Xymax Real Estate Institute

TOPIC REPORT

Reconsidering How to Assess Office Space Due to the
COVID-19 Pandemic
Assessing from Coming-to-office Ratio and “Office Space per Desk”

December 14, 2021

The rapid spread of telework due to the COVID-19 pandemic and the resulting decrease in the numberof people going to the office have likely generated redundant office space and desks at many companies.
While companies have traditionally assessed their necessary office space based on the number of officeoccupants (employees who belong to the office and are eligible to use the office), going forward they will
have to reconsider the office space and improve workplace efficiency in view of a hybrid work style thatcombines in-office work and telework.
With this hypothesis as a starting point, Xymax Real Estate Institute (“Xymax REI”) analyzed therelationship between the current coming-to-office ratio (percentage of employees coming to the office)and the office space of companies located in the 23 wards of Tokyo (hereinafter, the “Tokyo 23 Wards”),
based on the results of Metropolitan Areas Office Demand Survey Spring 2021 conducted in April 2021.*1
The optimal solution to post-pandemic office space will be complex, derived not only by the number ofoffice occupants but also by the coming-to-office ratio as well as new factors according to this ratio. In thisreport, we provide recommendations on how companies should formulate such complex and sophisticatedoffice strategies and overall workplace strategies according to the work styles they adopt.
*1 Metropolitan Areas Office Demand Survey Spring 2021, released on June 9, 2021
https://www.xymax.co.jp/english/research/images/pdf/20210609.pdf

1 tsubo = Approx. 3.3 sqm

Summary1.

As companies reduced their coming-to-office ratio due to the pandemic, conventional
offices that were developed based on the number of office occupants are seeing a rise inredundant space and a decline in area efficiency.

2.

As the number of people using the office fluctuates, we are reassessing the office space
through “office space per desk” instead of the previous “office space per person” based ona new, desk-related indicator of “desks per coming-to-office person” (number of desks per
coming-to-office worker), in addition to personnel-related indicators of “number of officeoccupants” and “coming-to-office ratio” (Figure 1).
Figure 1: Reconsidering How to Assess Office Space

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate InstituteAs a basis for companies to consider their office space, we calculated the “desks per coming-to-officeperson” and “office space per desk” of companies located in the Tokyo 23 Wards based on the survey
data.
The office space per desk as of April 2021 was 2.86 tsubo (median value).

The desks per coming-to-office person as of April 2021 was 185% (median value). This means that1.85 desks are currently provided for each coming-to-office worker. This is a relatively high level ofsurplus. Companies’ intended post-pandemic desks per coming-to-office person was 120%
(median value).

3.

Going forward, we assume that companies’ workplace strategies will become more diverse inaccordance with the characteristics, work styles and management policies of each company. There
will likely be two major directions in companies’ workplace measures and accompanying office space.
Reduce space: An increasing number of companies are likely to reduce their numbers of desks inaccordance with the drop in their coming-to-office ratio and reduce the space of their main officewhere employees congregate. However, this will not necessarily lead to a net decrease inworkplaces, since many companies will try to decentralize their workplaces by providing places towork in the suburbs (e.g., satellite offices, working from home) in return for downsizing their main
office.



Do not reduce space but expand in some cases: It is preferable for companies embracing a hybrid
work style that combines in-office work and telework to increase or enhance space that has thefunctions of the main office and aim to create higher-value-added offices. These companies will
not downsize their main office but may even expand it in some cases.

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute

Assessing the necessary office space from the number ofoffice occupants is no longer viable
Each year between 2013 and 2019, Xymax REI has analyzed and released information on the leased space
per user of typical offices through the Office Space per Person survey.*2*2 Reference: Office Space per Person 2019, released on October 2, 2019https://www.xymax.co.jp/english/research/images/pdf/20191002.pdf

In a pre-pandemic world where it was assumed that all employees came to the office, the number ofoffice users roughly equaled the number of office occupants. Therefore, it was easy to calculate thenecessary office space using the following formula: number of office users × office space per person.
Due to the pandemic, however, the Japanese government requested companies to reduce the numberof workers coming to the office by 70%, forcing companies to control their number of coming-to-office
employees. Figure 2 shows the coming-to-office ratio at the time of the April 2021 company survey andcompanies’ post-pandemic intentions toward the ratio. As you can see from the distribution, the ratio
during the pandemic significantly varies between companies, suggesting that companies’ approaches tothe coming-to-office ratio are highly individualized. At the same time, we also found that the ratio was
generally reduced to around 60% on average both in the actual ratio and future intention, with “100% (allemployees coming to office)” accounting for only 12.9% in the actual ratio and 19.3% in intention. In otherwords, the number of office users and the number of office occupants are likely to differ even after the
pandemic. In that case, it will be more appropriate to use the number of workers coming to office—derived
by multiplying the number of office occupants by the coming-to-office ratio—as the number of office users
instead of the number of office occupants.
Figure 2: Coming-to-office ratio (Actual Figure as of April 2021 and Post-pandemic Intention)

