We all know that occupancy has changed today from what it was pre-pandemic. The aspect that has changed the most when I look at workplace utilization patterns is occupancy variability. What I mean by Occupancy Variability is that before the pandemic, almost all offices globally had consistent month-to-month, week-to-week, and often day-to-day predictable occupancy. It was possible to build a forecast model that could get you within 5% of expected occupancy for an office if you had the actual occupancy from the last 13 months. There was low variability around occupancy because it followed clear patterns. Since late February 2020, this is no longer true for most offices. It is not currently possible to predict next month’s occupancy patterns given historical information.
Effective workplace design starts by knowing your expected occupancy. If you do not know expected occupancy, it is extremely challenging to lay out a workplace to meet employee needs. To make matters worse, in North America, there is a significant intra-week high variability of demand. What I mean by this is that before 2020, occupancy on Tuesday looked similar to Wednesday which looked similar to Thursday. Within the week, you could predict the next couple of days by seeing how the first went. Today, we may see a high Tuesday, low Wednesday, and high Thursday one week followed the next week by an average Tuesday, high Wednesday, and low Thursday. The consistency in how occupancy happens has disappeared.
High occupancy variability often features event-driven demand. If a senior leader is expected to show up one day, demand shifts to that day. Townhalls drive demand peaks. Unrelated, overlapping client requirements lead to unexpected peaks. Holidays and long weekends have a bigger impact on occupancy than they used to. Looking at average occupancy in an office with high occupancy variability will feel futile. It is similar to playing darts with a blindfold. You may get good at hitting the board consistently, but you likely are not hitting the numbers you thought you would.
In contrast, low occupancy variability still exists in the world. Offices in many European and Asian countries have returned to similar patterns that they had before but with lower total occupancy. Because of the lower total occupancy, even these locations will show patterns of higher variability than they did before. Where occupancy may have been consistent 5 days a week before 2020, now it may be consistent 4 days a week. In some instances, that higher variability will show up unexpectedly in a week or month. However, the same events that drive overall occupancy in high variability sites introduce difficult days into the low variability sites.
Workplaces are meant to be designed around how employees use them. The most significant factor in that design is how many employees expect to use the workplace. When that variable is difficult to quantify or highly variable, it makes the design difficult. An easy solution is to simply build for the peak day, but then you have significant costs tied up in real estate that is not being used much. That money could have gone to improving multiple sites or been reinvested in the business but instead, it is locked away. However, the workplace must still be able to accommodate the peak day somehow because otherwise people who want to be in the office will be turned away or have a terrible experience.
This is where I look to the Pareto Principle. It is a handy tool when dealing with curves that have long tails. My current thinking on workplaces (subject to change just as occupancy continues to change) is that the workplace for highly variable demand is actually three workplaces in one. Adjust this concept to your own world because we are all experiencing occupancy in different ways based on our companies’ policies and cultures.
- 80% of demand: The main space would be designed following traditional workplace principles. This allows the bulk of the space to feel normal for both the real estate teams and the business.
- 90% of demand: Additional needed capacity to this level would be heavier on touchdown spaces and collaboration but still have traditional desks for some.
- Peak demand: For the very few, event-driven peak demand days above the 90% of demand mark, accommodate through collaborative spaces only. Communicate to employees that on those busiest of days, desks will be at a premium and to be flexible to use other spaces.
By taking a tiered approach, the 90% and peak levels reduce the space per additional seat significantly versus a traditional workplace. This means less money is being spent on those atypical days while still accommodating them.
Alternatively, accommodating peak days through a flex provider relationship in the same building is a model gaining traction. In this approach, the 90% and peak levels (adjusted as appropriate to your risk tolerance) would be met by employees using shared space in the flex provider’s areas. The financial model around this is still evolving and requires ongoing opex instead of capex but can provide some very interesting workplace scenarios.