The Power Of The 95th Percentile: One Big Occupier Has A Formula To Calculate Office Space Needs

There is no one-size-fits-all solution, every office tenant is different and, indeed, the same company might have different needs for two of its offices. 

But nearly five years since the onset of coronavirus and a new world of work, some occupiers are beginning to feel that they can map out how much office space they need with more certainty, putting formulas in place to calculate the right number of square feet. 

“2020 was a catalyst for organisations to rightsize. First and foremost, they used that as a method of getting a healthier P&L,” Standard Chartered Managing Director and Head of Commercial Real Estate Services Surasen Naidu told the audience at the Bisnow UK Office Series: Leasing Trends & Occupier Demands event.

“Secondly, I think the spaces or the data that was utilised in terms of informing what that needed to look like from a rightsize perspective changed,” Naidu added at the event held at Brookfield Properties’ The Gilbert office building in the City of London. 

Standard Chartered had an average prepandemic building attendance of 76%, which dropped to 46%, including significant variations among different regions, he said. Africa and the Middle East operated at around 60%, Asia at 46%, and Europe and the Americas at 30%.

Those variations triggered it to do something different in terms of how it optimised office size as well as designing the space it did use. 

The formula it uses now involves monitoring building attendance over a six-month period at its 1,400 properties across the world. It takes the 95th percentile of building attendance over those six months, then multiplies that by 90 SF to get to the total amount of workspace it needs.

The 95th percentile of a figure is “the value where 95% of all measurements are under it, and 5% of measurements are over it,” according to an explanation on speedcurve.com.

Using the 95th percentile rather than an average gets rid of outliers like Fridays or public holidays, which would drag the average number of people in the office down and result in space being inadequate on many days. Using 95% of attendance usually means too much space, but the 95th percentile hits just the right spot, according to Standard Chartered’s calculations. 

The company is also using data to understand how its staff are using space and altering the layout of workspaces to fit.

“Our organisation has employed research analysts purely to look at how real estate data is being captured,” Naidu said.

“How do we plan for meeting rooms? Where in the past, we'd go to a business and they would say, ‘We need six-seater meeting rooms, four-seater meeting rooms,’ and so on and so on, we've used that data now to determine actually, you need two-person meeting rooms. And as a result, we have a more efficient real estate portfolio.”

The company created personas for different types of workers within its business, looked at how that kind of worker typically used space and with whom they interacted, and laid out floor plans accordingly. 

Traders, as a typical example, would normally be sat at rows and rows of desks next to other traders, more or less at assigned seating. Standard Chartered has now created trader adjacencies: Where there is a sales trader who is reliant on a risk professional, they now sit close to each other. 

“We didn't know that in the past, but we collected that through personas and through how they operate, and now we're able to design spaces that actually work for them,” Naidu said. “That makes them as productive as they can be and reduces things like latency as a result.”