How to Increase Space Efficiency Across Your Real Estate Portfolio

May 26, 2023
9 min

Knowing how to maximize space efficiency as a facility manager by eliminating overcrowding and space underutilization with a touch of technology brings reduced operational and rental costs, efficient management of real estate assets, and high employee productivity.

In multipurpose property management, space efficiency powered by technology is the hidden force that drives revenue growth as it maximizes commercial real estate value and optimizes property-related spending.

What is Space Efficiency and How to Calculate It

Space efficiency in reference to facility planning in multipurpose buildings is practices a company implements to optimize its space utilization and ensure it meets tenants’ or employees’ needs, which results in higher levels of satisfaction and productivity, reduced rental and operational costs, and increased commercial real estate revenue.

As for the multipurpose properties, these are real estate assets characterized by high space flexibility, hence often used and rented for different purposes. They are commonly used by businesses that undergo constant changes and can benefit from space flexibility. Under the same roof, one will find storages, apartments for rent, retail, mixed use spaces, and offices among many others.

For each building type, average space efficiency metrics will differ depending on the space type and goal. But most often, it will be a combination of the following metrics: floor occupancy rate, density per unit area, and cost per square foot.

To get a good grasp of whether your building is space-efficient, calculate floor occupancy rates by dividing the occupied floor space by the total available space and multiply it by 100%.

The same goes for the density per unit area where the total number of people or objects should be divided by the total area and the total cost of occupancy by total square footage for price per square foot (all without multiplying by 100%).

For multipurpose buildings, the average floor occupancy rate (again, everything depends on the type of business and regulations) should be around 80% and the average density per unit area should be around 7-10 square meters per person.

If the metrics are lower than average, the red flag is too bright for one to turn a blind eye to.

As for the price per square foot, the metrics will vary for each building, and it’s up to you to decide whether the result you’ve calculated aligns with your budget.

Top Issues Space Efficiency Solves in Multipurpose Properties Management

Low Space Flexibility

Space flexibility is the ability of the space to be reconfigured according to the changing business needs without excessive readjustments.

In multipurpose real estate, companies with buildings that lack space flexibility can’t cater to the businesses with diverse needs, culminating in low occupancy rates, short-term leases, and inability to compete with other real estate players who invest in space flexibility.

Properties lacking flexibility have poor traffic flows (for instance, narrow aisles in industrial buildings that add to safety risks), cluttered and disorganized areas, and high space waste.

All in all, it prolongs property downtime and closes lease opportunities as the space can’t be readjusted and leased as a different commercial property.

Overcrowding and Space Underutilization

Overcrowding happens when space can’t match high occupancy. In multipurpose buildings, this issue emerges when spaces are assigned to businesses with big teams or when the space is poorly readjusted for the new purpose (for example, when an office building is redesigned and further rented as a hotel with less square feet per room than expected).

Space underutilization is the opposite to overcrowding. COVID-19 only worsened the problem, doubling underutilization rates to 80%.

In both cases, the inability to optimize space utilization results in extra maintenance and utility costs, property taxes, and unstable streams of revenues.

Limited Space

Most often, limited space stems from poor space allocation when the environment doesn’t match the work process standards and employee needs, leading to high operational bills and low productivity.

Let’s say, a company is growing and plans to add new equipment and hire more employees. With the space being limited, this will lead to overcrowding, increased safety hazards, and the need to spend more on renting additional areas.

Further, the lack of space leads to the equipment being placed closer to the walls or in high-traffic areas, leading to accidental damage, hence the need for repairs or replacement.

Expensive Equipment and Property Maintenance

In multipurpose buildings, most companies have their employees operate specialized equipment, repairs and replacements of which are often outrageously expensive. This is the area where space inefficiency leads to the improper machinery installation, its overheating, and employees’ inability to operate the equipment.

If the equipment is located in hard-to-reach places, conducting inspection and testing sessions as well as replacing the worn equipment parts turns into another challenge for a facility manager.

On the contrary, high space efficiency helps companies place the equipment in a place where the risk of damage is minimal, and employees that operate the equipment can easily access it – measures that result in reduced equipment downtime, fewer repairs, and effective inspection sessions.

Simultaneous Management of Multiple Properties

With companies struggling to hire more real estate specialists, facility and property managers are often stuck with more properties but less time and resources to manage them.

Managing multiple properties comes with a high workload, resulting in ineffective multitasking and burnout, which, in turn, leads to failed task management. For instance, giving low priority maintenance requests and the inability to schedule inspection sessions lead to costly property repairs in the future, space downtime, and low return on investment.

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How to Maximize Space Efficiency in Commercial Real Estate for Higher Productivity and Lower Costs

Review Your Lease Terms and Sublease the Unused Space

Getting a subtenant can help you lower space-related costs by sharing utility bills and maintenance expenses as a part of space use.

Cooperate with a commercial real estate agent or formulate conditions like rent, termination, and property maintenance by yourself and list the property in question online.

Here, getting tenant management software like Buildium or TurboTenant that allows you to perform background checks (including criminal, eviction and credit history of potential tenants) and collect the data in one place is a great idea if you want to minimize expenses on hiring a broker but ensure safety.

Such software will also help you automate rent payments after you sublease the space, send lease renewal reminders, generate financial reports, and receive maintenance requests on time.

Evaluate and Maximize Space Utilization with Space Management Software

Start with conducting a space audit. Measure the rooms layout and map the space with 2D visualization like floor plan software to assign functionality to each room, identify how much space each rented room takes and how the furniture and equipment are placed.

