Step-by-Step Guide to Downsizing Office Space Efficiently: How to Adapt to the Hybrid Work Era

In recent years, many companies have found themselves with too much office space due to the rise of hybrid and remote working. With employees no longer needing to be in the office full-time, corporate real estate managers are challenged to manage costly, long-term real estate contracts that no longer align with their companies' needs.

Sjoerd Memelink , Hidde Stolwijk , and I had a fascinating discussion yesterday at Mr.Green Offices .

As a corporate real estate manager, you likely need help to downsize your office space while maintaining business productivity and flexibility. You're not alone in this; in this guide, we'll provide you with a roadmap to effectively reduce your office footprint without compromising the needs of your employees or your company.

We have added a few additional references for further reading at each step.

Step 1: Assess Your Current Situation

The first and most crucial step is to fully understand how your current office space is being used. Without this, any attempt to downsize will be based on guesswork rather than data.

Key Actions:

• Conduct a Space Utilization Audit: You’ll need to measure how your office is used daily. This includes tracking how many people are in the office, which areas are frequently occupied, and which are underused. This can be done manually or using sensors and software to track space usage. Many companies find that meeting rooms, desks, and common areas often sit unused most of the day.
• Review Workplace Attendance Patterns: Hybrid working means employees aren’t in the office daily, and their schedules may vary. Are some departments in the office more often than others? Are certain days busier than others? Understanding these patterns can help match your office space to your employee presence.
• Analyze the Type of Work Being Done: Are employees in the office primarily for focused, individual work, or do they come in mainly for collaborative tasks? This distinction will influence the kind of spaces you’ll need to maintain versus what can be cut.

Outcome:

By the end of this step, you should have a comprehensive view of how much of your current office space is needed and what areas can be reduced without negatively impacting the work environment.

Further reading:

• JLL. (2023). How is hybrid work reshaping the office of the future? JLL Real Estate.
• CBRE. (2022). Hybrid working: What the data tells us about office usage. CBRE.
• Cushman & Wakefield. (2022). Understanding space utilization in the hybrid era. Cushman & Wakefield.

Step 2: Understand Employee Needs

While data can show you how your office is being used, it's equally important to understand why your employees come into the office. This understanding is crucial to ensure that any space reduction supports your workforce’s evolving needs, fostering a stronger connection between management and employees.

Key Actions:

• Employee Surveys and Interviews: Ask employees about their preferences and feelings about the current setup. Do they come to the office for collaboration or prefer remote work? Would they like more flexible workspace arrangements (like hot desking), or do they value having a dedicated space?
• Tailor to Specific Departments: Different teams might have different office needs. For example, your sales team might benefit from collaborative areas to work closely with clients simultaneously. Your IT department may need fewer offices because they can work independently from home. Cater your office design based on department-specific needs.
• Monitor Trends: Employee needs are constantly evolving. Flexibility in office space planning means continually gathering feedback and being prepared to adjust space allocations as those needs change.

Outcome:

You will have a clearer understanding of how your employees want to use the office space and what they need from a downsized setup, ensuring that productivity and morale stay high after the changes.

Further Reading

• McKinsey & Company. (2022). The hybrid work revolution: Insights from employee behavior trends. McKinsey & Company.
• Deloitte. (2022). 2022 Deloitte global hybrid work survey. Deloitte Insights.
• Leesman. (2023). Hybrid work and employee preferences: What the data reveals. Leesman.

Step 3: Review Your Current Lease Agreements

Real estate contracts can be tricky to navigate, especially if they are long-term and inflexible. However, understanding your current lease situation is essential for making informed decisions about downsizing.

Key Actions:

• Identify Expiration Dates: Take a close look at when your leases expire. If you’re nearing the end of a lease, it might be an ideal time to negotiate for a smaller space or more flexible terms moving forward.
• Explore Subleasing: If your current lease has several years left, subleasing can be a viable way to reduce costs. This allows you to rent out part of your space to another company while still fulfilling your lease obligations. Could you ensure your lease provides for subleasing, or talk to your landlord about renegotiating this clause?
• Negotiate New Terms: Aim to negotiate more flexible terms for future leases. Some landlords may now offer "pay-as-you-go" agreements or options that allow companies to expand or contract their space based on workforce needs. Look for short-term leases or contracts with break clauses that enable easier adjustments.

Outcome:

By the end of this step, you’ll have a solid understanding of your legal and contractual obligations, which will allow you to navigate your downsizing plan without costly penalties or missed opportunities.

Further Reading:

• Savills. (2022). Real estate flexibility in the age of hybrid work. Savills.
• CBRE. (2023). Flexible office spaces and lease negotiations: Key trends in 2023. CBRE.
• WeWork. (2022). Navigating flexible leases for hybrid working environments. WeWork.

