Post written by: Greg Wetherwax
With advancements in technology and uncertainty surrounding the economy and workforce, there are significant changes to the way businesses are looking to occupy and utilize office space. According to Andrew Farrell from the National Trust Community Investment Corporation (a national syndicator of federal and state historic, solar and New Markets tax credits), there are emerging trends in commercial office space locations and design. These trends include:
- Using less space per employee resulting in reduced office space needed. With continuing economic uncertainty, many businesses are re-evaluating their real estate needs. Office space expenses are the second largest expense, next to salaries, for most companies. The need to lessen this expense has led tenants to look for flexibility with their office space with an overall goal of reducing the amount of space per employee.
- Dramatic changes in office space design and layout. Creating smaller workstations with lower wall separation is a growing trend. Thanks to improving technology and computers, more and more companies are becoming “paperless,” so the need for a larger individual workspace is not necessary. The lowering of the cubical wall is designed to stimulate employee interaction and collaboration. Instead of holding meetings in individual cubicles or meeting rooms, companies are using the open office space that is left from reduced individual work stations to create informal meeting areas. These informal meeting areas become valuable as technological advances in communication devices and internet connectivity allow employees to work away from their actual desk. In addition, working from home further reduces the cubicle and office space needed.
- Landlord and tenants are more enlightened and knowledgeable about sustainability and the bottom line. Building owners and tenants are becoming more aware of the costs related to office space occupancy. Those responsible for paying utility costs are learning that the characteristics of the building will have a direct affect on these utility costs. Access to sunlight can lower lighting costs, access to fresh air can reduce cooling costs, and insulating components of the building can reduce heating costs. It has been shown that company morale, absenteeism and health-related costs can be reduced by providing access to natural light and air.
Since the recession in 2008, many companies were forced to re-evaluate their real estate needs and reduce space requirements. The emerging trend in office space design of smaller, open workstations with more collaborative shared space allows formally obsolete buildings to be redesigned into contemporary office space. In addition, the inherent positive environmental attributes of repurposed older buildings are appealing to both tenants and landlords who appreciate the potential financial and health benefits of these redesigned spaces.
Landlords should keep these trends in mind as they look to attract tenants and keep occupancy rates high. Further, insurance agents and underwriters should also be aware of this emerging trend in office space as it may affect the square footage used in the underwriting process.