REoptimizer® Blog

How to Manage Your Commercial Real Estate Portfolio

Posted by Don Catalano on Feb 11, 2015 9:04:00 AM

While commercial real estate is a distinct industry with its own rules and practices, many of the practices that drive it are similar to those in the rest of the business world. If you aren't a full-time corporate real estate professional and still have to manage a portfolio, while you might get tripped up by some of the jargon and language, underneath it all is just good business sense.

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Topics: Commercial Real Estate Portfolio, CRE portfolio, how to manage cre portfolio, how do I manage my real estate portfolio, corporate real estate, commercial real estate, tenant tips, CRE

5 Ways to Prepare Your CRE Portfolio for 2015

Posted by Don Catalano on Dec 15, 2014 9:22:00 AM

With the new year here, many parts of your business are undergoing an end of the year review. Your CRE portfolio is no different. Here are five things that you should do before the ball drops in Times Square.

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Topics: Office Utilization, Corporate Real Estate tips, Commercial Real Estate Portfolio, CRE portfolio, CRE Tips, Corporate Real Estate Porftolio, tenant tips

CRE Portfolio Management: What Am I Risking by Being Flexible?

Posted by Michael Sweeney on Nov 8, 2013 1:13:00 PM

Real estate asset management is a sensitive balancing act. If you choose a portfolio that is highly stable, it could be less expensive and easier to manage, but difficult to adapt to your company's changing needs. On the other hand, structuring your portfolio for maximum flexibility with short-term leases and multiple smaller, locations lets you shrink or expand and easily adapt to the fluctuations of business. However, this strategy costs more money and time on a per-square foot basis. Flexible portfolios may be rewarding at times, but they aren't panaceas and carry some risks.

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Topics: Commercial Real Estate Portfolio

5 Qualities of an Outstanding CRE Portfolio

Posted by Don Catalano on Sep 27, 2013 11:37:00 AM

The value of your company's corporate real estate portfolio can be identified in five ways. While there are many soft standards that you can apply to judge your company's collection of locations, it's hard to quantify how much your employees like a space or exactly how much a space contributes to your brand image.You can, however, easily quantify the manageability of the portfolio, how each space performs relative to other spaces and your industry, and the flexibility of your portfolio. Here are five qualities of an outstanding CRE portfolio.


1. Occupancy Cost at or Below Market Average

If your company is large enough to have a CRE portfolio instead of a space or two, you should be able to negotiate competitive rents in any market you enter. As such, your total occupancy costs - rent plus CAMs - should be at or below the average for your market and your type of space. Maintaining an average or lower rent level while also holding sufficient spaces means that you've done a good job of negotiating for competitive pricing.

Learn more about REoptimizer®'s Benchmark to Market functionality


2. Staggered Rollovers

Given that renegotiating leases and potentially moving spaces can require a significant investment of labor, the rate at which lease renewals occur is part of setting up a successfully managed CRE portfolio. If you've configured your leases so that they all change at different times, you're able to maintain a steady workflow for your corporate real estate department, maximizing its efficiency. Staggered lease rollovers also give you the ability to constantly evolve your portfolio as you seek better performance.

A CRE portfolio with staggered rollover dates = a less stressed real estate department that can make crucial decisions successfully without being rushed

3. Uniformly Superior Metrics

When it comes to measuring how your real estate is impacting your business' bottom line, a CRE portfolio should be uniformly superior. The best portfolios perform at an optimized level at every location. 

For example, the rent-to-sales ratio is a common metric in retail businesses. If an industry targets a 3 percent rent to sales ratio, and your company comes in at 2.5 percent, it's a positive indicator. Getting there with all of your stores between 2.25 percent and 2.75 percent is an even better sign. Having locations that are pulling 4 or 5 percent ratios, on the other hand, is a sign of a non-optimized portfolio.

 

4. Time and Space Options

The problem with leased space in a CRE portfolio is that you can't truly be in the driver's seat. When landlords decide whether or not to re-lease to you, what to charge you, and if you can rent adjacent spaces, you're at their mercy. Strategically designed portfolios contain multiple renewal options and rights of first refusal or first negotiation on adjacent spaces. This lets you decide whether or not to stay and gives you a chance to lease expansion space before another company gets control of it. 

