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Employee work space not shrinking as expected, expert says

While people are becoming "unchained" from their workstations, the amount of space per employee is nowhere close to the 100 square feet that some space planners say is the average, said Norm Miller, professor at the Burnham-Moores Center for Real Estate at the University of San Diego.

Miller discussed workplace trends at the Burnham-Moores 18th annual Real Estate Conference last week. He began looking at workplace trends about five years ago and has been comparing survey responses to reality.

"If a space planner says [employees get] 100 square feet [of office space] per person, odds are it'll be more like 125 square feet or higher than that, because reality is going to get in the way," Miller said.

Two years ago, 40 percent of survey respondents stated that the space per person would shrink to less than 100 square feet within five years. After looking at data, Miller found this to be untrue.

The amount of square footage per person typically increases during a recession as companies lay off people. Also, companies may choose to downsize when leases expire, but the average office space per person is still above the 100-square-foot figure, he said.

Trends take longer than predicted and downsizing takes time, Miller said. Changes in the market are still inevitable, he said, and space per worker is headed toward 180 square feet.

During a recession there is pressure for greater productivity and cost cutting, Miller said. People are laid off and most firms don't rehire once a recession eases because they discover they don't need all of the people they had before the recession.

At the end of 2013, the average lease was allocating 180 square feet per person, which is 20 percent below the amount 10 years ago, Miller said.

Technology also is impacting space needs. Businesses are using the cloud for data storage and the Internet is faster and more reliable, allowing people to be more "unchained from their workstations," Miller said.

While digging for information, Miller would hear large numbers for the amount of space per worker from commercial real estate development association NAIOP and small numbers from CoreNet meetings — so he came up with a few theories.

One theory is that the cost to occupy a larger space isn't that high; therefore the downsizing claims are mostly rhetoric and apply to just a few firms. In the past 20 years, the real cost to occupy space as a percentage of operating expenses has been decreasing, amounting to about 3 percent of operating expenses, Miller said.

Another theory is that Americans are used to more space, making it harder to downsize. It will take time for lawyers to give up books, and for professors to give up bookcases and dedicated space, he said.

"Space planning never works out quite as planned," Miller said.

A third theory is that people don't need as much space because there isn't as much stuff as in the past, eliminating the need for file cabinets and other documents that can be stored on the cloud.

A fourth theory is that no one really knows the right amount of space needed.

Leases run three, five or 10 years and "we never have exactly the right amount of space on hand that we want," Miller said. Firms with higher turnover have a more difficult time matching space with actual needs. The higher per-square-foot number can be higher because there is an empty seat and less efficiency of space.

For example, a company with a higher-than-average churn rate has an 80 percent possibility that it may aim for 185 square feet per person and end up with 240 square feet, Miller said.

"The more you have a hierarchy of different management levels, each one with a unique type of office space, the less substitutable people are going to be between that, and I call that 'space friction,'" Miller said, adding that the space will be used less efficiently.

Miller tested the theories and occupants were asked what they really want. He found they want less noise and the ability to control interruptions; private space is one way to achieve this. They also want cleaner air, control over temperature, more collaboration space, more natural light and natural ventilation.

Productivity tends to increase in open space environments — employees work longer hours and personal time looking at Facebook and other sites is reduced.

Miller also found that expensive cities such as San Francisco and New York maintain larger work spaces; he determined that could be because those workers are probably paid more, which means more space, he said.

Lease terms did not affect the space per worker the way Miller thought they would. Instead, he found that companies leased as little as possible, and if they grow they'll renegotiate the lease.

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