Office occupancy rate can be described as the ratio of rented rental units in relation to the total number of units available in a city or building in a given time. It indicates how office space is being used, which in turn directly affects your revenue. So, what can you do to determine your office occupancy rate?
Measuring the Occupancy Rate of Your Property
To measure this, you can use a simple formula as shown below:
Occupancy Rate = Units rented/Total units available
For example, Company Y owns a commercial building that has 400 units. Of the total units, only 175 are rented out. With this information, you are able to calculate Company Y’s occupancy rate as shown below:
Occupancy Rate= (175/400) multiplied by 100% to get a percentage
Knowing how to calculate your office occupancy rate is important. It provides a method through which the performance and attractiveness of various real estate units can be compared. It can also help you draft up a plan that will increase office occupancy rates and ultimately improve rental yields for your commercial buildings.
Factors that Affect Office Occupancy Rates
Even when you’ve taken every possible measure to market your workspaces, the inevitable may still happen and you find yourself struggling to find renters. Some of the factors that create these conditions are manageable and preventable, whereas some are completely out of your control. Some of these include:
Land is a permanent resource. Its location determines its value and use.
Therefore, it is important to carefully consider the location of your desired property before committing yourself to it. You also need to do some homework and find out whether it will be a good fit for your employees and visitors or not.
Oversupply in the Market
When supply is high, demand takes a nosedive. This is one key aspect that stands out in almost every market and real estate is not immune to it.
When there’s an oversupply of rental units, potential tenants take advantage and arm twist property owners for rock-bottom rates. This, in turn, lowers occupancy rates significantly.
Low Credit Supply
Lending rates directly affect how businesses are run. They can boost or reduce operations. Most companies have to postpone expansion plans and scale down their operations in order to remain afloat. As a result, demand for office space is significantly reduced, which also affect the office occupancy rate.
This varies from city to city. Some areas are zoned as industrial or residential and hence are unattractive as commercial office space zones. Checking the zone regulations for a particular location is needed in order to make sure you are setting up in the right place.
Traffic congestion is a turn-off for many. Potential tenants will always be looking for locations that have little or no traffic congestion. Naturally, they want to spend less time commuting. Who doesn’t, right?
These factors notwithstanding, there are strategies that you can implement in order to boost your office occupancy rates and, consequently, earn extra revenue. They include:
Adapt to Future Trends
As the world evolves, so do office buildings. The appeal of new office buildings, aside from their location, lies in the amenities they offer and in how able they are to meet the needs of young workforce.
To retain current tenants or secure new ones, it is vital to adopt trends that will suit their evolving needs. One of the trends everyone is talking about is agile working.
Spaces that are equipped for an agile workforce tend to attract high net worth tenants who are willing to spend a lot to accommodate their staff and all their needs. But in order to ensure that your property attracts this kind of clients, your property needs the right office fit out. Therefore, the use of modern architecture and interior design might just be what gives your office spaces an edge over those of your competitors’.
Reinvent Your Marketing Strategy
Not all consumers can afford all the products on the market. Likewise, not all renters can afford your rates. Therefore, save yourself some energy and focus primarily on the right target audience.
Your marketing, just like your office building, shouldn’t be for everyone. Refine your campaigns to target those business owners that can afford renting in your building. And, of course, target those business owners that appreciate your point of difference.
Innovate Traditional Workspaces
For high returns, innovation is your best bet. Modernizing your workspaces to fit the needs of potential tenants is paramount.
In order to remain competitive, most companies are now adopting hot desking technologies that enable workers to share workstations remotely. Apps such as iotspot are disrupting how people work by providing a platform where a worker can book his or her favourite workspace in the office even while in transit.
This helps your tenants use the space more efficiently. Plus, it helps them save money by not renting a space larger than what they really need.
It may seem counterintuitive — after all, you want them to rent a larger space, right? Right, but think about the long-term strategy. If your tenants discover (and they always do!) that they could do with less space, they won’t hesitate to move out of your building.
So why not show you care about their bottom line from the very beginning? Tell them they can optimise the use of their smart office space through iOt and gain their trust and long-term business.
Provide the Right Amenities
Corporate buildings that have ramps, ample parking spaces, working elevators, and fully serviced compounds are becoming increasingly attractive to tenants. Such facilities also attract the right kind of clientele who are not only looking for a bargain.
They are also seeking a good, pleasant environment to work in. The availability of these important facilities and more can impact your building’s occupancy rates.
Do not relegate everything regarding your commercial buildings to your marketing agents. Instead, take time to learn about current trends and be flexible enough to change what isn’t working.
Transform your commercial properties into a hub of agile workspaces that potential tenants are eager to work in. This way you stand a better chance of improving your office occupancy rates and ultimately increasing your profit.