3 Great Ways to Employ CRE Portfolio Segmentation

CRE_Portfolio_Segmentation

Optimizing an entire portfolio becomes simpler when you know where to start. Today we are going to discuss a few ways to create those starting points in the process. Portfolio segmentation and categorization is a great way to gain perspective on your portfolio and its performance. Here are three ways for you to take a different look at one of your largest expenses:

Critical Dates

Sorting your leases by your time-sensitive lease clauses is essential to critical date management. Taking a portfolio level view of your key dates and being able to track which leases have options pending or expiring terms can save millions of dollars in disadvantageously leased commercial space. This is especially true given the CRE markets across the country in this economy. This is a great opportunity for tenants with expiring leases to come out on top, both on a cost per square foot basis and in favorable lease provisions, as landlords are desperate to keep current tenants and bring in new ones.

Property Type

There are several advantages to grouping your office, industrial, and retail locations separately, but we are going to discuss one today. Benchmarking – one of our favorite words here at REoptimizer® – helps decision makers to how they can better optimize their portfolios. In conjunction with the market benchmarking we always stress, seeing where your sites measure up against themselves is often a great starting point in improving the health of your CRE portfolio. Analyzing cash outflows of your different New Jersey warehouses, for example, may help you to determine whether or not leasing is really a sustainable option for your portfolio’s future.

Business Unit & Region

Segmentation by the function of each location (e.g. sales offices, call centers, regional HQs) can help you to see which sectors of your unique portfolio are not fully optimized and what specific sites are your “biggest losers.” With the economy the way it is, chances are you feel you are paying too much for your leased space. But perhaps you have been hamstrung by the fact that you are stuck in the majority your properties for years, certainly longer than the foreseeable economic future. This is where geography and market conditions come into play.

So let’s say you’re paying at a premium for your offices in New York, Arlington, and Los Angeles, and can’t do anything about it for another 4 years. Meanwhile, your warehouses in Ohio, Texas, and Wyoming, all have leases from 2007 and 2008 expiring over the next 18 months. Cutting down on warehousing costs would be a great way to alleviate the costs of requiring your corporate centers in expensive locations.