Space Planning and the Total Cost of Occupancy

The number of occupants and the space required per occupant are the key determinates to total cost of occupancy.  Consider that the occupancy costs are the multiplication of the rental rate per square foot plus the operating costs per square foot times the number of people and the space that each person occupies.  There are factors that add to the total space consumption including lost space from hallways, bathrooms, elevator cores, storage areas, atriums and reception areas.  This is often called the building loss factor and is an efficiency measure of the building.  To these losses also add the space required for cafeterias, special computer and server rooms and conference, training areas and other special spaces.

As you can see the quantities add up quickly.  Let’s use a simple example to show the impact of these numbers.

Assume 200 people at 150 SF per person.  The building loss factor is 20% and there are additional space uses of 10%.  The rent for office space is $20.00 PSF and the operating costs are $4.00 PSF.  The table below shows the total cost of occupancy at 150 SF per person and 130 SF per person.

 

 

150 SF Per Person

130 SF Per Person

Number of People

200

200

SF per Person

150

130

Space Required

30,000

26,000

     
plus Loss Factor

20%

20%

Lost Factor Space

6,000

5,200

     
Additional Space

10%

10%

Additional Space

3,000

2,600

     
Total Space Requirement

39,000

33,800

     
Rent plus Expenses

$24.00

$24.00

     
Total Occupancy Cost

$936,000

$811,200

     
Annual Cost Per Person

$4,680

$4,056

As you can see from the analysis, the annual total cost of occupancy goes up over $100,000 per year and the difference is over $600 per person per year for a small change in the space standards.  For large quantities of people, this difference becomes exceedingly large.  For a ten year lease, this is a $1 million difference in the two cases.  Said another way, the difference between to two cases on a per person basis is about $625 per year and this justifies the purchase of new furniture that typically runs $3000 to $4000 per individual.

 

by NAI Global

For More Information about Local News, Market Intel, or Commercial Real Estate Opportunities; visit www.Bryan-Cole.com

Bryan E. Cole | Team Leader
NAI Keystone Commercial & Industrial, LLC
direct: 610-370-8502
Bcole@naikeystone.com

Check out my new website at www.Bryan-Cole.com

NAI Keystone is a full service commercial and industrial real estate firm located in Reading PA; We handle buyer, tenant, and landlord representation throughout Pennsylvania and with the association of our global partners we can assist in locating product throughout the country.

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