Density: The No. 3 trend impacting the real estate of tech companies

Labor and costs are the two most significant impacts on real estate of technology companies. Rounding out the top three most significant effect is density.

Trend 3: Reversal of density

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The trend toward efficiency has reigned supreme in the real estate world. The drive toward a “less is more” ownership mentality on a personal and corporate basis has completely transformed the way things work. As a result, the concept of the private office has been largely eliminated from space design of technology companies. Personal workspace has been reduced from what was once an industry standard of 350 square feet to as low as 50 square feet, almost 600%. Average hard costs and materials are 21% lower in tech fit-out budgets than traditional offices.

In Phoenix, most tech companies have built out their office space using the open floor plan concept. Private offices, if any, are reserved for people with extremely focused job functions, such as accounting or human resources.

In most offices, part of the open floor concept includes small, private phone call rooms or conference rooms for employees to find privacy when needed. When done well, an open floor plate creates a flexible space that can be transformed to meet the company’s needs at any point in time. It allows the company to engage employees in a collaborative environment efficiently. But when not done well, an open office plan can inhibit productivity. Companies who have gone to the public office extreme have experienced this, and are now recognizing that not all types of employees love to be in the open, and sometimes loud, environment.

As companies become more sophisticated in providing a productive environment for their employees, we expect they’ll take a closer look at the optimal space utilization ratios to ensure their open office is the ideal plan to keep employees happy. After all, the Future of Work isn’t about cramming as many employees you can into your office space. Instead, it’s about investing in the right office space and build out to ensure the area enables employees to produce their best work.

Stay tuned for my next article in which I’ll explore trend number four: the flexible space evolution.

Matthew Coxhead

Author: Matthew Coxhead

Matthew Coxhead is an Executive Vice President at the JLL Phoenix office, where he specializes in representing tenants in office leasing transactions. Through his relationships with corporations both locally and nationally, he guides his clients through their most important real estate decisions.

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