You Don’t Need So Much Office Space

Last Updated February 25, 2017

Many companies focus on maximizing their costs savings by finding and negotiating the best rental rate per square foot. What they seem to forget is that there is a second, at times more productive, way to reduced rental overhead.

There are two ways to control rental costs:

  • Minimize the cost per square foot
  • Minimize the amount of space leased

This, of course, seems like pretty basic and sound logic to most, but it’s often surprising how many companies overload themselves with excess space. Many companies and their tenant representatives tend to focus their searches and eventual negotiations around getting the best deal per square foot. While this can be a productive course to take, many companies don’t realize that by simply shifting their perception of the amount of space they need and adjusting how efficiently they use that space can deliver pretty significant results.

Negotiating a good deal when it comes to cost per square foot involves several factors that may or may not be within a company’s power, including the amount of leverage they have in negotiations and the quality and location of a building. Controlling costs by controlling the size of a space, however, is a tangible factor over which a company has complete control.

Efficiency as the Primary Tactic

Even in a tenant’s market and with a company that has a lot of leverage and the best representatives, there is a limit to how favorable a rate a landlord can offer. By reducing unnecessary office space by 10 or 15 percent, any company large or small can uncover some significant cost savings.
Running a comprehensive space evaluation to determine the ideal layout and use of space should be a primary tactic for companies when attempting to reduce overhead costs. Time and time again, companies are leasing more space than they need and not using the space they have efficiently. Even when downsizing is driven by business conditions, many companies will still take on more space than is necessary. Focus on the ergonomics of a space and work with your team to uncover the hidden efficiency that can make a smaller space more productive than a larger one.

The Cost-Saving Irony of a High-Quality Space

Another tactic to consider is upgrading to a higher quality building. The overall advantages of a well-built space can translate ultimately to costs savings in the long run. Tenants often find that relocating to a high-quality office building ends up saving them money, especially when done in tandem with an efficiency-driven approach. Many modern, higher quality spaces are created with ergonomic principles in mind, moreover.

So when the time comes to find an office space, by all means find the right building and drive confident negotiations to control your costs. But don’t forget the advantages of using space efficiency to really deliver a healthier bottom line.

Coy Davidson

Senior Vice President at Colliers International, based in Houston, Texas.