Corporate Real Estate Strategies for Lower Expenses

CRE_Lower_Expenses

Expenses are a major aspect of any strategic commercial real estate analysis. Whether through better control of rents or of operating expenses, most commercial leases have room for savings.

The language of a lease is usually inflexible vis-a-vis rent levels. As such, you are usually going to be locked in for the term of the lease. However, in today's market, landlords will try to retain tenants and not have to release a space at rollover. With this in mind, if you are close to your lease's expiration date you may be able to negotiate a lower lease rate in exchange for pre-signing an extension. This strategy can be especially powerful with an owner who is looking to sell the building as an investment and needs to present it as having stable tenancy.

While leases are usually fixed, a strategic commercial real estate analysis can usually find a number of ways for you to cut your operating expenses. Here are a few examples:

Work with your landlord to re-quote vendor contracts for security, parking lot maintenance, landscaping and the like. Since he passes these expenses on to you, he has little motivation to aggressively manage them. Letting him know how important it is to you will make him take action to keep you happy.
Take a careful look at your insurance coverage. The insurance industry is in a constant state of flux, and switching providers could save you money.
Compare your space to other spaces that you occupy. While a small warehouse in Albuquerque will have a very different cost structure from a large office in New York City, comparing similar sites in similar markets could help you pinpoint inefficiencies.
Institute strategic conservation upgrades. While large capital items such as new HVAC units or solar panels can take decades to break even, other upgrades can pay back their cost in months. Such things as better insulation, high-efficiency lighting, and low-flow water fixtures frequently yield fast savings.

Good strategic commercial real estate management can save your company thousands if not millions. As such, performing this analysis potentially offers excellent ROI.