The balance sheet for good office space is much different than it looks at first glance. Steve McConnell does a nice chapter on this in Rapid Development and concludes that for prices in his area at that time skimping on office space to get more developers was a foolish decision - by about a factor of 100. (BTW I recommend the book, a good chunk of it will give techies good facts and figures to use to make a good case to management..)

Of course businesses have been ignoring research for years that says that code reviews are cost effective just in terms of improvements to debugging time. Let alone the implicit training benefits! In general costs that nickle and dime you to death get ignored by people because the up front bills are more obvious...