8, 2007 in the COLORADO REAL ESTATE
Office Lease Space Efficiency
by Warren Kieding
"SPATIAL EFFICIENCY " IS ONE OF THOSE TERMS that always seem to engender at least some confusion among commercial real estate professionals. Like so many other industry terms, it can be puzzling, open to interpretation, and unclear. That's never a good thing for tenants who should be in the know. Office space, after all, is not cheap by any standard.
On the one hand, the golden rule is "less is more." The less square footage necessary to successfully support a tenant's overall business objectives, the better.
On the other hand, the quality of the space is crucial in providing a comfortable and productive working environment.
Confusing? It can be. The first is about leasing the absolute minimum space required. The latter is about "right sizing" the space to provide a productive and energized office operation.
Three factors affect either minimizing the lease space required and/or maximizing the operational efficiency of the lease space:
The rentable lease square footage factor
The building floor plate size and configuration
The quantity and quality of the office space
The Rentable Square Footage Factor
Rentable square footage factors generally apply only those multi-tenant office buildings with facilities shared by the various tenants. The rentable factor is the tenant's pro-rata share of the building's areas, like building and elevator lobbies, public corridors, restrooms, and electrical and telephone rooms.
The rent the tenant pays is the rentable square footage the tenant actually occupies times the percentage of the building which the landlord determines as the building common area. For full-floor tenants, the add-on building percentage is typically six to eight percent. For partial-floor tenants, the add-on rentable factor typically ranges between 15 to 18 percent above the usable square footage (the hard-walled demised area of the lease space). The lower the add-on rentable factor, the lower the square footage the tenant pays for. Other factors which can determine overall efficiency are shared common area amenities which can save operational space, such as building conference facilities, vending / lunch rooms, and shower and exercise facilities directly beneficial to tenant operations.
The Building Floor Plate Size and Configuration
Some buildings have a reputation of being "inefficient" because floor plans have odd angles, curves, cut-outs, or atriums. More appropriately, each building has a unique floor plate that is best suited for a particular type of work environment. Buildings built in the 1960's were planned for perimeter offices and small interior workspaces. Buildings constructed later have typically been designed for more flexibility to accommodate perimeter offices and workstations.
Many of the older building floor plates are completely capable of supporting open workstation environments, but are limited to the sizes of cubicles they can accommodate because of bay depth and column spacing. Office space efficiency begins with a full understanding of what the tenant's specific needs are, and how compatible those requirements are to any given building.
For this reason alone, many newer suburban office buildings have increased exterior window-wall-to-building-core dimensions to cater to those tenants with significantly more furniture systems than private offices. Well-designed contemporary office buildings have a dimensionally diversified floor plate to better accommodate both private offices and open work space users.
The Quantity and Quality of the Office Space
The quality of office space does not have to be ostentatious. It's about good design as it relates to what needs to be accomplished in the office, and how effectively the people who work there can achieve that. Matching the right teams and individuals with the right type of working environment usually increases morale, as well. It is vital to balance correct temperatures, views, natural light, and other human needs against the total square footage.
Minimizing square footage is only part of the challenge of achieving spatial efficiency. You can squeeze only so many people into any given space before productivity begins to suffer. In that regard, efficiency could become counter-productive. And remember, the total square footage might be a false bargain if the quality of the space and the overall office environment is sacrificed.