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Rightsizing Your Real Estate & Office Space

If you are among the many global organizational leaders striving to maximize productivity and efficiency amidst a challenging labor market and economic uncertainties, rightsizing your company’s property portfolio is a big first step in that direction. 


Forty-three percent of business leaders prioritize reducing real estate expenses within the next three years, according to a recent study by FM:Systems. This finding highlights the growing emphasis on cost-saving measures and efficient workspace utilization via rightsizing.

What is Rightsizing?


In the context of organizational real estate, rightsizing is the process of aligning the size and composition of property holdings with the company’s current and future needs. It involves evaluating the utilization of existing properties and making adjustments to optimize efficiency and cost-effectiveness.


It’s important to note the difference between rightsizing and downsizing. While downsizing often involves reducing and is driven by short-term profit goals, rightsizing is a distinct concept focused on strategic planning. Rightsizing aims to align the size and composition of office space and real estate holdings with the organization’s current and future needs, considering factors beyond just cost reduction.


Simply cutting space without adequately evaluating the optimal workforce size is a temporary solution that can lead to recurring problems. Rightsizing goes beyond immediate cost reduction and seeks to create a long-term sustainable solution for the organization. By evaluating office space utilization and considering factors such as workforce size, growth projections, and operational needs, organizations can make informed decisions to optimize efficiency and productivity.


Saving Money and the Planet


As energy costs continue to rise amidst concerns about oil prices and other market forces, assessing usage and developing energy-efficient buildings allows organizations to lower costs and contribute to environmental sustainability by focusing on energy efficiency.


The environmental impact of building operations is a significant concern in the global effort to combat climate change. Building operations account for approximately 27 percent of annual global CO2 emissions, and the built environment contributes to a staggering 40 percent of global emissions. 


Figuring out how to optimize space utilization is crucial in addressing these emissions. Organizations can make substantial strides in reducing their carbon footprint by examining energy consumption for operating systems such as lighting, ventilation, and heating.


Beyond being good for the planet, reducing a company’s carbon footprint is also essential for attracting and retaining the younger generations of workers who make up most of the workforce. According to Deloitte’s 2023 Gen Z and Millennial Survey, these generations are increasingly vocal about the need for greater climate action from their employers. They have noticed that some organizations have deprioritized sustainability strategies recently, raising concerns.


Furthermore, Gen Z and Millennials believe employers are crucial in providing the necessary skills training to prepare the workforce to transition to a low-carbon economy. This highlights their expectation for companies to take active steps towards sustainability and to equip employees with the knowledge and tools required for a sustainable future.


The Rightsizing Process


The rightsizing process begins with assessing current properties’ utilization, considering factors such as occupancy rates and floor space usage. The next step is identifying the organization’s present and future space requirements, considering workforce size, growth projections, and operational needs.


Based on this assessment, leaders may consolidate properties into more efficient locations or expand their holdings to accommodate growth or specific operational needs. Later steps involve reviewing lease agreements, negotiating terms, and seeking cost optimization opportunities.


Rightsizing aims to create an agile workspace that supports the organization’s objectives, maximizes space utilization, and minimizes costs. It allows for a better alignment between the organization’s real estate portfolio and evolving business needs.


In the next section, we’ll discuss four rightsizing strategies—leveraging technology, optimizing existing space utilization, offering flexible work arrangements, and considering person-environment fit—to boost productivity, save money, and achieve greater energy efficiency in building operations.


Rightsizing Strategy 1: Leverage Technology


Leveraging technology, such as workplace sensors, allows for informed decision-making and improved building energy efficiency. Optimizing existing space, including considering upgrades and smart office solutions, ensures efficient utilization of leased areas. Offering flexible work arrangements accommodates employee preferences and reduces the need for physical office space. Additionally, considering person-environment fit when reconfiguring workspaces enhances communication, collaboration, and employee satisfaction. 


Utilization and space data are essential for a deeper understanding of office space usage and opportunities for optimization. However, organizations need help accessing such data. This is where technology becomes a crucial enabler. These technologies enable the collection and analysis of data related to space utilization, empowering executives to make well-informed decisions regarding sustainable office policies.


Intelligent workplace management solutions provide faster access to data, leading to improved building energy efficiency. Decision-makers can evaluate if the existing building meets the organization’s and employees’ needs and aligns with its purpose. As hybrid work becomes more prevalent, organizations may require less physical space than before the pandemic.


Rightsizing Strategy 2: Optimize Existing Space


Existing lease contracts pose a consideration for business leaders who want to rightsize. When organizations find themselves bound by these contracts, evaluating current space utilization and optimizing it effectively becomes crucial. For instance, are the heating, cooling, and lighting systems managed to minimize dead spots in areas where employees are not actively working?


In response to this challenge, more organizations are investing in smart office solutions to manage building operations, including lighting, heating, ventilation, and air conditioning. By incorporating utilization sensors, decision-makers gain access to a wealth of data revealing which spaces they genuinely utilize.


For example, consider a scenario where a massive building has few onsite workers relative to capacity. In such a case, the organization could consider consolidating workspaces, closing off particular floors, and implementing hot desking or hoteling. 