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
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TOPIC REPORT｜Xymax Real Estate Institute
In order to see how the difference between the number of office occupants and that of coming-to-office
workers affects office space per person, we first calculated the office space per person for both groups ofworkers. To exclude outliers in the analysis, only tenants with an office space per office occupant of at least
0.5 tsubo but less than 15 tsubo were subject to the analysis.
Figure 3 shows the distribution of office space per office occupant and per coming-to-office worker ofthe respondent companies located in the Tokyo 23 Wards. The median office space per coming-to-office
worker was 5.78 tsubo, differing significantly from the median office space per office occupant (3.29 tsubo).
Amid continued restrictions on coming-to-office, the conventional offices that were developed based on
the number of office occupants are seeing a rise in redundant space and a decline in area efficiency.
Figure 3: Office Space per Person (Office occupant and Coming-to-office worker) (As of April 2021)

Thus, in order to estimate the necessary office space in a situation where there is a difference between
the number of office occupants and the number of workers coming to office, it would be appropriate toconsider the coming-to-office ratio in addition to the conventional number of office users, i.e., the number
of office occupants.

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate InstituteHow to assess office space that is becoming complex due tothe emergence of “coming-to-office ratio”
Considering the optimal office space based on coming-to-office ratio and thenumber of desks
As described in Chapter 1, it is becoming difficult to calculate the necessary office space by simply
multiplying the number of office users by the office space per person, since the number of people actuallyusing the office is fluctuating due to the emergence of the new concept of “coming-to-office ratio.”
Therefore, the objective of this report is to present a basis for considering the appropriate office spaceand layout that suit companies’ post-pandemic coming-to-office measures. We do so through areassessment of office space by focusing on the number of desks [1] (for details, refer to <Reference> atthe end of the report), which is more relevant to office space, instead of the number of people, which is
now fluctuating.
Office space ＝ Number of office occupants × Coming-to-office ratio
to-office person × Office space per desk [1]× Desks per coming-

In the above formula, “desks per coming-to-office person” means the percentage of desks per comingto-office worker. This ratio and “office space per desk” are indicators that companies must set theappropriate value for, as for “coming-to-office ratio”. To provide a basis for doing so, in sections 2 and 3
we calculate the desks per coming-to-office person and office space per desk of companies located in theTokyo 23 Wards based on the survey data and present them as the present reference values.

Actual state of office space per desk
Figure 4 is the distribution of office space per desk calculated from companies’ leased space and numberof desks in their offices, which they replied in the April 2021 survey. The median value was 2.86 tsubo per
desk, with a majority of the companies falling between 2 and 4 tsubo. At the same time, companies withmore than 6 tsubo per desk also accounted for a little less than 10%.
Figure 4: Office Space per Desk (As of April 2021; n=714)

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute<PICK UP> Office space per desk by number of office occupants
An examination of the office space per desk by the number of office occupants revealed that offices withsmaller numbers of office occupants tended to have larger office space per desk (Figure 5). We assume
this is because small offices with smaller numbers of office occupants still need to provide the minimum
office functions as in larger offices, resulting in relatively large percentages of space for other than work
desks.
Figure 5: Office Space per Desk – By Number of Office occupants (As of April 2021)

Current state and future intention of desks per coming-to-office person
Figure 6 is the distribution of companies’ current (April 2021) desks per coming-to-office person andtheir post-pandemic intended ratio. The median current (April 2021) ratio was 185%. This means that 1.85
desks are currently provided for each coming-to-office worker. This is a relatively high level of surplus.
On the other hand, the median post-pandemic ratio was 120%, which indicates that companies intend
to reduce the number of desks going forward.

