REoptimizer® Blog

What You Should Know About Your Commercial Occupancy Costs

Posted by Don Catalano on Aug 1, 2018 8:32:00 AM


Occupying an office space or building that you have leased involves costs beyond basic rent. In order to budget properly and evaluate your real estate portfolio, you need to consider your total occupancy costs. Read on to learn more about occupancy costs and what you can do to reduce them.

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Topics: Occupancy Costs

REoptimizer's Top Commercial Real Estate Blogs from May 2017

Posted by Don Catalano on May 30, 2017 8:58:18 AM

In case you missed them, here are some of our top CRE articles from May:

 

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Topics: commercial real estate, Occupancy Costs, CRE Site Selection, Commercial Office

Reduce Your Commercial Occupancy Costs

Posted by Don Catalano on Apr 18, 2016 8:03:31 AM

Your monthly rent isn't the only cost that you need to consider when you're considering relocating or expanding your business. Occupancy costs are another ongoing expense that you need to take into consideration and account for, and with some careful planning and a little effort, it's possible to minimize these expenses to increase your profitability.

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Topics: Occupancy Costs

6 Ways to Reduce Occupancy Costs

Posted by Don Catalano on Sep 10, 2015 9:00:00 AM

Occupancy costs greatly impact a bottom line, so keeping them as low as possible is a boon for any business. Whether you're in the process of searching for a new space or are already locked into a lease, there are a number of ways that you can minimize occupancy costs. These tips will help you identify ways to reduce current costs or allow you to lease a space at the lowest possible cost.

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Topics: Occupancy Costs

5 Advantages to Leasing Your Commercial Real Estate

Posted by Don Catalano on Feb 9, 2015 8:55:00 AM

While many small business people dream of buying their buildings, many of the largest and savviest companies choose to lease their commercial real estate. Opting to stay a tenant doesn't just reduce up front costs. It also lowers ongoing expenditures while also giving your business greater flexibility. If you're on the fence between leasing and owning, here are five great reasons to stay a tenant.

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Topics: corporate real estate, commercial real estate, tenant tips, CRE, Occupancy Costs, commercial real estate lease, leasing real estate

Is Your Occupancy Cost Too Low?

Posted by Don Catalano on Apr 1, 2014 9:04:00 AM

With all of the focus that many companies put on managing occupancy cost, it can be easy to think that cheaper space is usually better space. However, there are times when it's possible to spend too little on the spaces you rent. Ultimately, the right space isn't the one that costs you the least. It's the one that generates the most profit for your company. Here are some reasons that you might want to spend a little more, instead of a little less, when you look for a space:

Adding Value With Amenities

Modern workplaces frequently use their amenities to compete for talent. The onsite day-care center and fitness center isn't a feature anymore -- it's a given. Building lavish break rooms, employee cafes and yoga studios into your offices can balloon their sizes -- and their costs. Instead, looking at a building that may have a higher rent per square foot, higher CAMs, a higher load factor or a combination of all three but that also offers its own load of shared amenities could end up lowering your overall occupancy costs.

 

Better Branding

Moving  a few miles up New York's Fifth Avenue from the downtown Flatiron district to the tony shopping district south of Central Park entails an almost ten-fold increase in rent -- from $358 per square foot to over $3,000. Nevertheless, many companies feel that the branding benefit that comes from having a flagship location more than outweighs the higher occupancy cost. While your business might not need a retail outlet at Fifth and 55th, you can get some of the same branding benefits by upgrading from an older Class B building to the newest Class A property in your submarket.

Rent vs. CAM

Rent isn't the only component of occupancy cost. Some companies advertise low rents to attract tenants but make up for it by charging more for common area maintenance. Whether the rents are low because the building is old and needs repair or the CAM is high because the owner is double-dipping by charging a management fee for itself, you end up paying the same or more as you would in a building with higher rent but lower operating expenses.

 

The Value of Location

Location isn't only a branding benefit. It can lead to real operational savings as well. For instance, a closer-in warehouse can reduce what you spend to have goods trucked in and out. Given enough trips, even a few miles' difference can add up to real money over the course of a year's logistics budget. For a sales force that spends a great deal of time on the road, a location with excellent freeway access and proximity to clients may make the difference between a sales person making four calls a day or five.

 

Better Layout

Some spaces cost more because they make more sense. Spending more for a taller warehouse that gives you a larger cube -- if you can use it -- ends up saving you money in the long run. An office building with a larger floor plate that gives you a more contiguous office that you can lay out better could leave you with more usable space even after leasing less rentable space. Shaving 500 or 1,000 square feet off of your lease can frequently justify paying a few more dollars of per square foot occupancy cost.

Open Office Layout Drawbacks

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Topics: Occupancy Cost, corporate real estate, commercial real estate, Occupancy Costs

Reducing Occupancy Costs - A Guide For Commercial Tenants

Posted by Don Catalano on Mar 11, 2014 10:18:00 AM

It's likely that real estate occupancy cost is in your company's top three expense categories along with your cost of goods sold and what you spend on labor. Given that it's a big expense, it also gives you the opportunity to make a big difference in your bottom line. Here are a few ways that you can reduce your occupancy costs:

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Topics: "Occupancy Cost ", reducing occupancy costs, commercial real estate, Occupancy Costs