Space Utilization: What It Is and How to Measure It Successfully

If your business is embracing a new hybrid work model, you might be losing money.

Companies navigating the transition to a hybrid work model may soon find that unused office space, utilities, and parking are an unnecessary drain on resources. Not to mention, ineffective space management, like overbooked meeting rooms, can leave employees feeling less than happy.

If this describes you, don’t worry. When implemented properly, a hybrid model can actually reduce company costs by as much as 40%.

Tracking and reporting on space utilization is the key to efficiently managing physical spaces and significantly minimizing costs. And with the right tools, it’s easier than you think.

This article will guide you through all you need to know about space utilization, including what it is, its benefits, and how you can start measuring it today.

Quick Summary:

• Space utilization refers to the analysis and optimization of using physical space within a building or environment. It involves assessing how space is allocated and used, aiming to improve efficiency and effectiveness. This concept is particularly important in workplaces, educational institutions, and retail environments, where optimal space usage can influence productivity, safety, and the overall user experience. Effective space utilization ensures that every square foot is used to its maximum potential, often incorporating elements of design, technology, and organizational behavior to achieve this goal.
• Hybrid companies can successfully track and improve their space utilization by measuring various workplace analytics metrics like occupancy, availability, ratio, cost, density, and peak rate.

What Is Space Utilization?

Space utilization involves measuring and assessing how office users interact with meeting rooms, common areas, individual desks, and even parking spaces.

Effective space utilization is highly useful for businesses transitioning to a hybrid model, as it ensures that spaces are used in the most efficient and profitable way possible. It also helps employers gain a nuanced understanding of changing office demands while allowing them to continue providing an exceptional experience for their employees.

By tracking the usage of spaces in real time, facility managers can:

• Gain insights into high-traffic areas
• Identify underutilized zones
• See where they can optimize layouts
• Implement strategies, like need-based booking systems for desks and collaborative areas, and modify room designs to boost efficiency

Ultimately, space utilization is a vital tool for enhancing employee productivity and satisfaction, as well as cost-effectiveness in modern workspaces.

Why Is Space Utilization Important in Hybrid Businesses?

Hybrid business models have different space requirements than in-person ones. Optimizing spaces can save businesses money, create happier and more loyal employees, improve safety, and simplify operations.

Reduced office hours and flexible schedules make predicting space usage a lot more complicated, however. Failing to properly manage offices can quickly lead to unused space on one side and overcrowding on the other.

Tracking and understanding the real needs of employees based on data can help businesses save significantly. In fact, companies moving to hybrid models save as much as $11,000 per employee per year.

Instead of paying out for unused rent, utility bills, and resources, partial work-from-home systems allow facility managers to cut excess space and overhead.

Embracing better space utilization can also boost employee satisfaction and retention. Office workers prefer the flexibility of hybrid models, so offering an environment that supports this boosts employee well-being. This could look like the following:

• Providing clear policies and systems around working from home
• Supplying supportive furniture, lighting, and ventilation in physical spaces
• Introducing technology and tools to effectively integrate those working digitally

Spaces with common areas for collaborating and socializing create a more productive environment and engaged community. Better utilization can even help ensure employee safety by improving layouts for improved health and fewer accidents.

Finally, an effectively managed hybrid system can simplify business operations. Downsizing spaces and implementing automated booking systems can help businesses run more smoothly and lead to better portfolio management.

Microsoft Implements a Hybrid System

Microsoft is a shining example of a company thriving under a hybrid model. The organization introduced a clear, business-wide process that allows for 50% remote work.

It has also innovated multiple hybrid systems, including specially designed hybrid meeting rooms, an app to track employee health to reduce illness, and data monitoring to determine how many people can access the worksite and when.

How Do You Measure Space Utilization?

Collecting and analyzing data is the key to determining and improving the usage of a space.

One of the most important figures companies should calculate is their current office space utilization rate. Knowing this rate for every space in a building — from desk areas to meeting rooms to restricted spaces — gives companies a full picture of their property.

You can calculate the average space utilization rate using the following formula:

(Number of employees / Total workplace capacity) x 100

So, if there were 50 people working in an office with a capacity of 100 on a given day, the utilization rate would be 50%.

Remember, the aim is not to constantly have maxed-out spaces. You must also consider the employee experience and strike a balance between comfort and efficiency. Ideal utilization rates differ from company to company, so reviewing personalized data is key.