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
Figure 6: Desks per coming-to-office person (As of April 2021 Ratio; Intended Post-pandemic Ratio)

Figure 7 shows companies’ intended post-pandemic desks per coming-to-office person in detail, inincrements of 10%. Around 50% of the companies fall between 90% and 129%, which implies thatcompanies intend to reduce their numbers of desks more systematically in accordance with their future
coming-to-office strategies.
Figure 7: Intended Post-pandemic Desks per coming-to-office person (n=706)

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute

Patterns of workplace strategies going forward and theresulting directions of office space
Many companies are still in search of or exploring the direction of post-pandemic workplace strategies.
Therefore, the aforementioned indicators will inevitably continue to change in accordance with theadjustments in companies’ workplace strategies, which accelerated due to the pandemic.
While our analysis has implied that the number of desks in offices will generally be reduced to morepractical numbers and office space be streamlined going forward, we also found that a certain number ofcompanies intend to have their coming-to-office ratio return to nearly 100%. We assume that workplacestrategies will become more diverse after the pandemic in accordance with the characteristics, work styles
and management policies of each company.*3 There will likely be the following two major directions incompanies’ workplace measures and the accompanying assessment of office space.
*3 Reference: Companies’ Workplace Strategies Identified Following the COVID-19 Pandemic, released on December 1, 2021
https://www.xymax.co.jp/english/research/images/pdf/20211201.pdf

Streamline main office space by decentralizing workplaces
One of the directions is to reduce office space. Reducing the numbers of desks in accordance with thedrop in the coming-to-office ratio to streamline the space of the main office began immediately after theoutbreak of the COVID-19 pandemic. In our survey, a comparison of companies’ intentions to reduce theiroffice space by their coming-to-office ratios in April 2021 revealed that companies with a lower comingto-office ratio tended to have stronger intentions to reduce their office space after the pandemic (Figure
8).
Figure 8: Intention to Reduce Office Space – By Coming-to-office Ratio as of April 2021

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate InstituteHowever, these “downsizers” are not just simply thinking to reduce their workplaces. When we asked
companies about post-pandemic workplaces other than for head office functions in our Greater Tokyo
Company Survey on Work Styles and the Workplace | July 2021,*4 we found that the “downsizers” hadstronger intentions to “enable employees to work in suburb (e.g., satellite office, work-from-home)” (60.4%)
than office “expanders” and weaker intentions to “centralize only in head office” (7.1%) (Figure 9). In otherwords, many companies plan to decentralize their workplaces by providing a satellite office in the suburbs
or introducing a work-from-home policy in return for downsizing the conventional main office that had
been intended for employees to congregate.
*4 Greater Tokyo Company Survey on Work Styles and the Workplace | July 2021, released on August 13, 2021 (in Japanese only)
https://soken.xymax.co.jp/2021/08/13/2108-greatertokyo_workstyle_survey_2107/

Figure 9: Post-pandemic Location of Workplace Other Than for Head Office Functions– By Intention toward Office Space

As you can see, a hybrid workplace strategy of reducing the main office space and actively decentralizing
places to work is likely to take root as one of the mainstream strategy patterns after the pandemic. In thiscase, the desks per coming-to-office person and office space per desk of the main office are expected tobe reduced and the conventional assessment of office demand to change significantly.

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
Redesign the main office by introducing a wide variety of spaces
The other direction is to introduce a wide variety of layouts other than the conventional work desk andnot reduce the total space of the main office even with fewer desks, and expand the space in some cases.
In the survey used in this analysis,*1 we found that many companies intended to not return an comingto-office ratio to 100% after the pandemic but to continue adopting a hybrid work style. In order toembrace a hybrid workstyle that combines in-office work and telework, it is preferable for companies toincrease or enhance space for strengthening the functions of the main office and aim to create a better
defined, higher-value-added main office.
*1 Metropolitan Areas Office Demand Survey Spring 2021, released on June 9, 2021
https://www.xymax.co.jp/english/research/images/pdf/20210609.pdf

In the Greater Tokyo Company Survey on Work Styles and the Workplace | July 2021,*4 the post-pandemic
main office strategies that companies were most interested in included “Place emphasis on communicationand functions for congregating” (43.1%), “Increase private rooms and booths for remote meetings” (38.9%)
and “Transform the office to a flexible layout (e.g., hot-desking)” (37.3%) (Figure 10). Going forward, wemight see a greater presence of function-specific spaces in the office in the place of desks, such as spaces
for encouraging collaboration among employees and for linking in-office work and telework toaccommodate a hybrid work style.
*4 Greater Tokyo Company Survey on Work Styles and the Workplace | July 2021, released on August 13, 2021 (in Japanese only)
https://soken.xymax.co.jp/2021/08/13/2108-greatertokyo_workstyle_survey_2107/

Figure 10: Strategy for Main Office Companies Are Interested in Post-pandemic (n=926)

