Whether U.S. businesses are still on a staffing pause due to the recession, or feeling optimistic about the economy, there is a new trend reshaping office markets across the country: rightsizing. And while this term doesn't always imply a decrease in space, that has certainly been the case with most businesses, especially law firms.
In fact, a recent report from Chicago-based real estate services firm JLL found that law firms, on average, shed 17 percent of their space upon relocating in 2014 - up from 14 percent in 2013 - with many moving administrative functions off-site and, in some cases, adopting open-office floor plans that allow them to further reduce their real estate expenses. While this trend has most commonly been associated with the legal sector, other industries are adopting a similar strategy as they seek to maximize efficiency and facilitate collaboration in the workplace.
Although each company's circumstances are unique, most rightsizing moves are made for one of the following reasons:
- They overleased (or underleased): When a business is just getting off the ground, it can be difficult to determine how much space to lease due in part to a lack of historical data. Therefore, companies need to find that sweet spot between too much and too little space, both of which could hamper growth. If a business rushes through the leasing process or simply doesn't grow as planned, rightsizing allows them to correct the situation. Sometimes this means leasing more space, not less.
While the circumstances for rightsizing vary, the outcome is the same. In the end, it all comes back to cost. By taking a close look at their operations, companies can take the guesswork out of leasing and ensure they're paying only for the space they need, making it easier to rein in expenses over the long term.
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Frank Chalupa is president and co-founder of Amata Office Solutions, a Chicago-based real estate provider specializing in office solutions for companies requiring up to 10,000 square feet of office space.
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