There are many ways to gather data, from manual systems to speaking to employees to a multitude of technologies.

Tracking technologies include the following:

• Smart badges and access control
• Wi-Fi tracking
• Internet of Things (IoT) occupancy sensors
• Heat mapping
• Computer vision from security cameras

Deloitte, for example, created intelligent buildings that use occupancy trackers to measure the busyness of areas like cafeterias.

Dropbox, on the other hand, which switched to a 90% “virtual first” company in 2021, used a company-wide survey to gather data and further improve its space utilization.

After collecting data, analysis helps you turn insights into action. While one option is to invest money and manpower into an analytics team, software tools are a more effective and affordable way to aggregate and analyze data. They also automate reports to help you make informed decisions.

Tips for Maximizing Space Utilization

If you’re looking to maximize your space utilization in your hybrid business, here’s some advice:

Switch To Hot-Desking

Join companies like Deloitte, Microsoft, and LEGO in swapping out fixed desks for flexible ones. This allows you to dramatically reduce the number of desks needed in your hybrid workspace.

LinkedIn’s flagship hybrid office changed its pre-pandemic plan to build 1080 desks for around 1,500 employees to just 569 workstations.

Here’s a complete hot desking guide.

Create Collaboration Spaces

Collaboration spaces not only breed cooperation and innovation, but they also establish a deeper sense of community among employees and boost employee well-being.

Implement Booking Systems

An automated system for booking desks, meeting rooms, and event spaces will transform the use of your space. It will also give your employees clarity and flexibility at work, boosting their satisfaction.

OfficeRnD Workplace, for example, allows you to book meeting rooms and desks from everywhere, on an interactive office map and integrates with the tools you already use.

Make Use Of Tech

Effective space management software helps you manage your office space efficiently by organizing resource booking.

Most importantly, it allos you to make more informed decisions about your space by providing you with the needed data analytics.

Space Utilization vs Other Types of Measurement

There are various additional space utilization metrics to track in order to effectively create a profitable and future-proof workspace, including space occupancy, availability, space utilization ratio, real estate costs, and peak rates.

Here, we’ll break down each of these important KPIs to help you monitor and improve your spaces.

Occupancy

Occupancy, which is similar to space utilization rate, looks at the percentage of occupied space at a particular moment compared to its maximum capacity.

To calculate the occupancy of a room, divide the room’s total capacity by the number of occupants. For an entire building, divide the number of rooms in use by the total number of rooms.

Studying occupancy over time helps you identify weekly, monthly, and long-term trends. Occupancy sensors and trackers are necessary to do this effectively.

Variables like operational hours, workforce size, and the type of space should also be considered. For instance, meeting rooms typically have lower occupancy rates than desks.

Availability

Availability or vacancy is the other side of occupancy. It is easy to calculate once you know the occupancy rate. For example, a room with 70% occupancy has 30% availability.

A high vacancy level usually indicates that you have excess or underutilized space. While it is a good thing to have some room for growth, it might be wise to downsize or reallocate extra space for alternative use.

Understanding when and how often spaces are available is critical for optimizing timetabling and resource allocation. Identifying peak availability for meeting and conference rooms, for example, allows companies to adjust scheduling or capacity accordingly.

Target Ratio

A target ratio, typically measured per building or group of spaces, establishes a balance between occupancy and availability. This ratio serves as a goal for guiding optimization efforts, spending decisions, and capacity planning.

Achieving the target ratio ensures that the space is neither underutilized nor overbooked, allowing for a smoother working experience and higher employee satisfaction.

Actual Ratio

The actual ratio compares the balance between occupancy and availability to the target ratio. This helps companies clearly measure current performance, identify areas for improvement, and adjust strategies.

Maintaining a close alignment between the target and actual ratios helps ensure effective space utilization management.

Cost per Square Foot

Cost per square foot is a metric that evaluates the financial implications of space utilization strategies, considering expenses such as rent, utilities, and maintenance. You can calculate it by dividing the facility’s rent and maintenance costs by its usable square footage.

In 2023, the average U.S. office listing rate was $37.64 per square foot, with some cities being even more costly. Optimizing spaces can be a great way to minimize costs.

Here’s how to calculate the ideal amount of office space per hybrid employee.

Space Costs per Employee

To determine how much you are spending to provide space for a single employee, divide the total costs of rent and utilities by the number of employees working on the premises.

This amount will help you identify if you are overspending. If you are, you can tighten up your expenses and boost your profits.

