Office Market Monitor | 2022 8 Prior to the pandemic, the property industry – owner and occupier alike – used a ‘Floor Space Ratio (FSR) calculation’ to determine how much space a tenant required to lease. Over the years, as fitouts became more efficient and ‘hot desking’ became more commonly used, the average FSR reduced from roughly 20 square metres per employee, at the turn of the century, to around 14 square metres per person just prior to the pandemic. An FSR however, worked on the assumption that employees, mostly worked from the office. In a world where many employees are working two or three days from home, calculating how much space is required has become exceptionally difficult for all occupiers – be they small or large. Agents around the country are reporting that while demand for office space is holding up reasonably well, negotiating leases is noticeably slower and more difficult, as occupiers hesitate over how much space they need. And it is easy to understand the hesitation. When employees do come into the office, nearly all expect a desk to work at. A pattern has also emerged of Tuesday, Wednesday and Thursday being the most popular days that employees go into work, and Mondays and Fridays are noticeably quieter. This leaves decision makers in a quandary - take enough space to accommodate all their employees on the busy days and they risk wasting money on empty office space on Monday and Friday. Take too little space, however, and they risk turning employees off coming into the office if they think they won’t be able to get a desk. Ultimately, most occupiers will choose the option that best supports revenue generation and that future proofs their business. People costs are almost always far higher than rental costs, so keeping employees happy and engaged through the right property decision can save money via less people turnover. On the flip side, there will be some occupiers that are eyeing off more difficult trading conditions in 2023 and potentially also 2024 and will be reluctant to spend more money than they must on office space, although these occupiers are likely to be the minority. Owners of space need to be patient during negotiations and support the process as much as possible by providing flexibility solutions or options. 2. Tenant space requirements in a WFH world
RkJQdWJsaXNoZXIy MTI3ODI1