Your company is growing and it is time to look into taking on office space for the first time, or you have outgrown your space and need to determine a solution for the future. There are many variables involved within how different companies in different sectors scale for growth and utilize office space, and your tenant representation broker will help you negotiate financially beneficial and flexible lease terms; e.g. tenant allowances, and expansion / contraction rights, to position your company in the best way possible to protect you from having / paying for inadequate office space.
Developing a workplace strategy that is tailored to your workforce will help create the optimal square footage for your lease, transform the work experience and enhance the creativity of your most valuable assets – your people. Most importantly, a workplace strategy will positively impact your bottom line while allowing your business to create standards and develop a strategy that meets short and long-term objectives by allowing your company to rapidly address changing business conditions and priorities.
What’s trending? Open offices with fewer private rooms or minimal “closed doors”. The idea is to drive more collaboration amongst your workforce, all while increasing density (reducing the square footage “SF” you lease) in your office space. In other words, a traditional office space in years’ past had a ratio of 1 employee : 250 square feet. Today, many organizations are pushing plans of 1 employee : 125 – 150 SF and adding “hoteling” on top of that. As a business owner, this all seems very logical with advancing technology and with the new breed of agile businesses disrupting the status quo. But truthfully, one style of office does not fit all. In fact, one style rarely fits more than the one business it was specifically designed for. Depending on your specific needs, both current and future, developing this strategy will directly impact your bottom line in several ways.
Your tenant representative should help you develop this strategy and should have specific experts in place who can be available to help you develop a specific strategy tailored to your workforce. Today, companies are utilizing workplace strategy tools to change the way they are occupying office space because there is data to show that many of today’s workplaces are far from optimal. Perhaps you read this week’s news that Ford (yes, the car company) is completely revamping its corporate offices to align its workplace design with the Apples and Googles of the world. Currently, many businesses, similar to Ford, are operating at a space utilization rate in a range of 40% – 50%, meaning that at any given time during the day up to 50% of the available desks are unoccupied. This lack of occupancy translates into wasted office rent that could be put to better use growing the business. What’s the norm? Generally speaking, we find that appropriately designed office space can increase space utilization to 80%. That metric alone has sparked a great deal of interest from many of our clients to take first and second looks at how their space is designed.
So, besides wasting money on rent for underutilized space, how else does your excess space financially impact your company? Not executing a workplace strategy that accurately sizes your space, increases your architectural expenses, the cost of improvements within your office space, your technology costs and the furniture you purchase to outfit your workforce. Simply put, if you find yourself in inadequate space, you are not just losing cash flow on the excess square footage but you more than likely have tied up or even lost capital on many expensive purchase decisions. In addition, you may have missed out on your singular opportunity to create a genuine expression of a strong and vibrant company culture that can and should be created through your workplace strategy’s reflection in your workspace.
As we all know, a sound company culture is a key contributing factor in:
- Attracting and retaining talent
- Differentiating yourself from the competition
- Boosting internal engagement which drives employees to achieve organizational goals
It is no wonder then, that executing a strategy that is tailored to your business is progressively more necessary in today’s competitive environment. Particularly for startups, a swing and a miss on office space can dramatically impact your business future. To spin this a different way, a startup has a blank slate. No “office standards” have been implemented and ingrained in a workplace culture that may be resistant to change. Do not waste this opportunity to get it right the first time.
About the Author:
Andy Effler specializes in Tenant Representation with JLL in Central Ohio. His career and reputation relies on educating and advising his clients to enter into real estate transactions (leasing or buying) that best position their company for success while minimizing their financial exposure and the impact on their bottom line. He has a passion for advocating and working with Startups / Entrepreneurs, and has spent his career in real estate building relationships and representing various companies within the startup ecosystem. He can be reached at 614.460.4402 or firstname.lastname@example.org