Good CEO’s are always looking for ways to increase shareholder earnings. Corporate real estate expenses are usually in the top five costs incurred by a company. Therefor it is an area that is under scrutiny to investigate ways the expense can be reduced and get what CEO’s want.
Many firms are reconsidering the office layout. Gone are the lavish large offices. They are being replaced with a more dense office environment that allows businesses to have additional employees per square foot. This statratagy can reduce the cost associated with office space rental.
Many times the corporate office may consider the occupancy cost per employee in relation to their overall occupancy cost as it relates to sales revenue. When reviewing the financial expense associated with an office lease this approach makes sense.
Office Space Density Effects More Than Bottom Line
However, I have been working with businesses for years looking for office space. While it may be important to save a few thousand dollars each month in rent there are other costs. The most talented employee pool will not be impressed with an office environment that isn’t attractive and is too dense.
Today’ s workforce is aware that they are spending a minimum of forty percent of their time working for your company. The probability is that a good amount of time will be spent in the actual office.
Given this fact, your future employee’s decision to work for you instead of your competition is based upon many factors. A significant few will be the quality of the work environment, the appeal of the office building, the amenities associated with the facility and the actual location of their personal work space. So don’t just focus on the bottom line expense of the space. Also consider the impact your space planning will have upon impressions that a future employee will consider when making a decision to work for your firm.
Office Space Density Short and Long Term Effects
There is a balance between an immediate economic impact and a long term impact. Sometimes clients will only be focused on the direct effect of the rent on their bottom line. Usually these are companies that are startups or have short term business goals. When the lease is signed and a year passes some of their employees will retire, resign or be terminated. At this moment the decisions made to lease the space have a significant impact upon the quality and talent of the individual being hired. Unfortunately it is to late change the leasing decisions made twelve months earlier.
I have seen clients suffer because of a decision made focusing only on the rental expense. It is important the office space density be considered as a part of the leasing decision. It is a mistake to make it the most important element of the decision unless you have short term plans for the business or the space.
A dense office space can work if their are good amenities associated with the space and the office building itself. Having large open areas, work rooms, common areas and break rooms help. The building should offer amenities such as covered parking, impressive lobby, weight room, conference facilities and security for starters. Office space density should be considered as a way to reduce the overall impact of the rent but don’t forget to take into account other factors that could increase expenses in other areas.