Nevermind TPS Reports! Will Recession Shrink Your Office Space?

In the 7 1/2th-floor office of the fantastical 1999 film Being John Malkovich, the ceilings are so low that workers

In the 7 1/2th-floor office of the fantastical 1999 film Being John Malkovich, the ceilings are so low that workers must walk hunchbacked. (Perhaps more to the movie’s point, a magical door in one office opens onto a crawl space that sucks visitors directly into Mr. Malkovich’s brain.)

In the almost-as-fantastical universe of New York real estate in 2009, the ersatz industry standard that one employee requires approximately 200 square feet—an admittedly inflated average that includes bigwig corner offices, bathrooms, hallways and kitchens—is shrinking.

And so, following in the stead of the $100-a-square-foot rent and the $1 billion tower sale, another trope of the high-on-the-hog office universe bites the dust.

“While financial service firms have always focused on layouts with open area, the current trend is to become even more operationally efficient by really packing the traders and analysts into cubicles,” said Ben Friedland, a senior vice president at CB Richard Ellis. “This decreases the overall square footage per employee.” 

“People are squeezing everyone,” said Laurence Jones, of Laurence G. Jones Architects. “They’ll put them into 150 to 200 square foot [spaces].”

A number of factors are pushing office users in this sardine-can direction. Chief among them: the economy.

“Right now, it’s almost all money-driven,” Mr. Jones said.

Or, as Paul Frischer, Newmark Knight Frank’s executive managing director of research and real estate strategies, wrote in a recent research report: “The expectation is that, during periods of growth, the amount of space required per employee would increase as companies are prepared to take on additional space. This expansion would include the promotion of employees from cubicle space to office and more open-space facilities that would include conference rooms. In periods of decline, it is expected that companies will shed space to reduce excess capacity and maintain overhead in line with revenue. This practice would include the forgoing of lease renewal and the subletting of vacant space.”

The economy also seems to be accelerating the preexisting movement toward European-style offices, such as the more open, egalitarian spaces filled with cubicles for management and lower-level staff adopted years ago by noted businessman Michael Bloomberg and others; and the “benching” now commonplace among hedge funds and slowly being adopted by other industries.

“Benching” is not a medieval torture device.

“It’s like sitting at a picnic bench,” said Dag Folger, an architect who, with Brad Zizmor, runs aplusi architecture. “Long, long, long, long [benches]. It’s about open communication. That has started to trickle down. There are a lot of hedge fund spaces that are on the market, and we’re working with a number of firms that may decide to take that [space], even though the function that’s going in there is not primarily a hedge fund function.”

One benefit of the benching model—aside from getting to overhear all of the once private conversations of one’s colleagues—is that it allows for more flexibility. (Benching models often come with glass-walled “phone booths,” complete with computer terminals, so, as Mr. Folger put it, “if I have a rash on my back, you shouldn’t have to suffer through me talking about that.”)

“Tenants don’t know how their business is going to be, so flexibility is really the key,” Mr. Folger said. “Furniture is a lot more easily flexible and convertible than moving walls.”

  Nevermind TPS Reports! Will Recession Shrink Your Office Space?