Burners Turn Earners: Turning Unused Real Estate Spaces into Workspaces

When Malcolm Porter bought and renovated a Downtown Berkeley office building to create a studio for his ad agency, he realized the space was considerably huge. Rather than seeing the space sit unutilized he subleased it.

“Identifying creative approaches to office space can be a great way to save time and money,” Porter explains.

So, when the owner of a five-person packaging design agency came looking for office space, Porter agreed to share part of his studio.

Unoccupied office parks, vacant conference rooms and empty desks are common in business districts across the United States. Over the past 30 years, the U.S. has added roughly 2 billion square feet of office space to its existing pool, most of which today’s mobile workforce no longer needs.

The American landscape is loaded with the massive untapped manmade resource known as ‘office space.’ Things are changing, at a gradual pace, but moving.  A startup called Liquidspace has turned the hidden reserve called unused office space into a utilitarian resource for the ever-expanding sharing economy. Liquidspace CEO Mark Gilbreath, 48, doesn’t have an office all of his own; nor does his company, which opened for business in 2011.

Liquidspace may sound like a version of Airbnb or Craigslist for office; but it taps on the idea of densification – reducing footprint per employee. They don’t manage the office inventory themselves, they simply provide a location to connect office seekers with excess capacity. But, it aspires to be more than just an app-based classified.  The company is trying to help enterprise-level companies leverage unused office space both their own and everyone else’s.

For most companies, office space is the biggest office expense. Unfortunately, most companies waste a fair amount of their office space. A recent Intel survey found that at any given time, 60% of cubicles and workstations and 77% of executive offices are unoccupied. Additionally, most employees telecommute an average three days a week with the remainder spent in the off-site meetings or working. By using share space, Intel hopes to house 20% more employees in the same space.

To study how people are using the existing office space is called “actual use of space,” or AUS for short. An AUS data enables corporate managers to study how people use the office and the equipment in it. If the office space is being used inefficiently, then the company is going to suffer. Studies by the International Facilities Management Association show that the average cost of providing a workspace to an employee ranges between $8,000 and $14,000 per year. If the average use of workspace is 50%, then the company is wasting $4,000 to $7,000 per year for each workspace.

The rise of mobile workforce, self-employment and sky-high office costs are intensifying demand for shared office space in business districts like Canary Wharf in London, Financial District in Manhattan and San Francisco, and Beijing Central Business District in China. A handful of companies are renting workspace by hour, a business model quite similar to Airbnb’s.

Vrumi, founded in 2011, has grown to 6,000 registered users and 120,000 square feet of workspace available on rent across the U.K. Breather, a four-year-old company operates in the U.S. and Canada. London-based Spacehop is bringing sharing economy to the workspace market, where filmmakers, novelists, and entrepreneurs share space to work with other creative people.

With the advent of the so-called sharing economy, those who are looking for extra moolah generating income with the help of the internet and smartphone apps. As a matter of fact, space has become a scarce commodity.  With people renting their garden plots to those who want to grow their own vegetables, and attics to those in need of storage.

LetMeSpace in Spain provides a marketplace to rent out anything from parking space to unused storage. In Hong Kong, Boxful help you organize your life by collecting and storing unwanted belongings. Pubs are renting out space in the morning to those looking for some quiet to work.

The Commercial Real Estate Competitiveness Study, released in 2013, forewarned that the higher-priced office space in Manhattan could create a dearth of space available and affordable to the city’s companies. A 2015 CBRE analysis noted that in tight submarkets for office space, residential conversions could result in losses of affordable office space in the U.K.

At the same time, a lot of office space remains available: 185 million square feet in the United States is no longer in use and ready for reuse, according to the National Association of Real Estate Managers. The good news is, a host of factors are remaking office space, including increases in telecommuting, as well as preferences for more flexible and collaborative spaces. The underlying fundamentals certainly suggest that the need for flexibility, cost control, and more collaboration will continue, forcing companies in the near term to implement a variety of models to meet their needs with unused or limited space.

A lot of companies are now encouraging office sharing among individuals from noncompetitive industries. This arrangement allows companies to share some costs as well as an opportunity for rank-and-file workers and executives to learn how companies in other industries operate.

Virtual companies are trying to incorporate collaborative benefits of onsite work by offering employees the opportunity to work in the same physical space. For example, Automatic provides a monthly subsidy to team members who co-work as an incentive to collaboration.

LiquidSpace has helped small startups, and it has found space for large, established companies, including Accenture, AT&T and Whole Foods. Some of these requests range from individual desks to office suits.

In the late 1980s, Ray Oldenburg coined the term Third Place, to describe neutral, public spaces where professionals can spent their free time working on personal projects, socializing, participating in community events, and more. By contrast, the Second Place is workspace, where people collaborate with team members, conducts majority of their work, develop professional skills and more. The Third Place is neither living quarters nor office space, but public spaces where companies rely on to increase productivity, professional collaboration, and provide opportunities for employees to tap in experiences, perspectives and cultures.

To facilitate work in the Third Place, companies are encouraging a flexible space model by renting out unused office space, enabling employees to work in from coffee shops (on the same floor) and coworking spaces. At the same time, some companies are building unique spaces that mimic the comforts of the Third Place environments, providing additional opportunities for employees to get out from behind the cubes.

Other companies are redesigning their existing, unused workspace to offer far more convenient coworking options, as well as sharing extra space with like-minded companies from different industries, and introducing an additional monthly revenue stream. By leveraging platforms like Vrumi, Liquidspace, Spacehop and LetMeSpace, companies and their employees can work without the hassle of a traditional lease. Meeting rooms, coworking space, shared workspace, dedicated desks and more, are available at the click of a button.

Companies can capitalize on growing interest surrounding the Third Place model. Build out the existing framework and provide employees with the incredibly unique opportunity to discover and engage with local communities.

In the future, the mindset of working 8-5 in an outdated cubicle will change as employees demand greater flexibility and as companies begin to realize the benefits of optimizing the workspace. Over the next five to ten years, demand for practical office solutions will continue to increase and companies will need to leverage powerful platforms to successfully meet the needs of an increasingly mobile workforce.

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