What does occupancy mean? Insights for FMs, CRE managers, IT, and HR

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7 mins read

You might think ‘what does occupancy mean’ is a simple question. And it can be, when we’re dealing with a simple definition of occupancy or occupancy rate.

But when it comes to strategic space management, each department in an office may have their own unique definitions. They may also have their own different metrics and tools for measuring them.

In this article, we explore what occupancy means in four critical lines of business. We review facility management, real estate portfolio management, IT, and Human Resources. We also cover simple tools to help measure occupancy in the workplace.

Understanding occupancy

According to Collins English Dictionary, occupancy is… “the act of using a room, building, or area of land, usually for a fixed period of time”. Wiktionary further describes it as “the period of time during which someone rents or otherwise occupies certain land or premises.”

Similarly, the term occupancy rate refers to how much space you’re occupying during a given time period. You determine this rate by dividing your occupied square footage by your unoccupied square footage. Note that synonyms for ‘occupancy rate’ include ‘percent occupancy’ and ‘space occupancy rate’.

But moving beyond this simple ‘word of the day’ definition... in our new world of flexible work arrangements and hybrid offices, understanding and optimizing occupancy can be more challenging.

Get it right, and you can expect positive business outcomes. Like a better optimized real estate portfolio, more collaboration in the workplace, and more employee buy-in for your return to the office.

Get it wrong, and you could be overpaying for inefficient office space that doesn’t serve your people well.

That said, achieving optimal occupancy will mean different things from business unit to business unit. And maybe even between different floors or areas of the office.

Corporate real estate managers, for example, might be concerned with maximum occupancy of a new building. And facility management teams are focused on improving capacity for their working neighborhoods and other flexible seating strategies.

And of course, employees will have their own ideas about how much space they need. Both for heads-down work and collaboration.

What does occupancy mean in facilities management?

Perhaps more than anyone else in the office, facility management professionals (FMs) have to contend with (and then improve) space management challenges that impact productivity, collaboration, and workplace experience.

FM responsibilities now include planning for the right amount of space, accommodating a hybrid work schedule, and managing room and desk booking, all while improving space utilization and helping keep employees happy and healthy.

Because of all these responsibilities, getting occupancy right is now incredibly important in facility management. Anyone involved in facility planning usually considers occupancy in two key areas.

Calculating room capacity

First, FMs need to figure out how to calculate optimal room capacity in a dynamic office space.

And then they need to be able to figure out if their actual occupancy aligns with their optimal capacity.

How many hybrid workers are actually using the space? What days are busiest? What types of desks do they prefer? Do we have enough formal and informal spaces for how employees are using the office?

Being able to answer these questions is one of the best ways to help everyone do their best work, while also maximizing occupancy rate. To do this, FMs need access to analytic tools. These tools must illustrate actual desk utilization and office density (more on these tools below).

Planning headcount

Second, headcount planning is another make-or-break element of facility planning.

It might be up to business development teams to decide what types of staffing needs a company will have in the future. But it’s up to FMs to have a systematic plan in place. Especially to ensure their company has the physical and digital resources to support everyone now and in the future.

In other words, FMs use occupancy data (along with more workplace analytics) to make better informed decisions and future-proof their facilities. This is ultimately what leads to a solid real estate portfolio. One that is cost-effective, better for the environment, and tailor made for the people who use it.

What does occupancy mean in corporate real estate?

Corporate real estate is often a company’s biggest expense after payroll. So getting occupancy right matters here, too.

Portfolio management is typically handled by a facility manager, property manager, real estate portfolio manager, and/or asset manager. All need to be able to optimize company space in a way that makes financial sense, without sacrificing employee experience.

As the pandemic proved, real estate managers need to be nimble. They must be open to change based on what’s happening on the ground and in the market.

And they also need to be able to understand where low occupancy rates impact the bottom line, so they can stop wasting valuable resources.

In other worlds, real estate professionals don’t just care about the simple occupation of a building.

They care about ensuring that their tenancy is providing the right resources in the most cost-effective way possible; whether taking possession of a place or renegotiating a lease, they need actionable insight across their whole portfolio.

Using robust tools

With new variants and global uncertainties continually popping up, real estate managers need robust tools to understand occupancy.

Ideally, these tools will also offer the ability to manage the entire portfolio and regulate lease management costs.

