One Fortune 500 organization discovered that its underused office space was costing $3 million a year to operate. They were keeping the lights on, buildings conditioned, and security systems running across an office portfolio built for a workforce far larger than the one using it. More than $20 million had gone toward those operating costs since the pandemic began.
Nobody signed off on that spending as a strategy. It simply accumulated, one budget cycle at a time, until it became a number leadership couldn’t ignore.
They’re not the only ones keeping the lights on for empty desks. Two-thirds of organizations report using less than 60% of their office space on average, according to CBRE’s 2025 Americas Office Occupier Sentiment Survey.*
The extra expense of keeping an underused building running is often buried across multiple budgets – maintenance, utilities, security and deferred capital investment. Leadership teams may sense the inefficiency, but don’t have a way to see its true scale or cost.
Most organizations know they have excess space. The challenge is understanding which buildings still support the business and which have become a financial drag.”
– Jeff Harper, AIA / Principal + Commercial Segment Leader, McMillan Pazdan Smith
Key Takeaways
- Underused office space is more common, and more expensive, than most leadership teams realize.
- How to turn raw space data into a business transformation roadmap leadership can act on.
- The benefits of a real estate evaluation that follows a repeatable, disciplined process and leadsclients from start to finish.
- The right questions combined with the right data, can clarify if an office space consolidation, restacking, or divestment makes sense.
What Underused Office Space Is Really Costing
It’s been six years since the pandemic disrupted traditional office patterns, but many corporate real estate portfolios still reflect pre-pandemic staffing models. Hybrid and remote work have reduced daily occupancy, while future office growth is less certain. Newmark’s analysis of AI’s impact on the office sector projects that office-using employment growth will be nearly flat through 2030, compared with the roughly 2.4% growth economists would otherwise expect.
For many organizations, that means space once expected to fill naturally as headcount grew may now remain underused.
When Excess Space Becomes a Business Problem
The financial cost of underused space is only part of the picture. Four other factors tend to compound the negative impact.
1. Space Misalignment
Many portfolios are still sized around pre-pandemic workplace standards. In some cases, organizations average 500 square feet per employee compared to historical benchmarks closer to 150 to 175 square feet. The result is buildings that remain fully operational, staffed, and maintained while sitting largely empty most of the week.
2. Culture and Collaboration
Lower in-office density can mean fewer spontaneous interactions and a harder time sustaining day-to-day workplace culture. This is critical for an organization’s retention. According to SHRM, workers in a positive organizational culture are almost four times more likely to stay with their current employer. For some organizations, the answer isn’t simply minimizing space. Helping clients pair smaller footprints with more intentional workplaces, including neighborhood-based work areas, unassigned seating, quiet focus rooms, wellness spaces and other settings that give employees more choice in how they work.
3. Aging Infrastructure
Buildings that were never candidates for major reinvestment because they were “working fine” can quietly accumulate years of deferred maintenance, inefficient layouts, and outdated systems. Then the temporary and delayed fixes can compound and lead to more expensive corrections.
4. Decision Paralysis
Large organizations with multiple stakeholders and competing priorities often lack a forcing moment to act, so the issue persists until a facility failure, lease event, budget cycle, or leadership change forces it back on the table.
How to Turn Portfolio Data Into a Roadmap
Many of these factors usually aren’t identified in a standard space inventory. Even when organizations have the data, it may sit across facilities, finance, human resources, and individual business units without being viewed together, holistically.
For that Fortune 500 organization, the underlying data already existed. What was missing was a way to frame it so leadership could see what the mismatch meant for the business. By translating raw portfolio data into measures such as square footage per employee, acres of conditioned space, and annual operating costs, an abstract utilization problem was turned into a much more tangible business case.
That’s why the first step in any consolidation conversation is building a clearer picture of how the portfolio is performing and translating that information into something leadership can use to make decisions rather than jumping straight into design.
