Today, corporate executives usually think of their company's information technology from the perspective of the network, instead of looking at each individual computer, printer or wire. Real estate, on the other hand, usually gets viewed as a set of individual installations or, at best, as an unconnected group of small groups, rather than as a unified whole. Applying network thinking to your commercial real estate portfolio brings both operational benefits and opportunities for greater cost efficiency.
Centrally locating your warehouses and distribution centers between your store locations is an example of network thinking. For example, a warehouse located in Sacramento, California is one day's drive from San Francisco, Portland, Reno, Los Angeles, and San Diego with Salt Lake City and Las Vegas also possible in a long day of driving. Eliminating multiple large warehouses to focus on a single center in Sacramento can yield significant cost savings and increased efficiency. This type of thinking applies throughout your company's commercial real estate portfolio.
Offices also offer the same opportunities for improved efficiency. Strategically locating a web of offices near your retail locations, production facilities and distribution properties can give you better oversight of your operations. Looking at your real estate operations as a whole will assist you to find areas where you have unnecessary offices as well as areas that are underserved with offices. Having the right office mix in your commercial real estate portfolio can not only improve the quality of your management but also significantly reduce both the time and money that your executives spend in corporate travel.
Adjusting your strategy to turn your commercial real estate portfolio into a dynamic system has significant cost and productivity benefits, but it also lets you look at the portfolio itself differently. Once all of your locations are running the way that you need them to, you can then start on the next step of optimizing your portfolio -- adjusting each location to maximize cost efficiency. Going back to the earlier example, once you know that you need a large warehouse in Sacramento, you can not only compare your cost of occupancy there with other markets, but also benchmark your location there against other properties in the community, hopefully leading to more savings.
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