NZ companies ‘flying blind’ on office costs as hybrid work leaves expensive space sitting empty

New Zealand businesses are being warned they are flying blind on one of their biggest expenses, as hybrid work reshapes office use faster than most employers can measure it.

While many organisations have embraced flexible arrangements, few have a firm grasp on what that means for day-to-day occupancy and how much space they actually need. Instead, decisions about leases, redesigns, and fit‑outs are still often driven by gut feel.

"Most organisations don't have a clear understanding of how their space is actually being used. It's one of their biggest costs, but one of the least understood," said Steffan Wiliams, workplace strategist from Gaze Commercial.

The warning comes as hybrid work becomes widespread in New Zealand. Recent survey data shows 93% of organisations support hybrid models, with employees spending an average of 3.3 days per week in the office. 

Around one-third of employees are also working from home at least some of the time, according to official labour market statistics.

Despite this data, most offices were built and leased on the assumption of near full attendance across five days. In reality, workplaces are operating at around 64% utilisation across a typical week, meaning a significant proportion of space is sitting empty on any given day.

That gap between old assumptions and new behaviour is becoming more visible. Attendance now tends to spike midweek, creating pockets of overcrowding even as other areas sit idle. 

"While many workplaces were designed for a five-day, peak attendance now occurs midweek, while large parts of the office sit empty while others are over capacity," Wiliams said.

Despite clear changes in work patterns, many employers still lack hard data on how their offices perform. Basic questions, such as how many desks are typically occupied, which teams come in when, which spaces are consistently underused, are often unanswered.

"Many organisations continue to rely on assumptions, anecdotal observation, or outdated benchmarks when making decisions about leases, redesigns, and long-term workplace investment," Wiliams said.

Office costs in New Zealand  

Those decisions carry high stakes. Office costs, including rent, operating expenses and fit‑out, remain among the largest recurring items on corporate balance sheets. 

The average workspace is estimated to cost around $10,800 a year in rent, operating expenses and fit-out, based on an office provision of 10m² per person and commercial property market data.

"Better aligning space with actual use could save a 125-person company around $270,000 annually," Wiliams said, highlighting the potential savings when footprints are brought into line with real utilisation.

Internationally, more organisations are also turning to real‑time utilisation data to close this information gap. Sensor-based systems and analytics tools are being used to track how desks, meeting rooms, and collaboration areas are actually used across the week, then feed that insight into planning for future layouts and lease commitments.

In New Zealand, adoption of such approaches is still at an early stage, even as cost pressures intensify. 

Wiliams argued that the lack of robust utilisation data is no longer just a facilities issue, but a strategic risk. 

"That creates risk – not just in cost, but in how effectively the workplace supports the business," the expert said.

With many companies facing key lease events over the next 12 to 24 months, the questions of how much space to hold and in what configuration are becoming more urgent. 

Employers have been advised that the priority is to replace guesswork with evidence, and to distinguish between space that feels busy on some days and space that consistently earns its keep.

"This isn't about monitoring people – it's about businesses understanding one of their biggest costs," Wiliams said.