Behind an Underutilized Office Is More Than Just Extra Space

This does not mean that every square meter sitting empty at a given moment is underutilized. A company may rotate teams throughout the week, reserve capacity for peak attendance days or maintain space for future growth without necessarily using it inefficiently. Underutilization occurs only when leased space persistently exceeds what a particular operation requires.

Measuring that excess, however, is complicated. Real estate statistics can show how much space is occupied, but not how much space each company actually needs. Underutilization can therefore remain outside the vacancy rate, but not outside a company’s costs, where it can become more significant when liquidity declines. 

The problem becomes particularly difficult to correct because a company’s needs can change much faster than its real estate commitments. Headcount can fall, attendance patterns can shift or an operation can be reorganized within months, while leased space remains subject to terms, expiration dates and conditions negotiated around different needs. Unlike other expenses that can decline with activity, space costs do not automatically adjust when utilization falls. Real estate efficiency therefore depends not only on the price per square meter, but also on the ability to adjust that space as operations change.

The question this raises is when the flexibility a company buys with additional space stops being worth what it costs to maintain. Hybrid work may have made the answer harder to find, because an office must now be sized not only for the people who work there, but also for the uncertainty of how many will do so, when and in what way. In that environment, having extra space can be prudent; keeping it once it is no longer needed can be inefficient. And the line between the two is not defined by how many desks remain empty, but by how much it is worth to a company to be prepared to use them.

In the end, the most expensive square meter may not be the one that costs the most, but the one whose purpose a company can no longer explain.

For more analysis of Mexico’s office market, visit SiiLA Market Analytics or contact us at contacto@siila.com.mx.

***

¹ SiiLA estimate based on Q2 2026 market conditions. The universe analyzed comprises 6,194 occupancies corresponding to 5,195 tenants in 813 Class A+, A and B office buildings in Mexico City, Monterrey and Guadalajara, totaling 8.67 million sqm of occupied space. The reference cost includes the building’s market rent and maintenance fee. When the latter was unavailable, it was imputed using the observed median for buildings in the same market and class. This method produced the lowest prediction error among five alternatives evaluated through out-of-sample validation of observed fees (MAE: US$0.71/sqm/month; RMSE: US$1.07/sqm/month; median absolute error: US$0.51/sqm/month). The resulting figures represent reference real estate costs at market conditions, not the contractual rents actually paid by tenants.

² Typical occupancy refers to the median of observed occupancies in each market, a measure that is less sensitive to exceptionally large occupancies. The aggregate distribution illustrates this asymmetry: across the universe analyzed, the median is 591 sqm, compared with an average of 1,400 sqm, while the 99th percentile reaches 15,478 sqm.

³ As a sensitivity test, imputed maintenance fees were adjusted by ±20%, while all other components of the calculation were held constant. The aggregate monthly cost moved from US$236.05 million in the baseline scenario to a range of US$232.47 million to US$239.62 million, equivalent to a variation of approximately ±1.5%. Although 51.4% of occupied space is in buildings without an observable maintenance fee and therefore relies on an imputed fee, this test indicates that maintenance-fee imputation does not drive the aggregate result.