Step 4: Develop a Downsizing Strategy

Once you know how much space you need and understand your lease options, it’s time to develop a comprehensive plan for downsizing. This is where you explore specific solutions for reducing office space without disrupting operations.

Key Strategies:

• Hot Desking: With hybrid work, many employees don’t need dedicated desks daily. By implementing hot desking, employees book desks when they need them, reducing the total number of desks required. This can free up significant space while maintaining flexibility for your workforce.
• Flexible Workspace Design: Consider adopting an open-plan office layout with flexible, multi-purpose spaces. Depending on the team's needs, these areas can serve as meeting rooms, collaborative spaces, or quiet zones. You may also invest in movable walls or furniture to easily adjust spaces based on usage.
• Create Smaller Satellite Offices: Some companies are opting for smaller regional offices ("satellite offices") rather than maintaining one sizeable central office. These offices are closer to where employees live, making them more accessible for occasional in-person collaboration. This can reduce your reliance on a single, ample office space.
• Encourage Remote Work: Depending on the nature of your business, you can downsize further by encouraging more employees to work remotely on a permanent or part-time basis. Providing the right tools and support for remote work ensures employees remain productive without a daily physical presence in the office.

Outcome:

A detailed downsizing strategy that outlines how much space you will reduce, the specific methods you will use (hot desking, subleasing, etc.), and a timeline for implementation.

Further Reading:

• JLL. (2022). Right-sizing your office: Developing a strategy that fits your business needs. JLL.
• Savills. (2022). Adapting your office space to hybrid work: A guide for businesses. Savills.
• Knight Frank. (2023). Downsizing in the post-pandemic world: Strategies for reducing your office footprint. Knight Frank.

Step 5: Implement Technology Solutions

Maintaining productivity and smooth collaboration between in-office and remote employees becomes essential as you downsize. The right technology will bridge any gaps and support a seamless transition.

Key Technology Investments:

• Cloud-Based Platforms: Ensure that all critical business tools (document storage, project management, etc.) are cloud-based so employees can access them anywhere. This reduces the need for physical space to store files or house dedicated servers.
• Collaboration and Communication Tools: Invest in reliable video conferencing and messaging platforms such as Zoom, Microsoft Teams, or Slack. These tools are vital for keeping employees connected and engaged regardless of where they work.
• Hot Desking Management Systems: If you’re moving to a hot-desking model, software platforms can help employees easily book desks or meeting rooms, preventing confusion or overcrowding.
• Data Analytics for Ongoing Space Usage: Monitor space usage and employee attendance with sensors or software tools to ensure your office footprint remains optimized over time. This data can inform future adjustments if more space is needed or if further downsizing is possible.

Outcome:

A tech-enabled workplace where employees can work efficiently from anywhere, ensuring that downsizing doesn’t hinder productivity.

Further Reading:

• Gensler. (2022). Smart technologies for the hybrid workplace: Tools for enhancing office flexibility. Gensler.
• Gartner. (2022). Top technology trends shaping the hybrid workplace. Gartner.
• Forrester. (2023). Collaboration technologies in hybrid work environments: Trends for 2023. Forrester.

Step 6: Monitor and Adjust

After implementing your downsizing strategy, please monitor its effectiveness regularly and make necessary adjustments. Employee needs and work habits can change; you must remain flexible to adapt.

Key Actions:

• Conduct Regular Check-ins: Gather feedback from employees regularly to see how they feel about the new office setup. Are they satisfied with the available space? Do they have enough quiet areas or collaboration spaces? Their input will help you identify any pain points early.
• Track Office Utilization: Use space utilization tools to track how the office is used over time. This will allow you to fine-tune your office design. For example, if collaboration spaces are in constant demand, you may add more, even in a downsized office.
• Stay Open to Change: Your business, workforce, and work habits will likely continue to evolve. Be prepared to adjust your office layout, size, or leasing agreements as necessary. Flexibility will help you make the most out of your space as needs change.

Outcome:

An adaptive, data-driven office space strategy that remains aligned with your company’s needs and goals.

Further Reading:

• Deloitte. (2022). How to monitor space utilization in a hybrid workplace. Deloitte.
• JLL. (2023). Adapting and adjusting your office space strategy post-hybrid work. JLL.
• CBRE. (2022). Real-time data for continuous office space monitoring. CBRE.

Final Thoughts

Downsizing office space can seem daunting, but it becomes manageable with a methodical approach and the right tools. By assessing your current situation, understanding your employees, and implementing a flexible strategy, you can reduce office space costs while maintaining productivity, morale, and business efficiency.