Michael Walker of SpaceLogik is a 30-year veteran of commercial real estate. He began as a tenant rep broker working out of his basement in his mid-20s. Over the decades, he also built a space analysis and efficiency system that drives the exponential value for office tenants, when compared to solely negotiating lease terms. He spoke with DisruptCRE about SpaceLogik, his patented space algorithms, and the savings that his company’s software and processes generate.
What drove you to come up with a workplace efficiency formula?
It was mostly out of necessity. As a boutique firm, it was almost impossible to win business from the big brokerage firms. On the few occasions when I did win, I would engage an architect to help with the programming, space projections, and planning. The problem was the space plans they produced were rarely in line with their original space estimates. That killed our budget, and sometimes it even killed the deal. At the very least, it usually meant we had to step back and consider buildings in a lower price range to fit the square footage and stay on budget. When this continued to happen on almost every deal, I started working on formulas. It just didn’t make sense that the industry couldn’t be at least reasonably close in projecting space accurately.
How did you come up with the formulas?
Well, I started by simply redrawing space plans that seemed obviously inefficient, partially to gain knowledge and partially to see if I could reduce my clients’ rent. While I was doing this, I made it my business to fully understand different space planning situations, furniture options, workplace trends and tricks to plan in unusually shaped buildings. I also noticed definite patterns in layouts and design by some of the architecture firms that just didn’t make sense from an efficiency standpoint. Lastly, I started questioning what seemed to be random circulation factors that all the architects used. With all that, I developed a circulation formula based on the assumption that space was efficiently designed space but also adjusted the required circulation based on the size of each area and the desired aisle widths.
But after testing that formula on a number of projects, it noticed it wasn’t working 100% of the time. I finally realized that every building has characteristics that make it either easier or harder to efficiently layout space and there needed to be some adjustment for that. So that led to a second algorithm that adjusted space projections based on each building’s relative efficiency. Both the original circulation algorithm and the building efficiency algorithm have since been awarded patents and are really the nucleus of the entire software application.
How does your quantitative analysis differ from what the rest of the industry is doing?
The first mistake that traditional space projections make is applying a circulation factor that really has no mathematical basis to it at all. I tell people all the time: “It’s not that it’s bad math, it’s that there’s no math at all.” It’s really an educated guess based on what’s happened in the industry for decades and decades, a rule of thumb. But just like the skin is the largest organ in the human body, the circulation area is by far the largest single space in any space program. But nobody has ever really questioned it because they assume that there is some architectural foundation for it. There isn’t.
The other half of the problem is another broad assumption that a tenant needs the same amount of space in all buildings. This is pretty far from the truth. I’ve worked with clients who originally were told they needed 100,000 square feet regardless of the building, and only to have our software show them that they actually need 79,000, 83,000, 86,000 and 91,000 square feet, depending on the efficiency of the various properties they’re considering.