Mar 04, 2020

Importance of Optimizing Your Commercial Real Estate Portfolio

By Don Catalano

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Importance of Optimizing Your Commercial Real Estate Portfolio
Whether your company owns or leases its real estate, it's there. And if you are like most businesses, your real estate portfolio represents a meaningful chunk of your total operating expense budget.  Are you sure that you are getting the maximum return on your investment? Most businesses can't answer yes to this simple question, and that's what optimizing your commercial real estate portfolio fixes.


Ultimately, there are two ways to optimize your portfolio. You can spend less, or you can get more from what you're spending. Paying attention to the right metrics and administering your leases and your physical spaces helps to ensure that you get both of these benefits.

 

Optimizing to Get More

Do you really understand how your commercial real estate performs for you?  Which combination of offices and cubes yields the best employee density with the lowest rate of absenteeism?  How much extra space do you really need to lease to have the right amount of space for future growth? Do central business district or suburban locations drive productivity and retention? These questions aren't about spending less on your space -- they're about getting more out of your locations and about keeping your workforce happier and more productive.

 

Answering these questions requires a great deal of data. The process of optimizing your commercial real estate portfolio starts with amassing data and storing it in a single repository that positions you to pull it out and analyze it. Having a global view of your entire portfolio in one place makes those space-to-space comparisons easier and helps you merge your commercial real estate data with the information that comes from other departments in your company.

 

Spending Less on Your Commercial Real Estate Portfolio

With the data that you use to wring maximum performance from your commercial real estate portfolio, you also get a detailed understanding of what each space costs on various metrics.  In addition, the information that lets you get more out of each space also helps you to identify where you aren't getting enough out of each space. For example, if you know that you need to lease an extra two or three desks when you move in and your space in Omaha has 20 extra desks, that space becomes one where you might look to sublease out a portion or move to a smaller space.

 

Looking at your portfolio on a wide scale and blending in market data helps you identify where you might be overpaying, as well. For example, in 2017, according to Inc. Magazine, Raleigh, Denver, Philadelphia, and Charlotte all had roughly the same office rents (give or take about 5 percent). If your process of optimizing your space indicated that you were paying an extra $4 a square foot in Charlotte, that would be a red flag to work with that landlord to bring your occupancy cost in that market in line.

 

Optimizing your commercial real estate portfolio also helps you identify issues with individual expense lines. Are your electric costs higher in Tucson than in Phoenix once you norm out for varying rates in the two communities? If so, it could indicate an issue with the lighting fixtures or air conditioning systems in that location.  The more data you have, the more savings you can find.

 

Optimizing Your Commercial Real Estate Portfolio

While some companies choose to use Excel and calendars to track their portfolios, there is a better way to do it. REoptimizer® makes optimizing your commercial real estate portfolio by offering a single application that tracks data, tracks dates, helps manage projects and integrates outside data to ensure that you are maximizing performance and minimizing cost.

 

Here are a few other articles we think you will like:

7 Things to Look Out for in Your Office Lease

Getting The Best Deal on Your Next Office Lease

 

3 Commercial Real Estate Technology Tools You Should Know

 

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Topics: Commercial Real Estate Portfolio

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Don Catalano

Don Catalano

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