REoptimizer® Blog

3 CRE Strategies that Result in Long-Term Cost Savings

Posted by Don Catalano on Mar 19, 2014 9:18:00 AM

Using the right strategy can make a big difference in your corporate real estate optimization program. Whether you're researching, leasing or configuring space, tweaking your practices just a little bit from the traditional norms can make a big difference in your results and save you thousands (or millions!) of dollars over the long-term. 

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Topics: corporate real estate optimization

4 Ways to Tell if Your Commercial Property is Ready to Be Ditched

Posted by Don Catalano on Mar 4, 2014 10:25:00 AM

When it comes to corporate real estate optimization, it's hard to beat the returns that you can achieve by discarding a property that is no longer suitable for your company's needs. While moving to a different or smaller space might save some money, discarding an unsuitable property can not only save money but also turn an inflexible fixed asset into liquid cash. Here are four ways to tell if you have a location that is ready to be shut down or replaced.

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Topics: corporate real estate optimization

Property Management Strategies that Save You Thousands

Posted by Michael Sweeney on Jan 21, 2014 11:38:00 AM

CRE_Property_Management

Property management is essential to corporate real estate optimization. Measuring your building’s operational efficiency is imperative when your goal is to minimize costs. This post will highlight some of the key metrics you should use to measure your building’s operational efficiency and how you can use this knowledge to take action and save your company thousands.

 

Energy Consumption

When looking at the amount of resources your business consumes for heating, electricity and water, there's one simple rule: less is better. Sometimes, you can work with your existing space to better utilize your existing resources. Other times, you will need to make some minor changes. Swapping out incandescent light bulbs with compact fluorescent or LED bulbs or adding window treatments are great low cost strategies that reduce energy usage. Major improvements to corporate real estate optimization might require significant capital expenditures, such as the installation of new HVAC systems or photovoltaic solar panels.

 

Want to learn more about building improvements that can reduce energy consumption? Read this article.

 

Electricity and Temperatures

There are two property management metrics that can immediately impact your bottom line. Adjusting your policies to control them can help attain corporate real estate optimization:

  • Thermostat Temperatures: While the value of allowing your building's temperature to fluctuate during off times can be debated, one factor is certain. Heat to a cool room temperature in winter and cool to a warm room temperature in summer. This ingenious tactic not only cuts costs but also mimics the outdoor temperature, potentially improving employee health and productivity.

  • Shutdown Times: Drive through any downtown, and you'll see whole offices lit up late at night. Sometimes, it might be because they have dedicated employees, but frequently it's because the lights are left running – burning energy and money. Setting a timer or motion switch to turn lights off at night can save real money. Shutting down computers at night makes a difference, also.

Maintenance vs. Repairs

Look carefully at what you spend on maintenance contracts and compare it to what you spend on repair calls. You’ll probably find that, while it's possible to waste money on unnecessary maintenance, there is also a tipping point where every dollar of maintenance savings generates more than one dollar of repair expense. Spending a little now to maintain your space can generate long-term savings.

 

Maintenance Staff Cost

You know the cost of your maintenance staff. However, calculating their cost relative to using third-party maintenance might lead to a different conclusion. Divide what you spend on your staff by the number of productive hours that they spend. For instance, if you pay a maintenance person $55,000 per year, all in, and he only does 20 hours worth of projects per week, you're paying him roughly $55 per hour. If you can find third-party staff at $40 per hour, you could save money by subcontracting the work out to them.

 

Average Vendor Service Time

If the average vendor has been serving a location for 20 years, there's a good chance that you're paying too much. Staying with the same vendor, year in and year out, might be convenient and might offer consistency, but it also gives that vendor the opportunity to bump the price up a little bit each year until you're paying too much. While you don't want to be churning vendors every few months, rebidding every time a contract comes up can help find better pricing or keep your existing vendors honest.

 

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Topics: corporate real estate optimization

5 Business Types that Can Do More with Less Space

Posted by Michael Sweeney on Dec 24, 2013 9:00:00 AM

The idea of ephemeralization   or the ability to do “more and more with less and less” can be applied to corporate real estate. While any company can squeeze more people into fewer square feet, a few industries have unique opportunities to do more with less space. These rules of thumb also apply to departments within larger corporations as well as they do to firms that have these specific purposes. If you are one of these five business types, you may be able to minimize corporate real estate spending by scaling down your office space:

 

1. Law Firms

An image of a room filled with dark wood panels and leather-bound volumes of books that all look strangely similar still makes people think of a law firm. However, en suite law libraries are now obsolete, thanks to online legal publishers. Even if nothing else changes at a law firm, the ability to delete the space that was once dedicated to allowing attorneys to do legal research can significantly shrink the amount of space that a law firm needs. Ongoing advances in technology also allow attorneys to be more productive with less support staff, further reducing the amount of space they need.

 

 

2. Creative Firms

Creative firms are able to benefit from some of the same space savings as law firms, since their stock and research libraries can also be moved online. Newer and smaller machines also let creative firms shrink the size of their work areas. The changing nature of the creative workforce is also enabling many firms to engage in corporate real estate optimization. As collaboration levels increase, creative firms are able to add more shared workspaces and fewer private areas, eliminating the duplication that some firms of the past had when they created team rooms and private offices.

