The 13th Baktun of the Mayan calendar ends on December 21, 2012. Some think that the world could very well end. This could be a good thing. After all, if the world ends, corporate real estate managers won't have to worry about their January CAM reconciliations. But if the world doesn't end, it means that some tenants may still have to worry about their own internal Mayan doomsday. There are a number of risk factors in the market that might not make the world blow up, but they could make your company's real estate portfolio much less cost-efficient.
Using Corporate Real Estate to Manage Transportation Costs
Fuel remains expensive even though it has dipped down from the highs it hit earlier in 2012. Barring a Mayan doomsday scenario like Peak Oil, the odds are that energy will remain available, but that the price will remain relatively high. In other words, your business can continue to expect high air fares, fuel surcharges for shipping, and increased fleet expenses.
Even if the oceans don't rise, the meteors don't fall and the Mayans are proven wrong, the economy is still in a tenuous situation. This should make 2013 an excellent year to lease more space. If you have gaps in your geographic coverage, look at adding/rearranging locations so that you can reduce travel expenses and better insulate your company against the rising cost of transportation.
QE and Rent Prices
Although its effects haven't become clear yet, the large amount of quantitative easing that the Fed has engaged in over the last few years has significantly increased the money supply. A growing supply of money usually leads to increased inflation. The inflation is already priced slightly into many commodities, but has not yet spilled over into affecting rents.
It may. And if it does, the Consumer Price Index will increase significantly. Savvy corporate real estate managers can protect their bottom lines by working with their landlords to change the nature of the rent increases in their leases. Whether you specify a fixed increase or you set your increases to CPI but cap them, it will give you real savings when inflation returns.
Eliminating Unnecessary Space
If the world ends, you won't need as much space in your corporate real estate portfolio. Even if it doesn't, you probably still have some space that you don't need. Take the time now to carefully analyze how much of each property in your portfolio you are actually using. If you have advanced tools like portfolio optimization software, you can go even deeper and analyze each space's cost-effectiveness. If you have spaces that don't make sense, either terminate their leases or sublease where possible so that you can get that expense off of your books.
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