Jan 11, 2012

5 Tips to Reduce Commercial Real Estate Occupancy Costs

By Don Catalano

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Reduce_CRE_Occupancy_Costs

Next to payroll, occupancy costs are usually a company's largest expense. If you can reduce commercial real estate costs, you can almost guarantee a better bottom line for your business. Look to these tips for finding ways to scale back your costs.

 

Cap maintenance, taxes, and insurance increases for common areas of the property.

Commercial real estate owners have been dealing with higher-than-normal vacancies the past few years as the economy has floundered, so now is a good time to discuss capping maintenance, tax, and insurance costs for common areas of the property. You could suggest that in your next lease, these costs (also called CAM) be increased only a certain amount each year. You can also specify that they don't rise above a certain dollar amount for any given payment period.

Optimize your space.

Take a close look at the space you're currently leasing. If your space has felt crowded, bring in a design expert to help you maximize the space before you look into leasing more square footage. If you need to separate one space from another, talk with your landlord about adding walls and doors.

 

Sublease.

If you're currently occupying too much real estate because of downsizing, relocation, or otherwise, consider subleasing to bring in a little extra income. Some small businesses just need a room or two, and the income you could earn from the sublease could make a big difference in offsetting expenses.

 

Renew your lease early to make adjustments in the lease terms.

If you signed your lease when the economy was stronger, you may need to adjust the terms of your lease to make them more workable in today's climate. Your landlord may be willing to make concessions to keep your business, knowing the vacancy rate is higher than normal.  Consider these steps to commercial real estate lease negotiation.

Consider changing locations.

If your current location doesn't work well for your particular business or if it is too expensive, search for new, more appropriate digs.  A good commercial real estate software may be what you need to get started.

 

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Don Catalano

Don Catalano

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