Ottawa Blog

The Shrinking Office

April 13th, 2012

Flipping furniture results in smaller real estate footprint

This article was orginally published in the Ottawa Business Journal on April 9th, 2012.

There is a new trend of corporate downsizing afoot, but it’s not what you think.

As our workplaces evolve to accommodate the needs of a multi-generational workforce that encompasses vastly differing views on the best use of space and how they prefer to work, one thing is for certain: their offices and workstations are getting smaller.

The primary driver for change in office space has always been the evolution of the tools we use to write and communicate with one another. What began with pens and inkwells gave way to typewriters, which in turn evolved into the desktop computer. Now much of the bulk of that computer is gradually being replaced by slim monitors, mini towers and portable laptops. Combine these advances with networked printers and cloud computing – even tried-and-true paper is giving way to electronic storage media.

But if the technology we use to do our jobs has changed, why are we still at the same desk?

Most of the clients we visit are still sitting at large desks and workstations built to accommodate the technology of the past. Yet a trip to any office furniture showroom in town shows office standards are shrinking as the way people work continues to change. Workstations are generally smaller with lower panel heights, allowing for more collaboration and for the penetration of natural light. Enclosed rooms more frequently incorporate sliding doors and employ furniture that is reconfigurable to allow use as a private office or a small meeting room.
No longer should 200 square feet per person be used as an industry benchmark; for most companies, we’re seeing the more appropriate metric is closer to 150 to 160 square feet per person, a reduction of 20 to 25 per cent.

The challenge is that the pace of technological innovation has outpaced the cycle of office space replacement and most firms aren’t prepared to change out their entire furniture inventory every five or 10 years as their leases expire.

The problem we see is most firms don’t look at the cost of furniture in the context of what might be saved from a reduced real estate footprint because, for the most part, the people trying to sell you furniture just don’t do the right math.

From my experience, a company with 50 people paying an average of $35 per square foot per year in rent, with furniture that’s more than 10 years old, would normally be occupying a space of about 10,000 square feet. However, if the firm were to relocate to a smaller, more efficient space of 8,000 square feet it would save upwards of $70,000 per year.

Over a five-year lease, that equates to $350,000 in reduced rent. Depending on the organization, my experience has been that the cost of making the change (i.e. buying furniture, constructing new space, etc.) is usually paid back over two to three years, which makes for a very sound investment.

Commercial space isn’t getting any cheaper and the pace of innovation isn’t slowing down. At the rate we’re going, the office of the future is going to be very different from the workspace we occupy today. But one thing is for sure: it will definitely be smaller.

Darren Fleming
Managing Principal, Cresa Ottawa
Send Darren Fleming an email.

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Tags: commercial real estate, Cresa, Cresa Ottawa, furniture, office space, ottawa, Tenant Representation
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