By: David C. Smith, Vice President, Americas Head of Occupier Research
Trends in office space usage since the Great Recession point towards tighter layouts. Occupiers have been looking for ways to shrink the amount of square footage allocated per employee. Currently, the national average is 194 square feet (sf) per employee, which is down 8.3% from 2009. The pace was especially strong in the first four years after the economic downturn. Between 2009 and 2013, square footage per employee shrunk 5.8%, which is an average of 1.4% per year. Since 2013, the annual average rate of densification has been less than half that pace (0.6% per year).
Square footage per worker varies across markets. In some markets, it is in the mid- or high-200’s (e.g., San Mateo County and Northern New Jersey), while in others it is less than 135 square feet (sf) per employee (e.g., Seattle and Washington, DC). More expensive markets tend to have less space per employee. However, the rate of densification is actually driven more by the relationship between office supply and job growth. Markets that have created more new office supply since the recession have densified at a slower rate. At the same time, some markets with recent, strong job growth have not had the required new office space construction to meet demand for growing companies in the market.
Occupiers have been allocating less square footage per employee, but that trend is starting to slow down as businesses grapple with the right balance of personal, private, communal, and break space. Cushman & Wakefield expects that more densification will occur in the coming years, but the pace will slow down as companies supplement most private space reductions with increases in shared space. This balancing act will result in less attention on purely reducing square footage per employee and more emphasis on the effectiveness and flexibility of the office space.
Cushman & Wakefield’s proprietary workplace strategy tool—Experience per SFTM—measures and analyzes employees’ experience within the office. Data collected from clients through this tool consistently show that ensuring minimal distractions in the workplace is the top driver of employees’ ability to focus on their work. Other common drivers of employee focus include availability and access to data/information, privacy, and having the types of space needed for varied tasks. Three of these four top employee experience levers point to the need to approach densification efforts with a focus on employees’ day-to-day effectiveness and not just on cost savings. This requires a variety of space types throughout the office. Companies that have built highly functional workplaces—even while densifying their office footprint—have increased the right types of communal spaces in appropriate quantities, including any or all of the following: focus rooms for individual work, conference rooms of varying sizes and layouts, hospitality-styled meeting space for casual conversations, and areas for social breaks.
Cushman & Wakefield’s newest occupier report, Space Matters, provides detailed information about office density for over 50 markets across the United States. Read the whole report here and learn more about office space usage, the future of amenities, the state of concessions, and the challenges of parking.
David Smith is the Vice President, Americas Head of Occupier Research. He produces occupier thought leadership content for the Research Center of Excellence and directs a program of market presentations, written analysis, surveys, forecasts, and data collection that supports Global Occupier Services and the brokerage business, as well as advance the strategic plan in Americas Research.