The turning point is never the utilization percentage; it’s the dollar figure. It’s important to illustrate what that gap is actually costing per year, and then the conversation changes from ‘should we study this’ to ‘which path makes the most sense,’ ”
– Jeff Harper, AIA / Principal
Comparing the Options: Restack, Consolidate, or Divest?
A useful portfolio evaluation brings together information that often resides in different parts of an organization, including real estate data, operating costs, staffing projections, workplace expectations, facility conditions, and long-term business priorities. Viewed together, that information can reveal options that no single dataset would identify.
» Reframe the Problem
Underutilization becomes easier to act on when you translate it from square footage into business impact. Looking at cost, culture, and operational efficiency together helps leadership see the scale of the issue and why it matters.
» Perform thorough Discovery
The numbers alone rarely explain why a portfolio is misaligned or what the organization will need next. Interviewing executives, facilities leaders, and human resources to understand future headcount, operational adjacencies, and workplace use often reveal what utilization data alone cannot show.
» Develop Scenarios
Most organizations benefit from comparing several defined paths rather than committing prematurely to one solution. Depending on what the analysis reveals, those scenarios may include:
- Reorganize teams and functions within the existing footprint if the location remains valuable, but space is used inefficiently.
- Combine operations when multiple facilities duplicate costs or consistently operate below capacity.
- Improve the space being retained when the organization needs a smaller footprint but a better employee experience.
- Remove a property from the portfolio when it no longer supports long-term operational needs.
- Preserve additional capacity when anticipated growth, specialized functions, or market conditions justify it.
» Evaluate Tradeoffs
Compare each scenario against operating and lifecycle costs, culture and collaboration, flexibility for future change, and real estate value, including potential sale or leaseback opportunities.
Plan for Long-term Implementation
Because these options are typically multi-year efforts, a phased roadmap helps leadership sequence decisions rather than treating office space consolidation as a single, all-or-nothing event. Helping organizations establish a roadmap across a five- to 10-year horizon that includes identifying which decisions need to happen first and where future workplace, renovation, or portfolio moves may follow.
This type of evaluation is the foundation of McMillan Pazdan Smith’s advisory services approach. Our team helps organizations connect portfolio data, facility conditions, workforce needs, and business priorities to develop practical scenarios and a phased path forward.
Questions to Answer Before Making an Office Space Decision
Before recommending a direction, McMillan Pazdan Smith’s advisory service team guides leadership to answer these questions through portfolio analysis, stakeholder discovery, and scenario planning:
- How does current utilization compare to what the space was originally designed to support?
- Is our real estate owned, leased, or mixed, and how does that shape our flexibility?
- What would each path forward (space consolidation, optimization, or status quo) cost over 5-10 years?
- How would each option affect culture, collaboration, and employee experience?
- Do we have a forcing moment, such as a lease expiration or budget cycle, to act on this decision?
Right-Sizing as a Long-Term Business Strategy
Framed correctly, a consolidation decision is rarely just about reducing square footage. It’s an opportunity to reinvest in higher-quality space, rebuild workplace density and culture, and align a real estate portfolio with how an organization operates today and where it’s headed next.
In some cases, that may mean selling an underperforming asset. In others, it could mean restacking teams, combining business units, allowing a lease to expire, evaluating a new location or investing more strategically in the space the organization chooses to keep. The right answer depends on what the portfolio data reveals and what the business needs their workplace to accomplish.
Organizations that treat this as a one-time, cost-cutting exercise tend to under-invest in the planning work upfront. Those that treat it as a multi-year strategic process that’s grounded in real data and evaluated against more than one scenario are better positioned to make a decision that leadership can stand behind and implement over time.
Learn More:
- Designing for Cognitive Comfort: Rethinking Workplaces for Neurodiverse Talent
- Designing Better Buildings for Humans: Sustainability, Wellness, and Lasting Impact
- Or, visit more efficient workplace projects:
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United Community Headquarters.
