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3 reasons why office space management can reduce costs

Jul 18, 2022

Introduction

In all organisations, both large and small, and across all industries, rent or office space contributes to a large portion of the overall monthly expenses. The ability to measure the utilization of the space accurately can assist with cost containment and help with decision making before costly exercises are undertaken. Questions such as, is this space needed, are the boardrooms the correct size, do we need more of them, or need less.  What about hotdesking, would it be a practical and viable solution within our environment? All these questions can be answered by digging deeper into the data that already exist within your organization, but until now items such as frequency, occupancy and utilization rates were very difficult or labour intensive to accuracy measure.

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What is frequency?

The Space Management Group (SMG) , defines frequency as the “measurement of the proportion of time that space is used compared to its availability”. Space availability is simply the length of time the space in question is available for use during the selected time frame.

For example, if a boardroom is typically used on weekdays from 07:30am until 04:30pm, the space availability is 45 hours per week. To find out its availability you monitor how many times this space is then used during these 45 hours. This is typically a manual process with a physical check being done once per hour during the space availability time frame. For the purposes of this example this means that someone needs to go to the room, once per hour, and make a note whether the room was being used or not and manually record that information. If once doing that you see the room is used for 30 hours of the available 45 you have the information to assess how many times the space was used.

Once you have the space availability number and the number of times the space was used, you have both pieces of information that are required to calculate the frequency rate. You need to divide the number of times the space was used by the space availability to get the frequency rate.

You now know that during the surveyed period the boardroom was used 66.67% of the time and therefore was empty, 33.33% of the time.

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What is occupancy?

The SMG defines occupancy as the “measure of how full the space is compared to its capacity”.

In order to calculate this metric, we specifically need to measure how well a room or space is used and to do so require three important pieces of information. The space capacity, to total number of people occupying the space as wells as the number of hours that the space was in use.

The typical method to use when calculating the capacity of a room or space is to use the “actual capacity”. This being the total number of people that can use the room or space at a given time. If we go back to our previous boardroom example, the actual capacity will be the number of people that can comfortably sit around the boardroom table, so let’s say that it has 12 chairs, then the actual capacity is 12.

The next step will be to assess how many people occupy the space when it is in use. As with the frequency rate, this requires the room to be manually checked over a set amount of time to calculate the utilisation rate of this room. It is important to note that it is critical for the frequency and occupancy rates to be collected at the same time, for the same number of hours. Then continuing with this example, as you check the room every hour during the 45 hour working week  you will also need to record how many people are in the room when it is being used.

Once you have completed the 45 hour work week, add up how many people are occupying the space whilst it is in use to get your total number of people occupying the space  and then divide this by the space capacity multiplied by the number of hours the space was in use to get your occupancy.

You now know, that on average when the room was used it was 74.17% occupied and therefore on average 26.83% of the capacity wasn’t used when the room was in use.

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What is utilisation?

“The utilisation rate is a function of a frequency rate and an occupancy rate”, as defined by SMG.

This is the finally part, and a very simple one providing you have already calculated both your frequency and occupancy rates.

Continuing with our boardroom used in the previous two examples, in order to calculate the utilising rate you need to multiple your frequency rate with your occupancy rate to get your spaces utilisation rate.

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Summary

By following all the steps above you are now able to calculate the frequency, occupancy or utilization rate for any room. Once you have that kind of information, it can be used in many ways to reduce the overall office rental or utility costs, such as;

  • reducing or reorganise existing space to minimise space rental
  • reducing other associated costs office cost such as air-conditioning or lighting based on how or when the space is used
  • reducing your cost per employee cost through improved seating ratios. Moving from a 1 to 1 seat ratio (a seat for everyone) to 1.3 to 1 (people to desks) represents a potential 30% savings in occupancy costs by either reducing the overall footprint or accommodating growth without acquiring more space.)
  • Subletting excess space
  • Reducing energy costs by “mothballing“ vacant space

This is where we can help

Conducting a space utilization study for your office space is necessary if you plan on optimizing your space and expenses. This will allow you to take advantage of underused space and reallocate it into shareable workspaces that mobile workers can use. Whilst this ultimately saves you costs on rental and energy; it also offers you the opportunity to hire more employees without having to expand your space.

The key to a successful space utilization study is accurate data. Through the use of technology, from Cataly5t, your organization will have access to transparent, accurate, and sustainable workspace data, helping key stakeholders make informed decisions that reduce costs, maximize productivity and space usage.

About Us

Cataly5t was founded on the principle of driving business forward through smart technology.

Our goal is to help our clients create workspaces that encourage employee engagement and productivity, while reducing real-estate costs and optimizing management of facilities. We do this by using cutting edge technology that seamlessly integrates into their workspace and system infrastructure.

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Catalyst
/ˈkat(ə)lɪst/

A substance that increases the rate of a chemical reaction.

Why the 5? –The number 5 is the number of humanity. Humans have 5 fingers on each hand, 5 toes on each foot and 5 senses. It’s never just about the technology, people are core to everything, people make technology work. And at Cataly5t, people are core to everything we do.

www.cataly5t.co.za | +27 86 199 9190

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