Dec 01, 2014

The Top 4 Commercial Real Estate Concerns

By Don Catalano



When it comes to managing commercial real estate concerns, there are a whole range to consider. While cost is the most obvious challenge, it is just one of many.

1. Navigating Different Workstyles

The nature of work has changed. Once, we did our work in small private offices where we could take calls, write memos and fill out reports. Our job descriptions were set and our duties were predictable. Then, offices changed. Open offices were designed to increase collaboration and reduce individual space, leading to lower occupancy costs. While the open office space achieved these goals, they did it at the expense of employee satisfaction and, at times, at the cost of productivity.

Striking a balance between open and closed office space is one of today's most important commercial real estate concerns. The best offices include both open and closed spaces and size them to accommodate anything from a single worker needing a place to concentrate to a large team working together. One of the keys to offering an office that is all things to all people is to do away with permanent space and, instead, use hoteling arrangements that let your workers choose which spaces they need, when.

2. Keeping Gen Y Happy

While Generation Y has been in the workforce for a while now, handling their unique quirks still remains one of the biggest commercial real estate concerns impacting office users. Younger workers represent one of the most capable labor pools to enter American business in decades. They are collaborative and tech-savvy, but they have a different attitude to work and to workspaces than previous generations.

Generation Y isn't just necessitating different office layouts. They are also requiring companies to change where they locate offices. Along with the Baby Boom, they are returning to the cities, making CBD office space more desirable than suburban campuses. On the other hand, they are also open to new and non-traditional office locations, introducing the opportunity for additional cost savings.

3. Creating a Flexible Portfolio

It's hard to tell what your business will need in five years. Will you need to be in Brooklyn or the Bronx? Should the best place for your call center be Des Moines, IA, Des Plains, IL or Destin, FL? Furthermore, it is also hard to predict which of your departments will grow, which will shrink and which will end up being outsourced. With all of this in mind, creating a flexible portfolio is another of the most important commercial real estate concerns for most companies.

The key to finding flexibility is to tie up the spaces that you know you will need for the long term, and accept the risks and costs of shorter-term leases for space that has a murkier future. Executive suite space is expensive on a monthly basis but usually lets you move in and out quickly. Sublease space can give you the benefit of a shorter-term lease and lower cost, on the other hand.

4. Managing Costs

In addition to all of these commercial real estate concerns, you still have to keep your occupancy costs under control. Many of the ways that you will manage your other commercial real estate challenges -- like building flexible spaces, taking advantage of subtenancy and leasing spaces in non-traditional locations -- will help to control costs. In addition, using technology like facilities management software to more effectively manage your portfolio can also help to reduce your expenditures. The benchmarking that these tools offer allows you to identify where you are overspending and address it.


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Don Catalano