Office Refurbishment ROI
If you’re thinking about an office refurbishment at your company, your management team will probably want you to build a business case. There are many benefits of an office refurbishment, from reduced operational costs to improved wellbeing. However, this isn’t enough to build a good business case. You need to be able to prove the return on investment that an office refurbishment can provide for your company.
The best way to build a solid business case for your proposed project is to use company data and industry research. This will enable you to prove the cost savings and performance benefits that your new design will provide. You can then factor in more subjective benefits, such as improved wellbeing and engagement.
At Zentura, we’ve been refurbishing offices in London and across the UK since 2008. When we first speak to companies, they are often unsure how to build a business case for their specific project. We’ve helped many of these companies to assess if they should go ahead with their project.
In this article, we'll explain the 3 essential steps to building a solid business case for your office refurbishment. We’ll then go through some of the most important benefits of office refurbishment, and how they may help you build a business case for your office renovation.
Collate & Analyse Data
If you’re trying to convince your board to invest in an office refurbishment, you will need facts and data, not assumptions and speculation. There are 3 main ways you can gather data to build your business case. These are internal research, secondary research, and workspace consultancy.
The best place to start is always internal research. You will have existing data held within your business about the leasing and operational costs of your office. You will also know how many staff work in your office. You could add to this by surveying staff about what is working well for them in your current office, and what is holding them back.
Secondary research is research carried out by someone else that is relevant to your situation. Many studies have researched how different elements of workplace design can impact performance, collaboration, and wellbeing. This research can help you understand the impact that an optimum workplace design can have. However, the design and culture of the offices in the research may well be very different from yours. Consequently, the exact impact of the factors will be different for you.
If your project is particularly important for your company, then you may want to engage a workspace consultant. They will be able to carry out multi-round surveys, space utilisation studies, and user workshops. The will enable them to build up a detailed picture of your current workspace, and how it could be optimised. To learn more about workspace consultancy, read our article, what is workspace consultancy?
Cost savings are a good place to start building your business case because you can be more certain about their impact. It is also a lot easier to persuade other stakeholders about the importance of reduced real estate costs.
Despite many professional services companies spending 10-15% of their annual revenue on real estate, 30-50% of it is often wasted! Especially with the recent rise in hybrid working, many companies have far more space than they need. By working with an office designer, you could create a far more compact layout. You could then create a sublet office to bring in additional income.
Operational costs are also a key part of any office renovation business case. The actual cost of running the office every day can come to a surprising total – around 25% of annual rent. A refurbishment is an opportunity to assess these costs and if it is worth replacing old systems with new, more efficient ones. For example, modern HVAC systems are up to 50% more efficient than systems from 10 or more years ago. This can create a 20% saving in your total office energy costs.
It is also worth looking at related real estate costs beyond office leasing and operational costs. For example, if your staff often book meetings at external locations, an office refurbishment could save these costs by creating a more collaborative space.
Focus on Performance
While cost savings may be more tangible, the main benefits of your office refurbishment will come in improved performance. Even if your current workspace is inefficient, there is only so far costs can be cut before you will harm the performance of your company. The possible performance benefits have a lot more potential.
The crucial benefit executives will be looking for in an office refurbishment is an improvement in productivity. In recent years, this has become a major issue for businesses across the UK, with productivity falling by 3-6%. One component of this is workspaces that no longer suit the way staff work. 2 in 3 office workers say that an inadequate office space has an adverse effect on their in-work performance.
Research shows that a well-designed office can increase productivity by up to 20%. By creating an environment that suits the varying tasks of your people, their office will no longer hold them back. As a result, your overall company performance will improve. An excellent office design will also help keep them inspired and motivated throughout the day, further improving their productivity.
Recruitment & Retention
Another crucial benefit of a well-designed workspace is the positive impact it has on talent attraction and retention. High performers in your workspace are about 400% more productive than the average performers. Keeping them and attracting more like them is absolutely essential.
In the war for talent, an excellent workspace experience can set your company apart from the competition. Up to 48% of employees consider their current office design to have a major impact on whether they stay working for a company or not. A great workspace can also help attract talent to your company by providing a unique first impression.
Of all the varied benefits of office renovation, wellbeing is perhaps the hardest to quantify. However, a healthy workforce is essential to the success of your company. Poor health is a major drag on workplace wellbeing. Workers in the UK lose an average of 30.4 working days a year due to illness-related underperformance. This costs the economy £78bn.
Modern offices maximising biophilic design have reported a 30% decrease in sickness-related absences. They also reported an increase in cognition and sleep quality. An ergonomic and biophilic workspace will boost the physical health of your people, while an on-brand and inspiring design will boost their mental wellbeing.
Planning Your Office Refurbishment
Building a definitive business case for your office refurbishment can be difficult. Real estate and staffing are two of the highest costs your company faces, so the stakes are high, but it is often difficult to find the data you need. By starting with cost savings, you will be able to build a solid foundation for your business case. More subjective benefits such as wellbeing can increase the strength of your business case.
How to build your business case will also depend on your brief. If your project is small churn works to allow for staff growth, then you may not need to create an ROI assessment at all. On the other hand, if this is a strategically important project for your company, then you will probably need the expertise and data experience of a qualified workspace consultant.
An office refurbishment could reduce two of your greatest costs whilst improving the performance of your people. Consequently, it could deliver excellent ROI for your company.
To learn more about planning for your office refurbishment, check out our article “how to set an office refurbishment budget”. There, we’ll discuss our simple 4 step process you can use to make sure you set an office refurbishment budget that is right for you. To learn about other areas of planning a successful office refurbishment including timeframes and contractor selection, read “5 steps to office refurbishment success”.
If you want to find out what your planned office refurbishment might cost, check out “How Much Will it Cost to Refurbish my Office in 2023?”. There, you’ll find indicative costs per sq/ft, as well as the different types of office refurbishment, and what can drive the cost up or down.