How to Decide Your Office Space Budget - 2024 Guide | Soul Spaces

The Strategic Business Guide to Your Office Space Budget in 2024

Francel
Digital Content Manager

Updated: April 17th, 2024

Published: April 5, 2024

Navigating the fast-paced business landscape demands careful budgeting and planning, especially when it comes to key expenditures like your office space. As teams return to in-office work, a well-planned budget ensures your workspace is fit for purpose and offers a solid return on investment. Your office is not only a physical site; it mirrors your brand, culture and values allocating resources strategically is vital to meet employee needs and align with business goals. In this guide, we share our inside knowledge on how to create a successful strategic office space budget for 2024.

 

Understanding the Importance of a Well-Planned Office Space Budget

 

Your office space is essentially your team’s home—where your organisation’s values, creativity and teamwork come to life. That’s why investing wisely here is crucial. By doing so, you create an environment that fosters innovation, boosts morale and prevents overspending. Aligning your space with your company’s identity and budget requires careful financial planning, setting the stage for long-term growth and ensuring your workspace remains a hub of inspiration and achievement.

Considerations include:

  • Employee satisfaction: Is your team content with the current setup?
  • Working styles: Are you adopting a hybrid model, fully in-office, or fully remote?
  • Future headcount: Do you plan to increase staff in the next year, and by how much?
  • Space options: could you refurbish your current space or is it best relocate?
  • Financial review: How was the previous fiscal year? Can you increase spending or do you need to cut costs?

These questions stem from three key areas: your team, your goals and your finances. Achieving a balance among these factors will ensure the most effective investment in your office space.

 

The Ideal Allocation: What Percentage of Your Revenue Should Go Into Office Space?

 

It’s often recommended to allocate around 5-7% of your revenue to rent and utilities, but this can vary based on your industry, location and business size. Finding the right balance means investing in a workspace that meets your needs without straining your finances. This approach ensures your office space supports growth without becoming a financial burden, fostering a productive work environment while maintaining financial health in a changing business landscape.

Joe Gillam, Soul Spaces Founder: “The stage our own business is at requires us to keep our fixed overheads as low as possible and allow for a level of flex on our real estate. We float just under the ray of 5% of our turnover mentioned in the previous paragraph. Partly because we have used the space we have for the team of 12 efficiently and partly because we are experts at leveraging real estate terms! We are able to see the diamond in the dirt when it comes to real estate and this kind of resourceful thinking can save money in real terms.” 

 

Knowing When To Move: The Signs It’s Time for a New Office Space

 

Understanding the signs that it’s time to move can be crucial for the sustained growth and productivity of your business. While change is often met with some resistance, recognising the indicators that your current space is no longer suitable can empower you to make informed decisions about your workspace. Check out our blog for the top 10 signals indicating it’s time to relocate: ‘When Should You Consider Moving Offices’ 

 

Opting To Fit Out Instead: When Renovation Beats Relocation

 

Understanding whether to fit out your existing office space or relocate entirely can be pivotal for your business’s growth and efficiency. While moving might seem like the obvious choice, there are situations where refurbishing your current space can be a more advantageous option. Here’s a breakdown to help you decide:

  • Assess your current space: Determine if your office is structurally sound and if updates can meet your needs.
  • Long-term goals: Evaluate future plans and growth projections to see if renovating to accommodate changes is more practical than moving.
  • Cost comparison: Compare fit out expenses to the costs of leasing or purchasing a new property, along with moving expenses.
  • Employee morale: Consider how refurbishment or relocation will affect employee satisfaction and productivity.
  • Timing and logistics: Evaluate the timeline and logistics of both options to minimise downtime and disruption to your business.

Ultimately, the decision depends on your specific circumstances and priorities. By carefully weighing these factors and consulting with relevant stakeholders, you can determine whether renovation beats relocation for your business.

 

Slash Costs, Not Quality: Strategies for Saving on Your Office Space

 

If your goal in 2024 is to cut overheads to free up funds for higher-priority investments. Here are some clever strategies to save on your office space without sacrificing quality:

Embrace flexible work arrangements:

Recent studies show that a hybrid work model can reduce office space needs by 20-30%. By offering flexible schedules, you can optimise space for the days your team is physically present.

Right-size your office footprint:

Analyse your space utilisation. If your team only uses 60% of their desks on average, consider downsizing or implementing hot desking for less frequent users.

Negotiate like a pro:

Research market rates in your area and leverage your positive tenancy history. Aim for a 5-10% reduction in base rent or concessions like free parking.

Get creative with multi-function zones:

Modular desks can adapt to different work styles and activities, potentially reducing furniture needs by 15%.

 

Efficient Use of Space: How Much Square Footage Do You Really Need?

 

Here’s the golden rule: you don’t need more space than your team can effectively utilise. Here are ways to assess your real needs:

Track space usage and audit space utilisation to understand how your current workspace is used. This data will be invaluable for determining the right amount of space in your new plan. Industry averages suggest a typical office worker uses around 150 sq. ft. but these days we are starting to see businesses taking up around 100-125 sq. ft. per person

Consider activity-based working. Allocate specific zones for different activities:

  • Quiet areas for focused work: 50 sq. ft. per person
  • Collaborative spaces for brainstorming: 50 sq. ft. per person
  • Breakout areas: 25 sq. ft. per person

By implementing space-saving techniques, you can significantly reduce your square footage requirements. Let’s say, through space optimisation, you determine you only need 125 sq. ft. per person. For a 10-person office, this translates to a total space requirement of 1,250 square feet. Compared to the industry average of 1,500 square feet, this represents a potential cost saving of 16.7% on rent alone.

Remember, these are just examples. Adjust them to align with your operational needs, team requirements, and industry benchmarks.

By carefully considering the insights shared in this guide, you can make informed decisions that optimise your workspace, foster growth and enhance productivity. For a more detailed exploration of office space options, fit out timelines, relocation considerations and costs, be sure to download our comprehensive client guide here.

Francel
Digital Content Manager
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