Underused commercial space – the silent financial drainer
Real estate is one of the biggest costs for businesses and yet many organisations don’t have visibility or awareness about how the space is being used, or in many cases, unused. According to 2017 research conducted by Memoori Research AB, most offices worldwide are underused by as much as half of their capacity on any given day. Without even realising it, large companies are potentially overpaying millions of dollars each year for underused space. RICK DURNFORD reports.
Space underuse is a modern challenge driven by changing work styles and the rise of the remote workforce. The digital evolution has changed the way we work and brought a shift in the way employees are using physical office spaces. Working remotely, mobile technologies and shifting business needs means that there are desks, meeting rooms and other collaborative spaces remaining untouched.
The impact of unused space
Beyond the cost of the real estate itself, there are various additional expenses incurred on energy, operation and house-keeping. These expenses often go unnoticed, as traditionally building managers have found it difficult to track specific details around how a space is used.
To put the cost implications of inefficient space management in perspective, Jones Lang Lasalle’s ‘3-30-300’ rule of thumb states that organisations typically spend approximately three dollars per square foot per year for utilities, $30 for rent, and $300 for payroll. A good cost-saving strategy often focuses on taking measures that improve space efficiency and employee productivity. The challenge is that organisations often lack the necessary insights to take meaningful action to address it.
Another impact of underused space and one not commonly thought about is how it affects employees and productivity. Underused spaces can create pockets of congestion, excessive noise and temperature discomfort in other places. It’s vital for organisations to create well-organised workplaces so that they can get the best out of their people every single day.
In addition to the impact on current employees, empty space can also impact an organisation’s ability to attract staff. Imagine a prospective employee coming in for an interview and seeing areas of empty desks and unused space, it can create a negative impression and raises questions about the profitability or success of the business.
IoT solutions to drive greater insights
It is critical then for building managers to have the tools to more accurately assess how their facility is being used. Being able to better measure usage patterns and performance of a space can help make more cost and energy-efficient decisions that are also occupant-friendly.
Traditionally building managers needed to walk around their premises, noting how spaces like meeting rooms, conference rooms, cabins, cubicles, and other areas were being utilised. This is a time consuming and expensive task that will provide some insights, but overall will not provide a deep understanding of how space is being used.
By contrast, IoT-driven sensor technology placed in an office can pull occupancy data to provide a detailed and accurate representation of the level of activity in an area. This data can be used to create insights and reveal readings to help building managers and owners take meaningful action.
Using this data, they can make more informed space decisions. Whether it’s leasing or building a new space, repurposing an existing venue, or reducing available space by renting or selling it are some of the decisions that often result in significant financial savings.
Using data to make informed decisions
Taking the physical guesswork out of the process and providing tangible data allows for meaningful actions to be taken with work space. It puts the power back in the company’s hands to ensure they are running as efficiently and proactively as possible.
Using IoT technology will help organisations optimise the potential of their corporate real estate and truly transform their buildings into more productive, enjoyable and engaging workplaces.
Rick Durnford is general manager of Connected Services at Honeywell.
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