part of your space optimization initiative. The next step is to gain the information that fuels these metrics. Space utilization sensors (also known as occupancy sensors) are the solution. They can help you to optimize your office space by:

  • Automatic and anonymous monitoring and measurement of employee movement throughout your building. Sensors work 24/7, gathering data continuously rather than a snapshot of use at a particular point in time. Calculating and providing metrics regarding workspace efficiency with regards to: occupancy, room usage, percentage overcapacity, all based on accurate and reliable, historical data. This can provide insights that lead to improvements within your corporate culture regarding the type of workspaces you optimize. 

 

How do you optimize office space?

Occupancy sensors can be positioned to monitor desks, meeting rooms, and the office floor area which will provide managers a better understanding of where underutilized space may occur and how those spaces may be improved in an effort to maximize usage. By integrating data from occupancy sensors with smart office systems, you can optimize space and increase efficiency.

Key occupancy sensor integrations

  • Meeting room booking systems can deliver better results when they integrate with occupancy sensors because they’ll receive automatic updates, alerting them to vacant or unoccupied rooms that can now be made available to other employees – rather than waiting for someone to manually update the system.  
  • Occupancy sensors integrated with your building management systems can help you automate HVAC and lighting, driving energy efficiency of your office space.
  • Integrating your occupancy data into a desk booking system enables you to efficiently implement hot-desking/ hoteling, which can help utilize space better under hybrid working.

Optimizing your office space utilization is a necessity in the modern corporate environment. A proactive approach to creating safe, comfortable, people-centric spaces is key to building happy working environments, reducing costs, and reducing your real estate’s carbon footprint. 

If you would like to know more about optimizing your office space utilization, book a demo with one of our office space efficiency experts to see how True Occupancy can help your business drive efficiencies.

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