Square footage of office space is a step function. You have to move office space whenever you outgrow your current office space. It's the move out and move in process that is expensive.

That's usually why companies jam employees together. The space starts at 8x8 for each employee and shrinks over the years because the company can afford the incremental cost of adding headcount but can't afford the big cost of moving to a new space.

At one place I worked thy shrunk everyone from 8x8 to 8x6. I never really understood why especially after seeing it could only save around $400. It took on average a few days to pack up a cube because it was also used as a declutter time (IT goes a few hundred unused computers out of it) The company paid someone else to move our boxes to the wall, convert all our cubes to 8x6 and then move us back. The company had to buy all of the 6x5 foot cube parts (as we had all 8x5). And and in another lost day for unpacking. Moral was low because 1) you got a much smaller spot 2) the promised common areas never came, 3) there were now huge open areas where they didn't put in new cubes reminding us that we have less space. And the kicker? When we started there were already free cubes from layoffs...

Edit: The company owned the whole building so shrinking the space we used didn't reduce our rent.

i don't think cutting costs by reducing office space has anything to do with employee productivity....it has more to do with cutting costs.

it is still a good point to optimize where it matters.

It's true in programming and its true everywhere else: don't optimize before you find the real bottlenecks. Otherwise you'll have a 1% gain but all sorts of unforeseen consequences start popping up.

It has to do with maximizing the return per employee, so to say. Otherwise you might as well fire the employee and save 100% of the salary.