Corporate real estate professionals should work closely with human resources and senior leadership to calculate how many employees per square foot to plan for.


Furthermore, organizations must assess whether the existing infrastructure is fit for purpose and explore potential upgrades, such as improving lighting and HVAC systems. At the end of 2021, the average age of a commercial building in the U.S. exceeded 50 years. Considering these factors is essential when optimizing space utilization and maximizing building energy efficiency.


Rightsizing Strategy 3: Offer Flexible Work Arrangements


The findings from McKinsey’s American Opportunity Survey reveal significant shifts in the US workforce. It shows that a staggering 92 million workers have been given the option of flexible work, while 80 million are actively engaging in flexible work arrangements. Additionally, many survey participants said their desire for flexible work was a major driving factor in their job search.


Flexible work arrangements can take many shapes, including alternative work schedules or setups that allow employees more control and flexibility over when, where, and how they work. These arrangements can include options such as telecommuting, flextime (adjusting start and end times), compressed workweeks (working longer hours in fewer days), part-time work, job sharing (two or more employees sharing one position), and freelance or gig work. Flexible work arrangements aim to accommodate individual preferences and improve work-life balance by giving employees greater autonomy and the ability to tailor their work schedules to meet personal and professional needs.


Rightsizing Strategy 4: Consider Person-Environment Fit


As a leader, it’s essential to recognize the significance of the physical workspace for your employees, including objects, surroundings, and how everything is arranged. When you decide how to reconfigure workspaces, your goal is to create spaces that bring employees closer together, promoting communication, interaction, and positive experiences. However, understanding how spatial design affects employees can be complicated because different studies offer different perspectives. 


Some studies suggest physical barriers like walls or partitions can hinder employee communication and relationship-building. They argue that removing these barriers and increasing proximity can positively affect employee interaction, collaboration, task performance, and job satisfaction. On the other hand, other studies suggest that being too close to each other may reduce privacy, feelings of ownership, and control, which could potentially limit employee performance and collaboration. There is clearly no one-site-fits-all approach. 


Understanding how your employees fit with their work environment can help make sense of these diverse findings. The person-environment fit theory looks at how individuals interact with their surroundings. Your employees naturally want a work environment that matches their values and meets their needs. 


A good match between their personal attributes and the physical work environment can lead to positive results like higher commitment, job satisfaction, and performance. One way to support person-environment fit is to involve employees in decision-making regarding reconfiguring workspaces better suited to meet employees’ needs and preferences to boost productivity while saving money and reducing energy usage.


The Human Side of Rightsizing


Recognizing the human impact of organizational changes is crucial, as your employees’ perceptions and reactions to change are pivotal. Studies consistently show staff commitment and buy-in to the change process are critical for effective organizational transformation. As a leader, understanding and addressing your staff’s concerns and ensuring they accept the changes can significantly influence the outcome.


Possible symptoms of change: Stress and workplace incivility


During the rightsizing process, you might notice a shift in behavior within your workplace. Introducing change often leads to uncertainty, triggering a range of emotions within employees, including excitement, anger, despair, stress, and fear. These emotions can lead to varied behavioral patterns, including workplace incivility, which tends to be amplified during organizational change processes.


Workplace incivility refers to low-intensity deviant actions aimed at causing harm, such as a lack of politeness, rude language, or disrespecting colleagues and leaders. While workplace incivility may not be as severe as other forms of workplace deviance, its impact should not be underestimated.


Incivility negatively affects the working environment, team dynamics, communication, and ultimately the organization’s reputation, profitability, and operational efficiency. Trust erosion makes it harder for teams to collaborate effectively. Surprisingly, studies have shown that a staggering 98% of employees have experienced incivility at work, with about half of them facing it weekly. The emotional and physical commitment required during these times can lead to burnout and emotional exhaustion, further exacerbating the likelihood of workplace incivility.


By understanding and addressing employees’ concerns, fostering open communication, and providing support during transitional periods, you can mitigate the negative consequences of change, such as workplace incivility and stress. Remember that your employees’ commitment and well-being are critical for successful organizational transformation.




In conclusion, rightsizing your office space and real estate holdings can maximize productivity, efficiency, and cost savings. By aligning the size and composition of your property portfolio with your organization’s current and future needs, you can optimize space utilization, reduce real estate expenses, and achieve greater energy efficiency. 


Harnessing the data from workplace analytics platforms is crucial for organizations to achieve cost-reducing and energy-saving goals. By automating data collection and analysis, decision-makers can make informed choices about office practices, enhance energy efficiency, and optimize space utilization in a post-pandemic work environment.


Finally, it’s essential that you consider the human impact of all aspects of rightsizing and address it proactively. By understanding the implications of organizational change, fostering open communication, and supporting employees during transitional periods, you can navigate the rightsizing process effectively and ensure successful organizational transformation.


When it comes to rightsizing, careful planning and execution are crucial to minimize disruptions and maximize the potential of human resources. It’s imperative to thoughtfully navigate the challenging terrain of rightsizing while fostering a positive work environment and upholding your reputation as an employer of choice.


By implementing the strategies above, you can save money, reduce environmental impact, and create an agile workspace that supports your organization’s objectives and the well-being of your employees.

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