CREJ - Office Properties Quarterly

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April 2015 — Office Properties Quarterly — Page 17
Market Drivers
I n today’s rapidly changing
office climate, it is often dif-
ficult to determine howmuch
space a tenant will need when
they are relocating.With the rise
of telework opportunities and alternate
office arrangements, it is not always as
cut-and-dried as a specific square foot-
age per person.This evolution presents
a unique challenge for commercial real
estate brokers and tenants alike, and
they must work closely to determine
the most effective course of action.
Denver Market Space
Utilization Study
Through phone surveys of Denver
office tenants and U.S. General Ser-
vices Administration data, the current
prevailing standard average workspace
is between 175 and 200 sf per person,
with the smallest reported space at 64
sf.This is down from recent years. In
2010 the average size per person was
between 225 and 250 sf. On the current
trajectory, this average could be down
to as low as 150 sf in a few years.
Local survey respondents typically
fall within the nationwide norms,
with law firms reporting the highest
average space per sf per employee,
followed by engineers, financial insti-
tutions and architects. Many Denver
companies are embracing telework
opportunities, with 60 percent of the
study group reporting that a portion of
their employees work from home on a
regular basis.While many employees
have the opportunity to telework full
time, they often choose to come to the
office for a portion of the day and still
require desk space.
Unsurprisingly, the industries in the
Denver market that tend to telework
the least are those requiring more
space per sf per employee.These
organizations often need face-to-face
time with clients, have shared storage
space and require regular contact with
coworkers.
Industry shift. Certain industries stand
out as most likely to make a shift in
office space use.Technology compa-
nies were among the first to embrace
densification of their space, said Joe
Sigdestad, principal at AvisonYoung.
Tech companies have the ability to
telework and use established tele-
work centers, and shared office space
is very common. Even traditionally
space-hungry users are making moves
to decrease their space use. “Efficient
space utilization has even crossed into
the legal field,” said Sigdestad. “Histori-
cally, law firms have had the highest
utilization ratio per attorney of over
1,000 rentable square feet per attorney.
Today the goal is much closer to 750
rentable square feet per attorney.”
Other industries that have a reputa-
tion for being old-fashioned are slowly
making a shift as well.The govern-
ment, for example, mostly uses the pri-
vate office setup for upper level associ-
ates, however, steps are being made
to reduce their footprint and increase
efficiency. Manufacturing companies
are also finding they can operate in
much less space than before.
Key motivators for tenants. As rents
increase in Denver, brokers see clients
reevaluate their space needs more and
more. Companies are required to do
more with less space to lower over-
head costs and increase efficiency. Not
only do open-office concepts save rent
money, but also they reduce utility and
maintenance costs.
Aside from financials, companies are
driven to remain an attractive place to
work. Retaining top employees is criti-
cal to a company’s success, and a flex-
ible work environment and telework-
ing is very attractive.
Additionally, open
space plans with
natural light encour-
age collaboration,
and allowing every
employee to enjoy
views is better than
a select few.
Strategies for the
effective broker. The
evolving concept of
office space utiliza-
tion presents certain
challenges a ten-
ant rep broker must face early in the
process to determine the size needs of
their clients. In initial conversations, it
is best to keep the conversation simple
to determine howmuch space they
are currently using per employee. One
suggestion is to find the gross sf of the
entire office and divide it by seats, said
David Hurtado, AvisonYoung principal
project manager. By evaluating this
baseline square footage, you have a
solid starting point for your future con-
versations. Next, it is key to determine
how the tenant envisions their space
and to involve a project manager and
architect for best results.
There are also ways to aid in the
evolving space trend as a landlord rep.
It is important to educate the landlord
on the changing face of office space
and make the advantages of leasing
to open-plan users clear. A building
owner who embraces densification
and prepares their building for these
users will easily set himself apart from
the competition. Being viewed as a
progressive owner will speak volumes
for the property and attract tenants
who desire better amenities.
There are many ways brokers can
use the shifting office space trend to
their advantage.
“A big area of opportunity is to
assist companies ‘right-size’ their
existing space by becoming more
efficient and effective at using it,”
said Justin Rayburn, principal at Avi-
son Young. “Right-sizing also allows
us to help our clients put more
money to the bottom line.”
By showing tenants the many ways
brokers can assist, in addition to
negotiating a lease, a broker’s value is
evident and the tenant is more likely
to come back again and again for
various real estate needs.s
Sarah Carver
Research manager,
Avison Young,
Denver
‘Historically, law firms have
had the highest utilization
ratio per attorney of over
1,000 rentable square feet per
attorney. Today the goal is
much closer to 750 rentable
square feet per attorney.’
– Joe Sigdestad, Avison Young