If you are in corporate real estate, the odds are good that this is one of the top 5 questions you have been asked over the last year. In the US, everyone knows that office occupancy is very low on Mondays and Fridays. [Note: it was probably low on Mondays and Fridays before the pandemic and it just was not noticed, but that’s a discussion for another day.] Leaders love to wonder why they are paying for a space that sits largely empty 4 out of 7 days a week. This question is one that points the way to the future of real estate but unfortunately is largely unsolvable today.
Let’s start by looking at today. There are three ways to solve the problem today (all with significant risks, issues, and obstacles). First, you can take flexible space through one of the coworking/flexible providers to meet your peak day demand while not paying for space on Mondays or Fridays. The obstacle to this is that it is only really available today in very large cities and mainly in central downtown districts. Options are limited and often expensive. The risk is that you do not actually understand your employee’s long-term space requirements and end up paying more for space that you only use part of the time and have no direct control over. Secondly, you can push through workplace policies that require some portion of employees to work from the office on Mondays and Fridays and not on Tuesdays, Wednesdays, or Thursdays. The risk to this is that you anger your employees and end up with a higher turnover and lower productivity. Thirdly, you can simply pretend your lease is only for 3 days out of the week instead of 7 making you feel like you are an efficient occupier of space. The downside here is that it is no different than the current reality but it can make you feel better.
There is one constraint that makes this problem nearly impossible to solve (now or in the future). If you need self-controlled security and privacy for your space, there are almost no options available other than taking a lease that gives you and only you access to the space; which means 7 days a week control still.
Looking to the future, there are increasing options to let you live a bit in both the full control and flexible worlds. Not all spaces need full control and privacy. Certain ad hoc collaboration, heads down working, non-sensitive meetings, or overflow capacity could be handled through shared flexible space while the sensitive, private activities are supported from dedicated space. This helps to mitigate how much space is leased while augmenting with other spaces.
The problem with this model is that it has not been well-tested with large enterprise companies. The risk becomes that the shared space is undersized for the overflow across multiple tenants of the building leading to overcrowding and not everyone is able to do the things they had planned. If everyone goes flex, there will be a new Tuesday, Wednesday, and Thursday over-occupancy problem instead of a Monday, Friday under-occupancy problem.
Sometimes it may be better to pay a bit extra for too much space than cut to the bone and not have enough space.