Why Office Occupancy Rates Are Up, While Utilization is Down

While many companies are being more forceful in asking workers to come back to the office, the number of people using this space remains far from what it could, with only 40% of employees using their office for the first half of 2023, according to CBRE. 

Some of that can be attributed to the lackluster return numbers, but CBRE also noted that more space sharing or allocation of people to seats is occurring. Also, space planning efficiency has allowed companies to reduce their global office portfolios. Many companies have increased these efficiencies by about 20% since January 2020, which has helped them reduce their portfolio size by up to 30%. Yet, despite the improvements and reductions, 64% of global office space remains underutilized. This is a big concern for corporate real estate leaders, both for operational and financial reasons.

As a result, more are trying to focus on what’s actually used or utilization rates. More companies are also relying on performance metrics to drive their portfolio rationalization and space optimization efforts rather than just planning metrics.

CBRE finds that occupancy rates have increased in the last year, reflecting the rise of space sharing. From the second quarter of 2022 to the same period a year later or this year, the global average occupancy rate went up 101%–81% for the Americas, or roughly a 29% increase above 2021 levels. And they’ve changed for different sectors with industrial and logistics, for example, at 77% in 2022 and up to 91% this year. As another example, life sciences climbed to 110% from 95% a year ago.

Utilization, however, went down from the second quarter of last year to the same period this year. Overall, it decreased 45% from the pre-pandemic global average of 64%. Comparing the second quarter of last year to this year’s second quarter, financial and professional services were down 44%; industrial and logistics were down 42%, life sciences dropped 35% and technology, media and telecom also went down 27%. The report advised companies to try to increase space utilization rates by focusing on portfolio right-sizing to repurpose underutilized space and improving employee experience initiatives to attract them back to the office.