When working with an office tenant one of the first questions we ask is how much space do you need. Surprisingly, many times a client isn’t sure, or has unrealistic expectations of their size requirements. In the past office buildings were built to accommodate approximately 3 or 4 people per 1,000 square feet of rentable space. With rent being one of the highest expenses for a company, many companies have looked to place more people in the same square footage. Why is this not always feasible?… Well there are a few reasons.

First, the amount of useable square footage varies greatly between buildings, with most offices having what they call a “load factor”. A load factor is a percentage of useable square footage vs. rentable square footage. The difference comes from buildings adding the common areas as a percentage to the rentable square footage. Most office buildings have a load factor between 15% and 18%; however, some high rises can have load factors in the low 20% range and in my career I’ve seen some landlords add a load factor upwards of 30%. What this translates to is although you may be paying for every 1,000 sq. ft. of rentable square footage, your useable square footage may be substantially less.

In this post pandemic age, office users must also take into account personal space restrictions, creating less dense occupancy and the need for additional space. During the pandemic we had an office user that was looking for eighteen thousand square feet of space, with the new regulations for space between employees, they ended up with a thirty thousand square foot space. Layout of the office space may also play a factor, with more and more companies looking for smaller private offices vs. the need for large executive offices.

Even if you can create the perfect layout a landlord may not want a tenant that has a high density occupancy. Why is this, after all, if you are paying rent what does a landlord care how many people you have in your office? There are many reasons a landlord would prefer to have less people per square foot in an office, and it’s not always, and rarely is, about the landlord wanting to rent larger space. The main concern a landlord has with higher density occupancy is the infrastructure of the building.

Remember earlier when I said that most older buildings were built to accommodate 3–4 people per 1,000 sq. ft.? Well, when that building was built, it was built with an infrastructure to accommodate that density, this includes power, HVAC (Heating Ventilation Air Conditioning), parking, plumbing/waste and ingress/egress. Bear in mind that every additional person and computer puts off heat, uses more water, produces that much more waste, and in this day and age requires more parking. A landlord must take all of this into consideration as extra heat or cooling taxes existing HVAC needs putting additional stress on the machines which in turns causes higher expenses for maintenance, as well as replacements, as the life expectancy is impacted.

Utilities are typically one of the largest expenses for office owners/landlords. This includes not just power requirements, but also water and waste. A building typically only has so much power. Every additional person adds to the power needs of the building, not just in HVAC requirements but also in the use of power with additional computers, phones, P.D.A.s, etc…. In some cases the infrastructure of the building won’t even allow for a higher power use, but even if it does, it will still increase expenses for the landlord. Water use also significantly increases with every additional person, as does waste. With additional waste, a landlord will have to pay for additional pickups. Lastly is the wear and tear to the paint, walls, flooring, fixtures, etc… Additional people equate to additional use, which in turn shortens the lifespan of the fixtures and in turn creates additional expenses for a landlord.

A landlord must also take into consideration their other tenants. If your use and/or higher density takes up parking, creates larger messes in common areas, or utilizes/monopolizes common area bathrooms, the landlord may get complaints, or in some cases lose other tenants. If you’d like more information or assistance with identifying the office needs for your company please contact joe@joekillinger.co

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