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​​​​​​​​​​​​​​​​​​When you’re looking for a new office space, what’s on your short list of considerations?

​​​You’ll likely prioritize things like location, layout, amenities, lease flexibility and—perhaps most importantly—rental rates.

In comparing leases, you can probably save a couple bucks per square foot. But what if that $3-$4 in space savings actually lost you money elsewhere? What if that cheaper office on paper is really more expensive because of its negative impact on employee engagement and wellbeing?

There’s a better way to evaluate your building’s true costs when you’re considering a new lease, and it can save you far more than $3-$4 per square foot: Productivity potential.​

The 3-30-300 rule of real estate

​​​​​We know pretty instinctively that better productivity saves money, but how can we prove it? Beyond that, how can we prove that it’s more impactful than rent savings?

Let’s compare their annual costs. The 3-30-300 rule illustrates the average order of magnitude between a company’s costs for utilities, rent and payroll (all per square foot, per year).

  • $3 for utilities
  • $30 for rent
  • $300 for payroll 

While actual figures will vary across locations and organizations, 3-30-300 is a solid rule of thumb. For example, where a 10% increase in energy efficiency would yield $0.30 savings per square foot and a 10% decrease in rent would save $3.00, a 10% gain in productivity is worth $30.​

The 3-30-300 calculator

That’s where JLL’s 3-30-300 calculator comes in. Using this tool, we input a company’s values for things like rentable area (that’s square footage), rent rates, employee salaries, average sick days and employee retention. The calculator then spits out their actual 3-30-300 and total cost of occupancy (TCO). From there, you can play around with attributes to calculate cost savings.

As an example: Using the 3-30-300 calculator, we find that a company with a TCO of just over $60 million per year and a human capital cost of $54 million can save:

  • $1.50 p.s.f./year with a reduced absenteeism rate of 10%
  • $11 p.s.f./year with 10% improvement in employee retention
  • $65 p.s.f./year with a 10% improvement in productivity

Even if you cut the same company’s improvements down to just 2% across the board—you’re still looking at $13 per square foot savings annually.

That’s a lot better than $3-4, don’t you think?

Not sure how your space can actually improve productivity? Learn more​