 

3. Sales Organizations

As more sales organizations push their outside sales people to live up to their titles, more and more desks and offices sit empty. The ability to more effectively manage employees in the field through CRM software and video conferencing makes it less important for sales reps to come into the office. This also means that sales offices need less space. Instead of having dedicated offices or cubes that sit empty most of the time, sales offices can be minimalized by offering ample small conference room space or open offices for sales reps that need the office to work or make calls.

 

4. Software Companies

While every industry has been impacted by outsourcing, offshoring and telecommuting, few are as directly impacted by these trends as software companies. For these businesses, corporate real estate optimization goes hand in hand with business process optimization. Decreasing office space has presents the unique opportunity to both cut costs and increase domestic worker retention by offering telecommuting for their employees.

 

 

5. Any Company Near an Executive Suite Space (or Starbucks)

Some environmentalists say that people should buy a car that will suit their needs 95 percent of the time instead of buying one that meets 100 percent of needs. In essence, this means that many working people would buy a subcompact car and rent a truck a few times a year. Whether or not it's good car buying advice, it's a great principle for corporate real estate optimization for any company. Have a space that suits most of your needs and, if you get a crush of people coming in, have an arrangement with a local executive suite space (or with a coffee shop) to rent overflow space by the day.

 

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5 Tips for Managing Vacant Office Space

Posted by Michael Sweeney on Dec 12, 2013 11:02:00 AM

The archenemy of any corporate real estate director is vacant office space. It is the most difficult obstacle when achieving corporate real estate optimization. It's not valuable or useful, but it consumes capital and eats up management time and resources. However, handling it is a necessary evil. Here are five tips that can help to lessen the impact of carrying vacant space.

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Optimize Your Corporate Real Estate Portfolio For Now & the Future

Posted by Don Catalano on Dec 2, 2013 10:35:00 AM

How do today’s corporations optimize their real estate portfolios for a profitable future? Corporate real estate optimization is a multi-disciplinary process. Operations span from changing light bulbs to restructuring corporate finances. Strategic optimization is an every day process that requires steadfast dedication towards efficiency. Here are four ways you can optimize your company's real estate for better performance today, and in the future:

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The Key to Optimizing a Corporate Relocation

Posted by Michael Sweeney on Nov 21, 2013 10:51:00 AM

Many corporate real estate optimization strategies focus on the property. If you can find a space that does more with fewer square feet, low rent and low operating expenses, you'll come out ahead. There's a lot of truth to this strategy. However, it isn't the only part of corporate real estate optimization. Frequently, the key to optimizing a corporate relocation has nothing to do with real estate metrics. Sometimes, the incentives that you can get from a community provides the best deal.

 

The Basics of Incentives

Incentives come in two broad forms. Some are automatic incentives that are on a given area's lawbooks. For instance, South Carolina allows counties to abate property taxes for five years to new facilities costing $50,000 or more. Others are negotiated. When a community really wants to attract (or retain) a company, it can take executive action or, pass a law to allow it to grant a special incentive package. Since getting a company to move into a given community can result in new jobs and tax revenues from employees, shoppers and vendors, governments can be very aggressive in recruiting new businesses.

 

Typical Incentives

Incentives come in all shapes and sizes. Some of the incentives that a state, county, city or region may offer to help you with corporate real estate optimization include:

  • Property Tax Abatements: A business either pays reduced or no property taxes for a period of time, lowering its operating expenses.

  • Income Tax Credits: Income tax credits reduce the amount of state tax that a company pays on local profits.

  • Withholding Credits: Some states allow companies to keep a portion of the tax that they withhold from their employees as a way of compensating the company for employing people there.

  • Sales Tax Exemptions: Companies can be exempt from having to pay sales taxes on corporate purchases or receive a portion of the sales tax they generate on their sales rebated to them.

  • Tax Increment Financing: Some communities can issue bonds from future property taxes to provide immediate low-rate financing for new developments.

  • Distressed Property Financing and Grants: Money is also available to incentivize companies to develop in areas that need environmental remediation or areas that are blighted or in need of new jobs, both in the form of loans and grants.

 

Achieving Relocation Benefits

Getting relocation benefits can be a very complicated process. Here are some ways to simplify it:

  • Get a national coordinator that will look at multiple locations to see which offer the best incentives. Being limited to only one location in the beginning of your process will limit you.

  • Keep an open mind. The best locations might have high rents or higher construction costs, but your bottom line cost is the most important factor.

  • Go to state economic development or business development offices. While the names vary, every state has an office that can help you cut through red tape and identify both state and local programs to help lower the cost of your relocation.

  • Hire boots on the ground. Once you've chosen a location or two, find a local representative (or have your national coordinator find someone) that can help you deal with community requirements.

  • Don't forget about home. Unless you're relocating for corporate real estate optimization purposes that go beyond simple cost, you might be pleasantly surprised by what your current community will do to keep you.

 

Other great Commercial Real Estate Optimization articles:

What is Commercial Real Estate Optimization?

Commercial Real Estate Utilization Optimization and the C-Suite

 

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Topics: corporate real estate optimization