For example, one of the best examples of occupancy management in this way comes from Syneos Health®, the only fully integrated biopharmaceutical solutions organization. They introduced space management software to enable a custom approach to opening facilities during the pandemic, location by location. Now, they’re using the same software to access nuanced occupancy data that is helping them make better real estate decisions.

“Knowing who’s using our offices, having good data on occupancy, good data, and utilization, that’s going to be critical as we fine tune the portfolio on the other side of this,” says Susana Fraile Vesperinas, Office Manager Corporate Real Estate and Services Spain at Syneos Health. “And I can’t imagine how you would do that without a tool like OfficeSpace.”

What does occupancy mean in IT?

IT cares more about creating a connected workplace than it does fitting in the right amount of people to the right amount of space. But they, too, have certain considerations when it comes to occupancy,

Namely, IT needs to know exactly how many people will actually be using the office, in order to ensure that they’ll have the right tools there to meet them.

With this occupancy data, they can then come up with physical and digital workspace solutions that optimize both their hybrid workplace and employee experience.

Occupancy may also have an impact on security in building automation systems (something that isn’t under the purview of IT, but is still a concern for IT teams) .

And as we’ll discuss further below, it’s often IT who are responsible for installing and managing one of the most important tools for assessing occupancy—IoT sensors.

What does occupancy mean in HR?

Similarly, HR managers don’t measure and plan for occupancy in the same way as FMs or portfolio managers.

Instead, they approach occupancy from the people perspective: do employees have the space they need? Are they happy with the space they have?

While they can certainly make use of occupancy rates, one of HR’s main roles when it comes to occupancy is helping bridge the gap between employees and FMs.

The majority of workers today want as much flexibility as possible, but actually adapting to hybrid work can be a challenge. Especially if the desk you’ve sat in (and loved) for years is suddenly up for grabs thanks to new hot desking strategies.

That’s why FM and CREs will often team up with HR to collect employee sentiment about all aspects of the physical workplace (i.e.: not just occupancy rates).

HR can also help roll out any new workplace management solutions in a way that is more mindful of individual employees and their needs.

What does occupancy mean to employees?

The exact occupancy rate of a building is not going to concern most employees.

Instead, what employees care about is having access to safe spaces that are just right for the task they’re performing.

The days of dreaming about the big corner office are gone for many of us. Especially since more and more CEOs are ‘walking the walk’ and booking desks like the rest of us. But no one wants to be crammed into an uninspiring cubicle, or to have to do heads-down work next to the always-busy kitchenette.

That’s why smart companies are now reimagining the workplace, bringing in lots of new spaces that accommodate lots of different personalities and enable lots of types of work. Think huddle rooms, phone booths, wellness and game rooms, and other cutting-edge flex room ideas.

Note that employees may also bring their own concerns about health and safety to the office, requiring social distancing well after any official restrictions have been lifted—making a social distancing planner a great long term investment, especially for large companies.

Measuring occupancy in the office

No matter what line of business we’re talking about, managers need good data to determine current occupancy and calculate desired occupancy.

With the right reporting and analytics, each team can access the insights they need to help measure, monitor, and optimize their own concerns.

For example, OfficeSpace Software provides space, occupancy, and more workplace reports and analytics that paint an in-depth picture of occupancy, allocation, and other critical metrics. FMs and CREs can use this information to assess operational costs and ensure they’re staying ahead of space requirements, while HR can use it as the jumping off point in dialog with employees.

The reports inside OfficeSpace help us answer questions like “How well have we activated each space? Did we rent out too much? Or did we lease too little?”
Daniel Santiago, Peloton Director of Workplace Operations

Ideally, CREs will also have portfolio reports that include all relevant property management data along with more tools to simplify and centralize lease management.

Finally, more and more companies are using sensors from companies like NSI, VergeSense, and SenzoLive. This is because they offer incredibly accurate data about actual occupancy. And all the better if these sensors can integrate with the same IWMS software that provides all this occupancy data.

Why does occupancy matter?

The word ‘occupancy’ means different things to different industries—so why it matters varies, too.

For example, if you’re in the hospitality industry, you obsess over single occupancy versus double occupancy and what impact different hotel rooms have on your overall hotel occupancy.

But in the office, it’s not just the act of occupying a space that matters.

Just because you get a certificate of occupancy, doesn’t mean you’ve got space that is best optimized for your needs.

What matters is creating an environment where everyone can thrive and do their best work. No matter how many people are using a space.