All Posts

The Most Important Metric in Corporate Real Estate is Outdated and Inaccurate

Share:

Corporate real estate is regularly measured by the key metric: square feet per person. The average square footage per U.S. office worker has been on a steady decline as real estate costs rise and open offices are replacing private offices and cubicles. In 2010, companies averaged 225 square feet per employee. By 2017, that average was 151 sq ft. Numbers for collaborative workstations are even smaller, as little as 60 to 80 square feet per person.

But what if the single metric that has defined an industry doesn’t actually measure how efficiently space is used? 

The modern office employee has dynamic working trends that demand an evolving environment.

Square foot per employee is routinely calculated with a simple equation: the usable square feet of space a company leases or owns divided by the number of employees assigned to each respective space, X square feet divided by Y employees. The company assigns certain employees to the buildings, floors, or areas where their teams work. Traditionally, the more senior an employee, the more square feet they’re designated. As a concept, this approach seems to make sense. 

The problem is, the modern workforce works differently.

Employees from the same teams are telecommuting, working remotely, collaborating across departments, etc. Many employees don’t come into the office every day, if they come into the office at all. Some employees are on their feet, spending their days in and out of various buildings connecting with teams across the organization. Others are visiting clients and tracking down sales prospects in the field. And none of it is entirely predictable. The modern office employee has dynamic working trends that demand an evolving environment.

Inconsistent attendance and changing work patterns destroy the old method of calculating square feet per employee.

So what happens to X square feet divided by Y employees? The whole equation breaks down.

Inconsistent attendance and changing work patterns destroy the old method of calculating square feet per employee. An example from one of our Fortune 1000 clients illustrates why. They operate nearly 288,440 sq ft of real estate and employ 1800 people. Dividing 1800 into 288,440 comes out to 160 sq ft of space for each employee. Then, they installed Density in order to measure the actual square feet utilized by their employees. Using Density’s real-time people count data, they found out that the average square foot per employee was actually 603. That’s a huge difference. Only during brief peak times when the office was full of people, did the average square foot per employee drop to 310. Even then, the number was still 100% higher than their initial build out. 

Density's Space Allocation Dashboard for Customers

A separate company we measure wanted to figure out how space was allocated across different teams. In this instance, the square feet metrics told an even more dramatic story. The teams were predominantly distributed by different floors ranging from 32,523 sq ft to 43,822 sq ft. What we found was that this company's sales team was inadvertently allocating 1056 sq ft per employee while the engineering team was allotted 391 sq ft per. These numbers may end up hindering workplace productivity. An engineer testing product quality may need to take up more than the assigned sq ft in order to adequately fulfill her role at the company. However, a salesperson may regularly take meetings in phone booths, conference rooms, or even offsite locations like restaurants or other offices. This type of role may demand less physical space in the same office footprint. 

Square Feet Per Person Metrics Separated by Team in Density's Dashboard

That’s a fact of the matter: some jobs demands more space, while others require less. Now, this doesn’t mean that they need to chop their real estate investments down and shove employees into smaller and smaller cubicles. It does mean that using the utilization data, they will be able to make more informed choices in designing and building out the space as they see fit based on actual needs.