FORTUNE -- So much for having your own little corner at work. For two decades, companies have been shifting to open workspace designs and eliminating dedicated offices in a twin effort to reduce real estate costs and encourage collaboration between colleagues. But as the per-person square footage of the typical workplace continues to shrink, many workers -- and managers -- are beginning to wonder whether we've reached the limit.
"In open workspaces, it's hard for people to get their work done if it requires uninterrupted concentration and focus," says Cali Williams Yost, a flexible workplace strategist and author of Tweak It: Make What Matters to You Happen Every Day. "People who have jobs that require private conversations or uninterrupted thinking really struggle."
A majority of employers allocate 150 square feet or less per worker, down dramatically from 225 square feet in 2010, according to a recent survey by CoreNet Global, a professional association for corporate real estate managers. Space per person is likely to continue to shrink, with 58% of companies expecting to increase employment in the next year. A whopping 81% of companies surveyed have already adopted an open-space floor plan.
Assigned space is unused 50% of the time, says Richard Kadzis, CoreNet's vice president for strategic communications. And cutting out that space can benefit a company's balance sheet.
AT&T (t) eliminated offices and consolidated workspace with savings of $3,000 per office for a total of $550 million per year, according to a General Services Administration report. Nortel's (ntl) telecommuting program saves $20 million a year in real estate, the equivalent of two 20-story office buildings with 40,000 square feet per floor.
But creating a decent workspace isn't as simple as tearing out office doors and putting in long rows of benches where employees can connect laptops, or putting in place a hoteling system for people to reserve space on an as-needed basis. Done right, an open floor-plan office will include strategically placed quiet rooms for "heads down" work, huddle rooms for small meetings or impromptu discussions, larger conference rooms, and social areas where all that collaboration and innovation can take place. There should also be access to plants and natural light, whether through windows, skylights or creative use of atriums.
Noise is often the most ignored factor in open design, says Kadzis. Acoustical engineers can do remarkable things with white noise and noise-absorbing materials, but they must be part of the design team. That group should also include executives from technology, environmental sustainability, human resources, and facilities management.
When editor Susan R. Paisner worked for a Washington, D.C. trade association, only 10 directors had dedicated offices, and the remaining 80 staffers shared one big open space divided into cubicles. "It was difficult for me because I was frequently being told to be quieter," Paisner recalls. "It was a very frustrating, difficult environment to work in."
There were a few small conference rooms in the office, but they were often booked. Once, a challenging issue arose, and she wanted to immediately sit down and speak privately with her staff, but they had to check every private space on the floor before finding one that was available.
Employers also need to integrate telecommuting and flexible work programs when they open these new workspaces, so managers and employees can match the type of work that needs to happen with the spaces and times that are available. For instance, someone who needs to concentrate on a large project should be able to shift her hours to come in before the office is noisy or work from home until she's met her deadline, Yost says. And employees need training to learn to manage where, when, and how they should work.
For anyone thinking that the challenges are greater than the benefits of open workspaces, you've got plenty of company. Even some real estate professionals believe that companies are over-building collaborative space at the expense of privacy and focus work -- 31% agreed with that statement in CoreNet's survey. But the cost savings are quite powerful.
"Open workspaces are not going away," predicts Yost. "Companies are going to take this as far as they can to save the overhead."