Commercial Investment Real Estate March/April 2018 | Page 33

More employees for the same size office space
result in hidden costs.
n the workplace, the trend continues of smaller Rising Costs
space for individuals and larger spaces for col- Landlords normally equate employee occupants in their
laborative activities. Since the 1990s, companies suites with the parking allocation that is negotiated in the
have reduced the square footage allocated to each lease. However, many companies have far more employees
employee from 250 to 300 rentable square feet to today’s than parking passes.
low of 100 to 150 rsf.
Parking challenges aside, recent experiences with compa-
As the cost of real estate rises, companies have more nies that overload employees in an office suite reveal other
incentive to increase their headcount within the same sized concerns and costs for landlords. These include higher day
office space. Furthermore, landlords are moving toward porter costs due to numerous restroom cleanings, extra
allocating more shared space in their buildings. These paper products, and stocking of supplies.
creative spaces have fewer private offices and larger open
Office buildings are designed for a certain heat load on
areas, allowing for dense workstation layout and boosting a floor. When a floor has six to 12 individuals per 1,000 rsf
employee count even further.
of space, the HVAC system is inadequate due to the
A recent survey of landlords in the Orange County, Cali- resulting heat generated by computers, monitors, equip-
fornia, and Los Angeles markets shows mixed results. Some ment, and people.
landlords have capped occupants per square foot and tried
Building HVAC systems often are modified since the
to enforce those counts. Other landlords are caught in the building engineer must reconfigure air flow to accommodate
quandary of being stuck with at least one tenant with an the excessive heat load in a certain suite or floor. Operating
excessive number of employees. Other owners are not deal- equipment above normal capacity increases repair and
ing with the problem.
maintenance costs. More importantly, it decreases the use-
The landlords who aren’t concerned about this issue usu- ful life of HVAC systems.
ally have lower occupancy buildings, so the parking remains
Undue wear and tear on the elevators from the increased
plentiful and the low occupancy in the building doesn’t feel personnel riding up and down is hard to quantify, but still
like the offices and common areas are overcrowded. How- causes a high cost to the building owner with excessive repairs
ever, many of the brokers surveyed
and reduced lifespan. Current genera-
felt that once a building reaches
tion elevators have a 15- to 20-year
85 percent occupancy, this issue
lifespan, so replacing them a few years
by Jeffrey W. Eales, CCIM, CPM early is extremely costly.
becomes problematic.
I
CCIM.COM
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