Back in the Office. Now What? – June 17, 2024
Even as some larger and more established tech companies have been putting their office spaces up for sublease, up-and-coming firms have been signing leases—sometimes to sublet from tenants downsizing their spaces. That’s the positive news. The less positive news is that they haven’t quite figured out the new normal of office utilization.
So say international design practice Hassell and workplace analytics provider Density in a new study, The State of Tech Industry Workplaces. Citing data from CBRE, the study says that with average peak utilization not exceeding 34% in tech offices (a figure that’s still above the average for all industries), up to $40 million in rent costs are wasted annually on underused space.
Post-pandemic, tech tenants were in the vanguard of devising return-to-work plans, yet they’ve faced many of the same struggles with space usage as their counterparts in other office-using industries.
“Tech companies have traditionally been workplace leaders,” said Dr. Daniel Davis, head of research at Hassell. “Their amenity-rich offices nurtured billion-dollar businesses and untold envy. Then the pandemic happened. Many quickly adopted hybrid and remote work. Now, some of those offices sit underutilized while others struggle to accommodate new work patterns.”
Hassell and Density based their report on examination of a full year’s usage of tech workspaces to understand the relationships between utilization, return-to-work (RTO) policies and layout in space totaling more than 1.4 million square feet. Among the study’s key findings are the following:
- The impact of RTO policy on office utilization isn’t as significant as one would expect. Shifting from a policy that allows employees to decide when to come into the office and adopting a mandatory three-day, in-office hybrid policy only increases peak daily utilization by 17 percentage points (from 29% to 46%). This suggests that hybrid RTO policies aren’t being fully enforced or respected, according to the report.
- In the office, employees who can decide where they work spend twice as much time in meeting rooms compared to those with formal hybrid policies. The study found that 48% of in-office time for employees who get to choose is spent in meeting rooms. That compares to 29% of time in meeting rooms for employees who have a three-day per week policy and 23% for those in-office two days per week. The study quotes Phil Kirschner with McKinsey & Co. as saying, “What is it that is bringing people in? The other people.”
- Tech companies have over-optimized for open-plan offices. Every workplace studied by Hassell and Density is open plan, with only a handful of enclosed offices. These open spaces aren’t suited to the video calls and hybrid meetings that are critical to new work patterns. As a result, meeting rooms aren’t just places for groups to collaborate, but are also forced to function as quiet space for video calls and focus: 36% of the time meeting rooms are used as private offices or phone booths.
This has implications for how efficiently the overall space is used. “Meeting rooms typically see the heaviest use,” according to the report. “On the other hand, seats in open-plan areas are often vacant, with only 19% occupied at the busiest time each day. Similarly, seats in informal collaboration areas, like lounges and cafes, are only 18% occupied at the peak.”
The study offers guidelines for implementing workplace design and maximizing space utilization. Naturally, it’s a process in which office landlords can serve as partners.