What is Occupancy and Utilization?

By Devon Maresco
Marketing Coordinator
SpaceIQ

Occupancy and utilization are two terms every facility manager needs to get familiar with. Not only are the terms themselves important to distinguish, the implications they have portend a significant amount of workplace decision-making. What is occupancy and utilization in the context of the workplace? Individually, they’re two crucial metrics for workplace governance. Together, they’re ingredients in the formula for workplace efficiency.

Here’s a look at occupancy and utilization in the context of the workplace, and the roles they play in engineering productivity, agility, and efficiency.

What is space occupancy?

Space occupancy is the measure of total employees in a workplace at a given time. It’s usually represented against the total capacity, to show occupancy rate. You can also measure space occupancy within the context of square footage, which is most common when facility managers seek to understand utilization.

Generally, space occupancy is a measure of people. It’s one side of the relationship between workspaces and how they’re used.

What is space utilization?

Space utilization is the other side of the workplace equation and represents a measure of usage. It’s represented as the rate at which employees use a particular space. Utilization can be a static measure, as well as a dynamic one. For example, you can measure the utilization of a space right now or over a period of months, weeks, days, or even hours.

Utilization provides insight into efficiency—how well a company is able to capitalize on the cost of the space it’s paying for.

How do you calculate occupancy and utilization?

Both occupancy and utilization have their own formula. It’s important to understand and calculate them both, to benchmark both sides of the workplace equation. Here’s how to calculate them:

• The formula for space occupancy is occupied square footage divided by unoccupied square footage. If you occupy 20,000 square feet of space out of an available 22,000 square feet, your space occupancy rate is 90%.
• The formula for space utilization is occupancy divided by capacity. If there are 34 people in a building that supports 50, the space utilization rate is 68%. This also applies at the workspace level, and can become a fluctuating measure in agile offices.

These figures serve important purposes in everything from KPI tracking to data-driven decision-making about the workplace. Each metric applies to different aspects of space management, but more often than not, facility managers will use them in conjunction with one another for a more holistic measure of space efficiency.

How do occupancy and utilization work together?

Occupancy and utilization go hand-in-hand. Occupancy represents the people within a workplace; utilization represents their interaction with those surroundings. Together, it paints a clear picture of a workplace in motion.

Say, for example, your occupancy rate for a particular floor of a building is at 85%. Now, imagine that space utilization on that floor is only 39%. What does that tell you? For starters, it likely signs that people assigned to that floor aren’t working on it. Or, it could signal that there are too many workspaces—or not enough of the type those employees need. On the surface, it’s clear there’s a problem, and further investigation is likely to yield insights.

Now, consider a more complex example. You’ve adopted a flex work arrangement. Occupancy is down to 40% and you’re thinking of downsizing the office. Space utilization rates show 80% for individual workstations, 20% for conference rooms, and 50% for breakout spaces. Using this data, you decide to consolidate facilities to eliminate half of the conference rooms, reduce the number of breakout spaces, and increase the number of hotel workstations in a smaller workspace. Occupancy rises to 60% and utilization balances out among the different workspaces.

There are endless examples of how occupancy and space utilization inform each other. As facility managers delve deeper into these figures, they’ll learn more about how to manipulate them in the context of tangible improvements to the workplace.

How to incorporate these variables into space management

The importance of occupancy and utilization in space management is unparalleled. These two metrics serve as the foundation for setting the parameters of available physical space. Moreover, they inform workplace managers of their options for how to make the most of space in regards to demand for certain types of spaces. In some cases, it’s as simple as realizing the need for more space. In other situations, it means having the ability to make desking decisions based on utilization rates.

Occupancy and utilization are important metrics in their own right, as well as together. They’re easy to track and monitor, and extremely insightful. Facility managers should abide by the trends and patterns they produce, and shape the workplace according to the data. The result is a workplace that’s efficient, accommodating, and comfortable for everyone in it.

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