Five Creative Ways to Recoup Costs of Empty Office Space
The workplace may never be the same again. Covid has shown companies and employees that working from home can be done successfully. It has also shown employees that working from home makes balancing work and personal life more manageable. So, it shouldn’t be a surprise that Pew Research Center found that six in 10 employees chose to work from home in a survey earlier this year.
This presents a challenge to companies that, until now, have provided a central workplace for all employees. A recent McKinsey study found that companies, on average, plan to reduce office space by 30 percent. Whether companies are committed to long-term leases or own their office buildings, empty offices are expensive.
What can you do if you face a similar challenge? Below are a few ideas that may help you respond to those vacancies and recoup costs as much as possible.
Medical Office Space
Nobody is going to have a cavity filled online anytime soon. Even with growing telehealth trends, medical and dental practices still require old-fashioned human interaction. You can convert vacant office space into urgent care offices, pharmacies, dental offices, etc.
Even people working from home may need temporary office space from time to time. A co-working space could fill that need by offering space to hold meetings or concentrate on work (especially during summer break, when kids are out of school). You might be able to use existing furniture, conference rooms, internet, and phones. To address potential Covid concerns, the office likely will need to be updated to a more open-planned, flexible, hybrid workplace with lots of natural light and good ventilation.
Fueled by e-commerce growth, another alternative is converting office space into a distribution or fulfillment center. Online retailers and grocery delivery services, for example, could use satellite distribution centers to fulfill orders. Office space located in or near a city that can improve last-mile logistics and help e-businesses meet customer demand is especially valuable.
Sub-Leasing Office Space
Subleasing empty office space, furnished or unfurnished, is another way you can cover the costs of unused space. Depending on how your office space is configured, you may need to comply with building code requirements such as offering two egress points, providing access to restrooms, ensuring fire-rated separation between tenant and subleased space, and more. Sublease tenants may request capital improvements, as well. Still, if you’re committed to a long-term lease, any income can help offset the costs of vacant space.
We will probably not return to pre-Covid workplaces that we used to know with offices, conference rooms, and cubicles. Hybrid offices will be used by employees when needed. But work-from-home employees will leave many offices empty. Creatively leasing or subleasing empty office space can help companies address office vacancy rates that are currently at 27-year highs.