Employee Density

Worker density tells you the number of employees you have per square foot of space. You can calculate it by dividing the number of employees present by the space’s total square footage.

Knowing how much space one worker needs allows you to improve the workspace’s design and layout and avoid overcrowding.

Peak Rates

It’s important to track peak rates to determine the busiest hours across dedicated workstations, meeting rooms, common areas, and other spaces.

Peak utilization indicates the maximum number of people in a room or area at one time, and peak frequency measures how often spaces achieve peak occupancy.

You can track peak rates over a certain period to determine which days of the week, times of the year, and specific hours face higher demand. With this data, you can ensure you have the space you need, implement scheduling systems, or allocate more resources to accommodate or combat busy hours.

Why Measure Space Utilization at All?

Aside from the immediate cost savings, measuring space utilization helps you make informed decisions about your business, which is vital for its future health and success.

Let’s dive into this a bit; here are some of the most important benefits of tracking your space utilization.

Improve Planning

Tracking how employees use spaces helps you do more than know how much office space you need. It assists you in accurately forecasting for the future — both short and long-term.

Regular reports let you optimize usage while still allowing for growth. This also helps you adapt quickly to stay profitable and competitive.

Reviewing utilization in company strategy meetings can help inform decisions like:

• Adding additional meeting rooms
• Adapting workspace layouts
• Implementing booking strategies for shared spaces

These things, in turn, can minimize operational costs, reduce employee turnover, and boost employee health and well-being.

Get Employees for Life

Autonomy makes people 2.3 times more likely to stay with an organization.

Creating spaces that support seamless, flexible working will attract a committed and dedicated workforce. Understanding the spaces that employees value will also allow you to invest in these areas and attract and retain top talent.

Become a Greener Company

Cutting out unnecessary space, utilities, and resources will reduce your carbon footprint. In addition to saving on costs, your entire business will run more efficiently and sustainably, helping you hit the climate goals you set and comply with fast-changing regulations.

Ensure Optimal Space Utilization with OfficeRnD Workplace

If you suspect you’re not using your spaces well and want to embrace a hybrid work model without the hassle, tracking and improving your space utilization can help.

Using data to understand how you use your spaces removes the guesswork and lets you make strategic decisions for the future.

Although monitoring multiple metrics and implementing new systems can seem complicated, with the right tools, it doesn’t require a huge time or financial investment. OfficeRnD Workplace can help you track, manage, and optimize your spaces all via one platform.

From enabling meeting room and desk booking from anywhere to streamlining your hybrid policy and boosting collaboration with office resource scheduling, OfficeRnD Workplace automates many tasks for you. It was built to integrate easily with your existing tools, like Microsoft Office, Google Workspace, and Slack, so you can get started right away.

Plus, its powerful data analytics features provide you with the necessary information to make more informed business decisions.

FAQ

How Do You Measure Space Utilization?

The quickest way to measure space utilization in your office spaces and meeting rooms is to compare the number of people using a space at one time to its total capacity. Low utilization rates usually indicate underused spaces.

What Is Space Utilization Analysis?

Space utilization helps organizations measure how employees use and interact with various spaces, from workspaces to conference rooms. They can use these insights to optimize the usage of these spaces and save money.

Why is Utilizing Space Important?

Utilizing space effectively is important because it maximizes the functionality of an area, enhances productivity, and can significantly reduce costs by minimizing wasted space. Efficient space utilization also improves the aesthetics and flow of an environment, which can contribute to better morale and workplace satisfaction. Moreover, strategically organized spaces can support the environmental sustainability of a business by reducing energy use and the need for additional building resources.

What is the Definition of Space Usage?

Space usage refers to the manner and efficiency with which physical space is utilized within an environment, whether it’s an office, residential area, or public space. It encompasses the organization, design, and allocation of space to ensure that it meets the functional and operational needs of its users. Effective space usage aims to optimize every square foot for productivity, comfort, and aesthetic appeal, often considering factors such as accessibility, flexibility, and sustainability.

What is KPI for Space Utilization?

KPI (Key Performance Indicator) for space utilization measures how effectively physical space is used within a facility. Common KPIs include the percentage of occupied space, space per employee, and the cost per square foot. These indicators help organizations assess whether they are making optimal use of their office space, identify areas for improvement, and manage real estate costs efficiently. This can lead to better planning decisions, cost savings, and enhanced workplace environments tailored to employee needs and company goals.