How
Much
Space
Do We
Ocean Photography/Veer
Need?
38
No company ever seems to have the right
amount of office space. Firms grow and
shrink throughout the years for many reasons; however, they must contract for space
over a set lease term of fve, 15, or even 20
years. Typically this situation results in
about 20 percent to 25 percent more space
per worker than the stated goals of space
planners. So frms with a goal of 200 square
feet per worker will likely end up closer to
250 sf per worker.
Yet, in last year's CoreNet Global survey,
corporate executives indicated they expect to
reduce the amount of space they lease in the
next fve years to less than 100 sf of dedicated
space per worker. Since the current average
rentable building area in the U.S. is about 300
sf per worker, does this mean we have three
times as much ofce space as needed?
Current Space Trends
Looking at square feet per worker on new
leases, the U.S. national average in late 2012
was 185 sf per worker, according to CoStar
May | June | 2013
lease data. Tis number refects new leases in major markets and a
fairly tight economic environment. Company executives do not want
to lease too much excess space even though they may fnd current
rental rates are attractive. Comparing utilized space by industry (see
chart) reveals consistent diferences that are refective of an industry's
compensation level and need for work space.
As of 2013, on leases close to expiration, the average space per worker
is ofen double the estimate for new
leases. Tis makes sense, since companies can't downsize until leases
expire. In sof economies we expect
a fair amount of shadow space that is
leased but not occupied. Since labor Europe
210 sf
costs matter much more than occupancy costs, most tenants are able to
China 50 sf
honor their leases until they expire,
so they pay for more space than they
actually need. Te extra space also
140 sf
Japan
provides a convenient option to
expand and hire more workers with270 sf
U.S.
out the need to move. So we expect
to observe signifcant extra space in
0
50 100 150 200 250 300
weaker economies, when rents seem
Source: World Business Council for Sustainable Development
to be bargains.
Office Space per User
Commercial Investment Real Estate