What is the 3-30-300 rule for office costs?

How it works

The rule compares three yearly costs per square foot: $3 for utilities, $30 for rent and $300 for payroll, including salaries and benefits. JLL describes it as illustrating the average order of magnitude between those costs, so the figures are a ratio to reason with, not a benchmark for any one market.

Its main use is in business cases. Because payroll is a hundred times utilities and ten times rent in the rule, a change that helps people work even slightly better can be worth more than a much larger saving on energy or rent. Equally, cutting space in a way that makes work harder can cost more than it saves.

The real ratios vary by city, industry and building, and hybrid work changes the picture: the rule assumes the space is used by the people whose pay it counts. Teams applying it today use their own cost figures and measured occupancy rather than the rule's round numbers.

Formula

Cost per sq ft = Annual cost ÷ Office area, calculated separately for utilities, rent and payroll

Annual cost: The yearly spend on one layer: utilities, rent, or payroll and benefits for the people based in the office.
Office area: The area of the office in square feet, measured the same way for all three layers.

Worked example · illustrative figures

An office of 50,000 sq ft has annual utilities of $150,000, rent of $1,750,000 and payroll of $20,000,000 for the people based there.
Utilities: $150,000 ÷ 50,000 = $3 per sq ft.
Rent: $1,750,000 ÷ 50,000 = $35 per sq ft.
Payroll: $20,000,000 ÷ 50,000 = $400 per sq ft.
A 1% gain in productivity is worth $200,000 a year; a 10% cut in rent saves $175,000.

This office runs at 3–35–400: payroll is more than eleven times rent, so a small productivity gain is worth more than a sizable rent cut.

How to measure it

Use your own figures: utilities and rent from bills and the lease, payroll and benefits for the people based at the site.
Divide each by the same area, rentable or usable.
In hybrid offices, add a view per occupied seat, because the space serves fewer people each day than headcount suggests.

Examples

A workplace team argues for better meeting rooms and quiet space by showing that a small productivity gain is worth more than the rent saved by cutting them.
An energy project is judged not only on utility savings but also on whether better air and temperature help people work.

Benchmarks

JLL describes the rule as the average order of magnitude between a company's costs: $3 for utilities, $30 for rent and $300 for payroll, per square foot per year.
JLL Spark, The science of smart buildings
JLL notes that many organizations still rely on the 3-30-300 rule, and warns that focusing on those fixed costs overlooks the effect of design on well-being and productivity.
JLL, Office makeovers: giving employees what they want

Common mistakes

Treating the figures as market benchmarks; they are an illustrative ratio.
Using the rule to justify any spending on space without evidence that it helps people work.
Applying full payroll to an office that most people use only some days.

Frequently asked questions

What is the 3-30-300 rule?

It is a rule of thumb for office costs: per square foot each year, a company spends about $3 on utilities, $30 on rent and $300 on payroll. The point is the ratio. People cost far more than the space they use, so the workplace's effect on their work matters most.

Where does the 3-30-300 rule come from?

JLL describes it as a rule of thumb that illustrates the average order of magnitude between a company's utility, rent and payroll costs, and notes that many organizations still rely on it. It is not a formal standard, and the figures are a ratio to reason with rather than precise costs.

Is the 3-30-300 rule still accurate?

As a ratio it still makes its point: payroll is by far the largest cost tied to an office. The exact figures vary widely by city, industry and building, and hybrid work means fewer people use each square foot on a given day, so calculate your own ratios.

How is the 3-30-300 rule used in workplace strategy?

It is used in business cases for workplace improvements. If better rooms, air, light or coordination tools help people work even a little better, the gain can outweigh the cost. It also warns against space cuts that save rent but make work harder.

Total occupancy cost Everything an organization spends to occupy a workplace in a year: rent, operating costs, utilities, services and fit-out.
Cost per seat The total annual occupancy cost of an office divided by the seats it provides, or by the seats actually used.
Workplace experience (WX) How employees experience the office and its services, from finding a desk and colleagues to hosting visitors and getting help.
Workplace strategy The plan that links how an organization works to the space, policies and tools it provides for work.

Sources

Kadence editorial team · Last reviewed September 30, 2026