Unlocking the Secrets of Corporate Real Estate: The 3 R's of CRE
iOptimize Realty?
Tenant Representation, Renegotiation, Right-sizing, Relocation, Economic Development, & CRE Optimization
If you want to save money on your Corporate Real Estate, it’s as easy as working with the 3 R's:
Using these techniques gives corporate tenants a surefire basis for reducing the cost of their real estate portfolios while maximizing the efficiency of each property. So let’s learn a little bit more.
Right Size Your Space?
By right sizing their space, corporate tenants have the opportunity to achieve significant cost savings. Because now, many companies find themselves occupying more space than they actually need.?
Times are different. The work from home movement has downgraded average office occupancies to a fraction of what they used to be.
The shifting landscape from remote working arrangements also means that your team members may be scattered throughout the country. When companies adopted WFH policies, many Americans used this as an opportunity to exercise a new work / life freedom, even moving to lower costs states where the power of the dollar goes further. So, companies looking to enforce mandatory return-to-office policies now have to grapple with reigning in employees from their new cross-country arrangements… And good luck with that. The landscape has indefinitely shifted and those who don’t need to work from the office, likely never will because other employers will give them the option to continue working from home.?
Read about How to Right-Size Your Hybrid Office.
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And on the employer side, businesses are saving more corporate funds than ever streamlining their footprints and assessing where the portfolios can become a more efficient expense. Right-sizing involves analyzing various factors such as workforce size, operational needs, and future growth projections. By understanding their specific spatial requirements, companies can identify opportunities to downsize or reconfigure their space, eliminating wasted square footage and associated costs.
The benefits of Right-sizing are multifold. Firstly, it allows companies to reduce their base rent and operating expenses, resulting in immediate savings. Secondly, it improves space utilization, maximizing productivity and enhancing collaboration among employees. With a more efficient layout, companies can eliminate underutilized areas and create functional work environments tailored to their unique needs.
But, let's face it, your landlord probably won’t be willing to cut your square footage right off the bat. So, let’s talk about how Right-sizing becomes more of a possibly though successful negotiation.
Renegotiate
In a pre-COVID leasing environment, companies would sign a ten-year lease or so and only revisit it a year or two before its expiration. However, changing times have also changed the way savvy tenants treat their portfolios.
With rampant office vacancies, low occupancy rates, and dismal economic conditions, landlords have never been in a hotter seat. In some metropolitan regions, office occupancy lingers around 50% of what it was several years ago.