Use space utilization software like 3D visualization tools, for instance, building modeling software that helps with large-scale redesigning and safety review. With the use of 2D and 3D tools, a facility manager can reconfigure the space by moving the objects on the screen and see whether the changes fit in a particular area before actually implementing them in real life.

You can track occupancy and traffic rates with sensor technologies to identify which space is used most often or, on the contrary, underused.

As a facility manager, you can also collect data on HVAC, lighting, and noise levels with building management systems and gather feedback from renters regarding their satisfaction with the environment.

With all the data at your fingertips, making a decision that benefits the tenants will be easy.

Maximize Space Allocation with Proper Space Planning Solutions

Take into consideration workflows and the nature of employee work when optimizing space allocation in commercial real estate to make sure the changes you implement align with workspace and safety regulations.

With the help of space planning tools like computer-aided design software (CAD), a facility manager can visualize their space, generate multiple layouts and modify them while also maximizing the furniture and equipment placement on the screen before implementing changes in real life.

Other tools, like integrated workplace management systems (IWMS), are similar to specialized facility management systems. Both serve as a centralized platform for facility management activities like space planning, resource and contact, management, and data analysis. There, a facility manager can keep digital space plans and revisit space allocation projects to ensure better space use.

Build a Custom Digital Solution to Automate Your Facility Management Tasks

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Increase Space Flexibility by Introducing Open-Floor Plans

Open-space designs enhance work processes that require collaboration but decrease the productivity of employees whose tasks involve concentration. They often go hand in hand with modular furniture and movable walls that can easily reconfigure the space without complex structural changes.

Dividing the space into zones will require inventory evaluation and task setting. With tools like facility management software, space planners can streamline their activities, send task and event reminders, message construction teams, vendors and suppliers, and gather feedback from the stakeholders.

Prevent Property and Equipment Repairs with Inventory Management

Inventory is the supplies and equipment a company requires to operate. If the inventory isn’t inspected constantly, such negligence burns a hole in the pocket.

With inventory tracking systems and customizable CRMs, a facility manager can store equipment data like asset value, history of use, and location in one place. They can also schedule maintenance sessions and get reminders to ensure inventory audits and preventive maintenance are performed on time.

With the aforementioned tools, a facility manager can track the asset’s lifecycle and who uses the asset – a feature that carries weight in the hybrid work culture where employees take office equipment home like laptops for remote work. And if the item breaks and needs replacement, an employee can form a repair request and send details to a facility manager in a matter of seconds.

Streamline Your Project Tasks, Scheduling, and Budgeting with Facility Management Solutions

If you’ve got more than one item in your commercial real estate portfolio to manage, things might get all over the map. How to compartmentalize the management of all commercial real estate assets without failing to complete tasks in time?

To balance their schedule, facility specialists can use FMS: Workplace, UpKeep or FMX tailored to facility management needs specifically. Most of facility management tools like the aforementioned come with baked-in budgeting features so you can track expenses, plan the budget, manage invoices, and generate reports to identify areas for cost optimization.

They help users streamline their project activities by automating their routine tasks related to lease management, maintenance scheduling, and reporting along with video conferencing and messaging apps for streamlined communication with employees, vendors, and tenants.

For facility managers who have to deal with huge volumes of data on a daily basis, there are custom CRMs. They help facility managers improve relationships with tenants by storing all documents and communication in one place while also ensuring facility managers handle equipment, inventory, and service requests on time. Other functions like budgeting and reporting are also included.

Build a Digital Solution with Ascendix to Automate Your Workflows

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Why Consider Ascendix as a Partner in Facility Management Software Development?

We’ve been in real estate industry for 16+ years, specializing in the development of custom digital real estate solutions like property management software that help commercial property, asset, and facility managers along with other real estate specialists save hours of work and boost productivity by automating their routine tasks.

Why choose Ascendix?

  • We’ve been in real estate for 16+ years and got practice-based experience in the development of custom digital solutions;
  • We are both service providers and product developers. We know what it takes to build a top-notch product and how to successfully overcome challenges in the development process;
  • Together we can build digital solutions like floor plan software and custom CRMs along with document generation and reporting tools among many others;
  • Ascendix developers can test and audit your software, help you migrate the data, build a new facility management solution from scratch, and add third-party integration with API functionality;
  • We’ve been building a variety of custom digital solutions for global leaders like JLL and Colliers for years now;
  • Ascendix has 5 offices in the US and Europe – a feature that will optimize your software development costs.

At the end of the day, we’re professionals who know how to increase efficiency and maximize value across your real estate portfolio. Let’s build a solution that streamlines your property and facility management together!

What is space efficiency?

Space efficiency in reference to facility planning is practices a company implements to reduce space waste while optimizing the space that’s already being to ensure it meets tenants’ or employees’ needs, resulting in satisfaction, productivity, reduced rental and operational costs, and increased commercial real estate revenue. 

Why is space efficiency beneficial in increasing the value of a commercial real estate portfolio?

Space efficiency is beneficial for increasing the value of a commercial real estate portfolio because it reduces rental and operational costs, prevents property repairs, extends the equipment life, and increases space flexibility. 

Which automation tools can facility managers benefit from?

Automation tools that facility managers can benefit from are inventory management tools, tenant management software, custom CRMs, CAD tools, floor plan software, reporting and document generation tools, and sensor technologies. 


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