When you have market intelligence and lease terms with multiple options, you can open up your CRE portfolio to more opportunities.

 

5. Low Space Turnover

Ultimately, the best determinant of a successful CRE portfolio is how long your business stays in its existing spaces. While some turnover is a natural part of doing business, few businesses constantly replace existing spaces. If you're able to find spaces that work for you and stay in them through multiple renewals while still meeting all financial goals, you'll enjoy greater continuity in your business and lower management and occupancy costs.


A great CRE portfolio doesn't come about through luck or happenstance. Most come from careful planning and good strategy. Having expert, outside help from a skilled tenant representative gives you both perspective and market intelligence that you can use to build the perfect CRE portfolio.

 

Learn more about Commercial Real Estate Optimization:

What is Commercial Real Estate Optimization?

Commercial Real Estate Utilization Optimization and the C-Suite

Why Commercial Real Estate Optimization is Important for the C-Suite

 

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Topics: Commercial Real Estate Portfolio

Standardizing Your Commercial Real Estate Portfolio Management

Posted by Don Catalano on May 29, 2013 9:37:00 AM

Standardizing your commercial real estate portfolio management isn't about putting every location file in the same color folder. The key to standardization is to move away from the original documents. Every landlord tends to use their own lease documents, making them hard to directly compare. At the same time, you also have to deal with different city, state and national laws which also makes documents disparate. Whether you go with a simple system that you devise yourself or you opt for a software package that automates the process for you, the key is to put your CRE portfolio information into a usable format.

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Topics: Commercial Real Estate Portfolio

What the Looming 'Fiscal Cliff' Could Mean for Your Commercial Real Estate Portfolio

Posted by Jordan Slater on Nov 19, 2012 12:37:00 PM

While the looming fiscal cliff may not be good for business, it could actually yield certain benefits vis-a-vis a company's commercial real estate portfolio. Setting aside the hysteria and to look at the potential impact, it becomes clear that the cliff poses more of a threat to private landlords than to anyone else. Should the country go over the cliff, it is likely to impact the commercial real estate world in two different ways -- by changing the tax code and by impacting the broader economy.

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Topics: Commercial Real Estate Portfolio, Fiscal Cliff

Understanding the Dynamics of Your Commercial Real Estate Portfolio

Posted by Jordan Slater on Aug 10, 2012 11:35:00 AM


Today, corporate executives usually think of their company's information technology from the perspective of the network, instead of looking at each individual computer, printer or wire. Real estate, on the other hand, usually gets viewed as a set of individual installations or, at best, as an unconnected group of small groups, rather than as a unified whole. Applying network thinking to your commercial real estate portfolio brings both operational benefits and opportunities for greater cost efficiency.

Centrally locating your warehouses and distribution centers between your store locations is an example of network thinking. For example, a warehouse located in Sacramento, California is one day's drive from San Francisco, Portland, Reno, Los Angeles, and San Diego with Salt Lake City and Las Vegas also possible in a long day of driving. Eliminating multiple large warehouses to focus on a single center in Sacramento can yield significant cost savings and increased efficiency. This type of thinking applies throughout your company's commercial real estate portfolio.

Offices also offer the same opportunities for improved efficiency. Strategically locating a web of offices near your retail locations, production facilities and distribution properties can give you better oversight of your operations. Looking at your real estate operations as a whole will assist you to find areas where you have unnecessary offices as well as areas that are underserved with offices. Having the right office mix in your commercial real estate portfolio can not only improve the quality of your management but also significantly reduce both the time and money that your executives spend in corporate travel. 

Adjusting your strategy to turn your commercial real estate portfolio into a dynamic system has significant cost and productivity benefits, but it also lets you look at the portfolio itself differently. Once all of your locations are running the way that you need them to, you can then start on the next step of optimizing your portfolio -- adjusting each location to maximize cost efficiency. Going back to the earlier example, once you know that you need a large warehouse in Sacramento, you can not only compare your cost of occupancy there with other markets, but also benchmark your location there against other properties in the community, hopefully leading to more savings.

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Topics: Commercial Real Estate Portfolio