How would you complete the sentence?
- The office locations where we’ve maximized the space through an ideal balance of occupancy vs vacancy to support our current and projected headcount
- The buildings that use alternative workplace design principles of hoteling and ‘hot desking’ making them 100% occupied, 100% of the time
- The facilities that are ranked highest along our financial performance benchmark
A good answer could be “all of the above” but, the best answer is, “the locations we no longer own/lease because we eliminated the need for them.”
The following are three featured practices and technologies you could implement to make better use of essential facilities and free up capacity in others that give you the option to consolidate multiple locations, dispose non-core assets through sales or exercise options not to renew on those facilities that are no longer needed.
There are a couple of approaches to optimize space occupancy and vacancy utilized to the point where you have “swing space” for growth and the right amount of space for your current headcount. The first is the no tech, labor intensive ‘walk the floor’ technique with drawings in hand to determine who is sitting where and what spaces are available. Not a very effective approach but, you’d be amazed how many CRE professionals still use this practice…and you know who you are.
The second is to access space management systems (CAFM capabilities of ARCHIBUS, Centerstone, Planon, TRIRIGA, etc.) that automatically calculate occupancy/vacancy in real time based on moves/adds/changes and link CAD drawings with the staff listing database.
By adjusting your acceptable level of utilization you can determine which spaces you can consolidate into facilities that have more attractive rent rates or owned facilities that are more efficient to operate and either opt not to renew the lease or sell the surplus asset.
Hoteling/”Hot Desking”/Conference Room Booking
Another very effective way to achieve a higher rate of utilization and minimize the overall need for space is to employ tenants of alternative workplace strategies of hoteling or “hot desking” where employees are assigned temporary spaces to be used only when needed or having smaller cubes/offices and more meeting/conference space.
Again, technology can play a vital role to manage room reservations. One system by Agilquest is among the more sophisticated that interfaces the room/office inventory and a company’s email and calendar functions. By utilizing space on as needed basis a company can dramatically eliminate its overall need for space and reduce its portfolio footprint.
The final approach highlighted in this post is to evaluate the overall financial performance of facilities within your portfolio and assess whether or not they meet, exceed and fall below acceptable occupancy cost benchmarks.
Once you aggregate your overall operational costs, leasing and ownership expenses you could utilize information systems to develop an optimum Cost/SF metrics and readily identify those facilities in your portfolio that could be subject to cost reduction, consolidation, or disposition based on a financial performance benchmark.
Dashboarding and reporting tools found within Integrated Workplace Management Systems (IWMS) systems, your own ERP or an integration of systems using cloud technologies can give you the ability to categorize the financial performance of facilities of deemed “essential” and remain in the portfolio or “non essential” and be removed.
These are just a few approaches you could take to justify the reduction in your overall occupancy costs of office, manufacturing, distribution/warehouse, and retail locations.
The most effective way is to identify leased or owned properties that can be eliminated entirely and become among the “most cost effective facilities in your portfolio.”