What do you do if your corporate real estate costs are spiraling out of control?

For most organizations lowering real estate costs means scrutinizing the overall size and scale of their portfolio. Systematic portfolio reviews analyzing occupancy rates, customer engagement and revenue tied to operational real estate is imperative to identify excess space and help shape a path to a leaner more cost effective portfolio.

Auditing operating expenses is sound practice, particularly in today’s climate of low office building occupancy. Some property owners may try to offset fixed operating costs like taxes, insurance, and common area maintenance by unfairly distributing them among fewer tenants, causing a spike in operating expenses. Engaging a skilled tenant representative is key; they can scrutinize your lease’s operating expense clauses to identify which costs should rightfully be passed through by the landlord. In cases where there is a high vacancy rate and you've noticed an uptick in expenses, a professional’s input is crucial for review.

Conducting a thorough audit of corporate real estate costs is indeed crucial which includes analyzing lease agreements, utility bills, maintenance expenses, occupancy levels, and other overhead costs to pinpoint areas of inefficiency or overspending. By analyzing cost data and identifying inefficiencies, companies can uncover opportunities to reduce expenses and optimize resource allocation. By establishing a culture of continuous improvement and cost consciousness, organizations can proactively monitor, evaluate, and optimize corporate real estate costs to adapt to changing business needs and market conditions.

If expenses are out of control look to the reasons. Inflation Poor forecasting Untrained team Lack of oversight of expenditure

It's becoming clear that while unassigned hot desking may suit employees who come to the office sporadically, it often falls short for companies with a hybrid model where in-person attendance is expected 50% or more of the time. Successful hybrid strategies typically rely on the concurrent presence of significant team numbers. Desk sharing within such frameworks can lead to issues and is generally unfavorably received by staff.

Optimizing space can involve practical & specific changes to how space is used. For example, warehouses can increase their storage density by installing racking systems & adopting vertical storage solutions, maximizing the utility of their footprint. In office settings, reducing physical paperwork through digitalization can lessen the need for extensive filing systems & storage areas, freeing up space for other uses. Companies can also redesign office layouts to include shared workstations and flexible meeting areas, which accommodate fluctuating occupancy levels & reduce the overall space required. These strategies not only streamline operations but also significantly cut down on the square footage needed, directly impacting rental costs.

In the current market, which greatly favors tenants, engaging a skilled tenant representative can be crucial. They can help explore the range of financial concessions a landlord might offer for mutually beneficial terms, such as extending the lease. It's also wise to cultivate various strategic options and scout the market for other landlords ready to present attractive lease proposals, even if your current lease is far from expiring. Leveraging this tenant-advantaged market can lead to substantial savings and added value for your business.

Relocating to areas with lower demand can significantly reduce corporate real estate costs. In these regions companies may find opportunities to downsize their space requirements or opt for flex space, which combines office and other uses at a lower cost. Looking for bldgs with Common Area Maintenance (CAM) fees can help as well, since all these things really add up. This strategic move not only cuts overhead but also aligns with operational needs and budget constraints, making it a viable solution for controlling spiraling real estate expenses.

Leveraging technology in corporate real estate includes using data analytics to assess space utilization, enabling adjustments in layouts or leasing to enhance efficiency. Property management software automates tasks like lease management and maintenance scheduling, while IoT sensors monitor real-time energy use, reducing costs. CAD and BIM tools facilitate efficient space planning with virtual layouts before physical changes, maximizing space use. Remote monitoring technologies allow control of systems such as HVAC from afar, decreasing the need for onsite staff and operational costs, thus optimizing real estate management and improving cost-effectiveness.