With hybrid work, office space demand has changed significantly in the UK. Many organisations are now discovering that their offices were originally designed to accommodate daily attendance, yet on any given day, they are only 40-60% occupied. The first instinct is to reduce office space and find a smaller office. This makes perfect sense, but there are also smarter solutions that are not immediately considered.
The Downsizing Dilemma
Downsizing to a smaller office is not a trivial decision and requires significant costs beyond a reduced rent bill. For example, dilapidations on existing leases can vary from £50 to 150 per square foot depending on lease length and condition of property. Similarly, the commercial fit out costs of a new office can vary from £65 to 140 per square foot depending on standard commercial space specifications. In addition to this, there are moving costs, IT relocation, and business disruption costs.
More insidiously, downsizing to a smaller office commits an organisation to a future pattern of work that may not necessarily hold true in the future. Attendance data from 2023 to 2026 reveals significant variation in attendance patterns across various sectors and even teams within organisations. Moreover, attendance patterns are constantly evolving as organisations continually refine their hybrid work policies and as economic conditions fluctuate.
Workplace consultancies’ research reveals that organisations typically underestimate space demand when downsizing to a smaller office. Meeting rooms are a common area where space demand is underestimated in a hybrid work environment. Meeting rooms are actually increasing in demand as organisations begin to schedule in-office work and hybrid work together. Downsizing to a smaller office based on desk space demand alone can lead to a lack of meeting rooms, which is a common problem organisations are discovering.
Reimagining Existing Space
Instead of reducing square footage, organisations are thinking differently about utilisation of existing space. This strategy is cost-effective and can be implemented for a small fraction of the cost of relocations.
Activity-based working is the biggest change in space utilisation strategies. Rather than allocating a desk to a worker who does not use it effectively, organisations are now allocating space according to activity. This means focused working areas, collaborative working areas, meeting rooms, and social areas are all sized according to real demand.
Studies of office utilisation have consistently shown that traditional office strategies mean that 60-70% of office desks are not occupied on a typical day. An activity-based office utilises the same number of workers in 40-50% less desk space because of more effective allocation of space.
Neighbourhoods/zones are another way of thinking about office space. This is particularly relevant to larger office spaces. Rather than dividing office space into departmental areas, organisations are dividing their office space into neighbourhoods, which are then a combination of workspace, meeting rooms, and amenities.
Flex ratios are a way of calculating the number of desks to workers. Traditional offices operate at a 1:1 ratio. New hybrid offices are now working at a ratio of between 0.6:1 and 0.8:1 depending upon attendance patterns. Offices that have data showing a consistent 50% attendance are now comfortable working at a 0.7:1 ratio (seven desks to ten workers), which is a significant amount of space that could be used for other purposes.
Collaboration Space
There is a genuine business need for collaboration space in hybrid working environments. When teams meet in the office, they do so to collaborate. They will use collaboration space designed for collaboration. Excess space currently used for individual workstations may be converted into collaboration space with associated design and furnishing to meet collaboration needs. Collaboration is fast becoming the reason for people to commute to work.
Wellbeing spaces have progressed from being ‘nice to have’ luxuries to becoming essential components of the office. This includes quiet rooms, meditation rooms, fitness rooms, and relaxation rooms, promoting employee wellbeing while differentiating the office from home working environments. Studies have proven that such facilities are likely to increase employee turnout to the office voluntarily.
Social and hospitality spaces help to change the perception of the office from being just a place of work to becoming a social platform for employees. This has been achieved through enhanced breakout rooms, kitchens, and meeting rooms. This has enabled many companies to witness enhanced employee satisfaction with hybrid working.
Learning and development spaces are designed to accommodate training, workshops, and other activities aimed at employee development. This space can be designed to accommodate presentation equipment, flexible furniture, and soundproofing. This space can be used for other activities such as project rooms or meeting rooms.
Phased Space Reduction
For companies that are still uncertain about their long-term needs, phased approaches can be taken to reduce space commitment while still allowing for flexibility.
Internal densification
For companies looking to reduce their space requirements, internal densification can be done by consolidating operations to fewer floors within the original building, thus leaving floors vacant. This allows companies to have contiguous vacant space, thus allowing for easier subletting or returning to landlords.
Restructuring of leases
Many companies can use this option to reduce their costs while still staying within their original location. This can be done by having discussions with landlords regarding breaking the leases at agreed times or surrendering some of the leased space. This can be beneficial to landlords, especially if they are likely to suffer from vacant space.
Having flexible lease options on additional space is also beneficial to organisations that require additional space. Commercial landlords are now offering flex terms on secondary space, which provides organisations with access to meeting rooms or desk space on a rolling monthly commitment.
Data-Driven Decision Making
Space management requires understanding the actual usage patterns, not just making assumptions. Workplace analytics technology has become much more sophisticated, providing objective data to guide decision-making processes.
Occupancy sensors monitor the usage of desks and meeting rooms in real-time, which helps identify the usage patterns over days, weeks, and seasons. This data helps identify which space is over-utilised and which space is underutilised.
Booking system analytics offer additional data on how the space is being booked versus how the space is being utilised. For example, meeting rooms are often booked and rarely used, implying different issues than high space usage.
Employee feedback mechanisms offer additional data on the quality of space, whether the space is sufficient, and whether the space has been designed appropriately. Through regular employee feedback and surveys, the organisation can determine whether the space changes meet the requirements or need further adjustments.
The Strategic Alternative
While the option to downsize has the advantage of lower rents, it involves significant costs, disruption, and risks. The alternative strategies of rethinking existing space, monetising space, creating strategic space, and phased reduction offer flexibility and solutions to the problem of space underutilisation.
The most sophisticated companies view space surplus not as a problem to be fixed, but as an opportunity to enhance the quality of the space and remain strategically flexible. As hybrid working styles continue to mature, the need for such flexibility will be felt more and more as the future becomes more and more unpredictable.
The office space strategy implemented today will be felt over the next few years. Instead of taking the reactive approach of downsizing based on current space usage, the more forward-thinking companies are taking the proactive approach of adopting adaptive strategies to remain flexible, yet optimise space and cost.
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Managing office space in the hybrid work environment requires balancing cost efficiency with strategic flexibility. Paradigm Interiors helps organisations rethink existing space, through office renovation – creating space that justifies the commute.