Tom McGarity
Bigger isn't always better — at least that's what we are seeing when it comes to overall square footage in office space these days. When we look at trends and numbers, for the most part, the days of big corner offices, large workstations and considerable paper file storage space are quickly going by the wayside.
Here in the Midwest, we have witnessed a significant compression of office space in the last 10 to 15 years. Where companies once allocated 250 square feet of space per employee, some have now dropped below 175 square feet per employee.
For example, it is not unusual for companies to lease or buy commercial buildings where they can house 500 employees in 100,000 square feet of space. In years past, they easily would have needed 125,000 square feet or more. Some larger users located in Columbus recently shared they have had a 20 percent reduction in work surface per employee since 2000. So, why the compression of space?
There seem to be a number of factors. First, not surprisingly, the issue of economics. Less space means less of everything: furniture, carpeting, storage and areas that require conditioning. Of course, putting more employees in less space raises other concerns like necessary upgrades to lighting and air conditioning systems and greater parking demands. However, money isn't the only consideration.
Those who study workplace trends say business owners are doing their best to be forward thinking, creating new ways to work more efficiently and attract a younger and more-cutting edge talent pool while keeping an eye on the budget.
The computer age and a move to a “call center” mentality has greatly affected workplace setups. As companies hire younger employees, they are finding this new generation is familiar with technology that allows them to work almost anywhere. They are not strangers to laptops, iPads and smartphones that allow them to work and access needed resources from virtually anywhere — a small table at a coffee shop or even their car. An office with four walls and a conference table is not necessarily a necessity any longer.
Add to that the trend in business to work as teams. That means the walls are literally coming down, making way for large open areas where team members can communicate about their work and collaborate on projects. This kind of ethos eliminates the need for “sacred space” and, instead, opens the door to bring employees together in one environment, making for a more cohesive workplace.
As the trend to “more people-less space” continues, it is important to track vacancy rates. Statistics show that when it comes to commercial office space, vacancy rates have climbed. In the Columbus region, our vacancy rate stands at about 20 percent. This trend is not only regional, but becoming more widespread. For this reason, the compression of office space should not be overlooked when analyzing vacancies and the cause for them.
Of course, there will always be an interest in new office space. History shows people like to be associated with new and exciting areas like we have here in the Easton development, an upscale office and retail establishment located in northeast Columbus. Amenities still have a lot to do with what people buy and lease when it comes to commercial office space.
As we look toward the future, compression of office space must be consistently reviewed and evaluated in how it affects overall vacancy. As large tenants look to give up major square footage, going to smaller buildings with bigger footprints, the challenge for those of us in commercial real estate will be to provide the best alternatives to an ever-changing market.