Jan 28, 2019 8:32:00 AM

Tips to Optimize Your Commercial Real Estate Portfolio

By Don Catalano

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Tips to Optimize Your Commercial Real Estate Portfolio
Optimizing the performance of your commercial real estate portfolio is a key component in maximizing your return on investments. You can use a range of strategies to achieve this purpose. In this section, we are going to explore five major strategies you can apply to achieve an optimized portfolio.

 

1. Manage Costs

When optimizing your Real Estate portfolio, it is essential that you understand the running cost of each of your spaces. You need multiple metrics to quickly compare and rank spaces. With WMS tools, you can easily know where to invest. For instance, you may be spending more per square foot for natural gas in San Francisco than you would in Los Angeles. If you are able to evaluate the running costs of both locations, you would realize that San Francisco has more heating days.

 

However, if you discover that janitorial costs per square foot in LA is almost twice the cost in SF, you may need to investigate. This is because LA has a lower cost of living compared to San Francisco.

 

Having the right tool like REoptimizer ® helps you easily evaluate the metrics and compare different spaces. You will be able to know when and where to invest. A facility in a highly efficient building may not benefit from a major investment in a solar system. Managing costs is an essential step in optimizing your real estate portfolio.

 

2. Measure Utilization

Underutilized spaces drain a company’s overall budget. It goes without saying that to optimize your real estate portfolio, you do not need unused spaces. You have to ensure that you are using all the space you pay for. Empty warehouses and cubicles are examples of a badly optimized portfolio. Sometimes, they are subtle to find. This is why it is good to use tools that will help you identify these types of underutilized spaces. 

 

3. Get Smart About Technology

One of the most optimal strategies that can be used involves relocating certain non-core operations from higher cost geographies to lower cost locations. As you begin to evaluate your business needs, you may realize that certain aspects of your company like data centers may no longer have to be centrally located. The key to making this decision is by getting smarter with technology. Emerging technologies are decreasing the need for investing in square footage.

 

4. Optimizing the Workplace

Today, employees have different perspectives as regards flexibility and mobility in the workplace. To attract and retain top talents, your work environment has to be optimized from the employees’ perspective. Employee engagement is essential for the success of your business. You can reduce operational friction and automate processes by enhancing workplace experience with the use of emerging sensor technologies (e.g.—Internet of Things).

 

5. Benchmark to Market

If you have followed the above steps in optimizing your real estate portfolio, you may still need to understand the economic efficiency of your portfolio. This is essential to have a fully optimized real estate portfolio.

 

To do this, you have to compare your space performance to the market as a whole. If your space is costlier in rent and running expenses compared to the norm in the market, you may have to re-evaluate your optimization strategy and save more money.

 

The result of implementing these strategies is that you would be able to build an optimized portfolio. By using a tool like REoptimizer ®, you will be able to evaluate the right metrics.

 

Here are a few other articles you might enjoy:

Best Ways to Optimize Office Utilization

10 Things to Remember When Leasing Office Space

7 Critical Lease Terms that Corporate Tenants Should Know

 

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Topics: Commercial Real Estate Portfolio

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Don Catalano

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