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute

Conclusion
The pandemic has brought about drastic changes to the styles and places of work, triggering significant
modifications in the use of the workplace. Under such circumstances, companies are forced to reconsider
and optimize their workplaces in view of the post-pandemic world.
However, this does not simply involve adjusting the office space according to the number of office users,
which is now fluctuating due to the emergence of the “coming-to-office ratio.” What kind of workplacescompanies will develop going forward will become a crucial element that will also affect management
strategies and personnel strategies. It will be essential for companies to link in-office work and telework,
as well as setting out strategies with clear intentions. For companies to define their optimal workplace
space, it will no longer suffice to consider elements within the main office, such as office space per desk,coming-to-office ratio and desks per coming-to-office person, but it will be necessary to consider morecomprehensively by including elements of third-place facilities provided outside the main office.
As companies’ work styles and workplace strategies undergo dramatic structural changes amid thelingering pandemic, Xymax REI will continue to consider how to assess office space and macro-economic
office demand going forward.

<Reference> New calculation method for office space
The new formula for assessing office space by focusing not on the number of people, which is now
fluctuating, but on the number of desks, which is more closely related to office space, is as [2] below.
Office space ＝ Number of desks × Office space per desk [2]The number of desks above was previously calculated as [3] below.
Number of desks ＝ Number of office occupants × Desk provision ratio[3]

The “desk provision ratio” in [3] is an indicator of the number of desks per office occupant. Companies
only had to consider this ratio when the coming-to-office ratio was 100%. Going forward, however, thenumber of desks will be calculated as [4] below, since companies will have to consider the desks per
coming-to-office person, which is the number of desks provided for the number of workers coming to
office, which is calculated by multiplying the number of office occupants by the coming-to-office ratio.
Number of desks ＝ Number of office occupants × Coming-to-office ratio × Desks per coming-tooffice person [4]The “desks per coming-to-office person” in [4] is an indicator of the number of desks per coming-tooffice worker. The previous desk provision ratio will be replaced by “coming-to-office ratio”×“desks per
coming-to-office person”.
Based on [2] and [4] above, the office space for a hybrid work style that combines in-office work andtelework can be estimated by using formula [1] below.
Office space ＝ Number of office occupants × Coming-to-office ratio × Desks per coming-to-officeperson × Office space per desk [1]TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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TOPIC REPORT｜Xymax Real Estate Institute
Survey Overview
Original data

Metropolitan Areas Office Demand Survey Spring 2021 (Survey period: April 2021)

Targetrespondents

Of general office tenants occupying office buildings in the Tokyo 23 Wards, those with an office

Numberofvalid answers

space per user of at least 0.5 tsubo but less than 15 tsubo

714
・“Space” refers to the contractual leased space. It includes offices, entrances (reception areas), meetingrooms, break rooms, libraries, storage rooms and dedicated, enclosed hallways.
・“Number of office occupants” is the number of employees who are eligible to use the office though
may not be using it every day.
・“Coming-to-office ratio” is the companies’ current average coming-to-office employee ratio andtheir post-pandemic ratio, with 100% meaning all employees come to the office.
・“Number of workers coming to office” is the average number of employees coming to the office atthe time of the survey.

Remarks・“Desks” refer to desks in the main office where respondents replied that general work can be done.
They include fixed desks (e.g., islands of opposing desks, cubicles), hot-desking, group hot-desking,desks in open meeting space, focus booths and private rooms (e.g., for phone and online meetings),
canteens and café space, space for refreshing, space for external collaboration. They do not include
desks in meeting rooms (for small to large numbers of people), president/executive rooms, reception
areas, libraries and storage rooms, changing/locker rooms, server rooms, smoking rooms, day carespace, show rooms and event space.
・“Desk provision ratio” is an indicator of the number of desks per office occupant.
・“Desks per coming-to-office person” is an indicator of the number of desks per coming-to-office
worker.

The percentage mix in the charts contained in this report are rounded to the first decimal place and therefore may not add up to 100%.

For further inquiries please contact below:
Xymax Real Estate Institutehttps://soken.xymax.co.jp | E-MAIL: info-rei@xymax.co.jp

TOPIC REPORT: Reconsidering How to Assess Office Space Due to the COVID-19 Pandemic
The contents of this report are as of the time of writing. Xymax Real Estate Institute does not guarantee their accuracy or completeness.
This report may not be reproduced, cited, transmitted, distributed, or reprinted without prior permission of Xymax Real Estate Institute.
Copyright © 2022 Xymax Real Estate Institute Corporation. All rights reserved.

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