Written by: Maggie McDermott Fernandez
Close your eyes and think of the phrase “Spring Cleaning.” What pops up into your head? Chances are it’s you, completely exhausted, sitting on piles of clothes that are starting to resemble Mount Everest. There’s no room for the new fitness gear you’ve bought because your closets are stacked with loads of old DVDs – for the player that you don’t even own anymore! There may be 30 pairs of high heels that don’t make sense with your daily outfit of yoga pants and a hoodie. Oh, and let’s not forget the boxes of old toys that belong to your kids, who have already graduated from college. “Keep or donate?” Does this question sound familiar?
Let’s face it; we’ve all been there. While you may be a tad embarrassed at your hoarding tendencies, there’s a sense of relief when it’s all over. There’s a rejuvenation that happens when a space is updated to become more functional for life right now instead of holding onto things that no longer serve us.
In our personal lives, we gravitate toward this concept of re-evaluating and changing up our space so naturally. For some reason, though, we rarely apply this same mentality to our workplace. Quite frankly, I think we need to. Like our closet space at home, our workspace should align with what we need right now, not when we signed our lease ten years ago! By taking the concept of “spring cleaning” and applying it to the workplace, we can stop wasting money on unused space and make our people more productive.
The first step is understanding your occupancy trends and how employees are using the space. Sensor technology tools, like the ones offered through 4SITE by CORT, can gather data to pinpoint which spaces are used the most or the least. This information can help individuals find the right ratio of “we space” to “me space” within an office.
For example, conference rooms are often the most expensive space to operate and yet are the least utilized. The data collected from 4SITE by CORT has shown that on average, these spaces are used less than 30% of the time. Rather than throwing rent money down the drain, it makes more sense to re-evaluate what your staff needs out of their space and adjust accordingly.
Let’s metaphorically “clean out our closets.” This means we’ll throw out that fondue set from our wedding registry 20 years ago (that we still haven’t even opened!) and make room for what we need now.
Let’s say a company signs a five-year lease, and within that time frame, they have four major strategic initiatives that will take place in their space:
- One that requires regular executive team meetings.
- One that requires employee training, including lectures and classes.
- One that is a temporary project that requires hiring additional headcount for a year.
- A new contract that requires employees from another state to travel to your office frequently. They don’t need dedicated space, but you’d love for them to have somewhere comfortable to touch down between meetings.
Wouldn’t it be fantastic to accommodate all of these different scenarios, especially if it’s a seamless process and will save money? With CORT Furniture-as-a-Service™ (FaaS), that’s exactly what can happen!
For another example, I will use a 20 x 25 square foot conference room to show how a space can quickly be adjusted for these exact needs.
Scenario 1: Traditional conference room
Rental rate for a 12-month term: $780 a month
Scenario 2: Lecture hall and training
Rental rate for a 12-month term: $915 a month
Scenario 3: Temporary employees
Rental rate for a 12-month term: $604 a month
Scenario 4: Touch down space for traveling employees
Rental rate for a 12-month term: $1080 a month
The Hidden Costs of Poorly Planned Space
What happens to this business when their conference room remains empty? Let’s say that this company occupies space in New York City at $95 a square foot and that they have three other similar conference rooms in their suite. When rent is taken into account, along with cleaning services and utilities, that’s $710,000 down the drain throughout a 5-year lease for that 70% vacancy. That’s almost $400 a day wasted on unused space in conference rooms alone. The other parts of the office haven’t even been considered yet!
If this company were to leave their conference room as is for the full five years, they ultimately would pay for wasted space while struggling to find the square footage to place interns, set up a training classroom, and create a lounge area for their traveling employees. However, should they choose the smarter option, and take advantage of FaaS with CORT rather than purchasing new furniture each time the room changes, they would be looking at a cost savings of over $100,000 after considering the hidden costs of ownership. If the other three conference rooms were used similarly, we’re looking at over $400,000 saved!
Simply looking at the number on a quote isn’t telling the whole story. If the quotes were telling the whole truth, there would be a lot more line items:
Hidden costs of ownership
- Project management
- Labor for moves, changes, and add-ons
- Cost of capital
- Asset management
- Purchase of new furniture when old furniture doesn’t work out
Hidden benefits of rental
- NOT paying for any of the hidden costs listed above
- Freeing up capital to go toward higher ROI activities instead of an immediately depreciating asset
- No large upfront investments. You pay for what you need when you need it.
- Decreasing employee turnover costs. Quickly reacting to employee needs means better productivity and employee engagement and retention.
- Speed to market
- Ability to scale up or expand the business quickly
There are certain situations where purchasing furniture makes more sense. If there are no foreseen changes for private offices or core workstations over a 5-year lease duration, we would never encourage you to rent. We’ve grown so accustomed to purchasing our furniture, though, that more often people don’t realize all the places where rental would make their lives a lot easier and could save the company a lot of money.
At CORT, we have over 40 years of experience operating a rental business across the entire country. This means we know firsthand how much expense and time goes into managing furniture ownership. We take on this burden so that you don’t have to. As things change and grow, we are right there with you, often able to deliver in as little as 48 hours.
We’d love to help you better understand your space and make the most of your real estate. Contact us today to get started!
Maggie McDermott Fernandez is a DC-area native and a member of the MidAtlantic CoreNet Global Chapter. She currently serves as Strategic Account Manager over National Accounts at CORT Business Services. With experience in both access control & security and Furniture-as-a-Service, Maggie has spent over 11 years in the Commercial Real Estate community, supporting corporate occupiers and CRE providers, including tenant and landlord brokerage, project management, move management, and property management. Maggie graduated Cum Laude from Christopher Newport University with a B.A. in Spanish and a Minor in Leadership Studies.