Every company expects to have occupancy costs related to industrial real estate leases; however, thinking of those costs as fixed and unchangeable is a mistake. Doing so can mean that you're overpaying and sinking more money into your industrial facility than you need to be. Follow these tips to shrink your occupancy costs and positively impact your bottom line.
Conduct a Lease Audit
Before you set your sights on your company, double check the landlord's math. Landlords often use templates and simply plug in numbers, which can lead to number transpositions and data entry errors. Calculate the operating pass-through costs for yourself and ensure that the numbers match. If you can't determine how the landlord arrived at the numbers, contact their office for more information. Here are some tips for your commercial lease audit.
Strictly Manage Energy Use
Making changes to your industrial space can help to lower your energy consumption and decrease utility costs. Replace light fixtures with energy-saving options like LEDs, and look into ways to decrease energy expenditures in your data center. Motion-activated lighting in areas like bathrooms and break rooms can also decrease your energy footprint. Consider purchasing energy tracking software, which will help you delve into how you're using power and uncover areas of potential waste.
Appeal Property Taxes
Regularly scheduled tax reassessments may not keep up with the depreciation of an industrial facility. If you believe your taxes are too high, work with your landlord or directly with the township or city to have the industrial building reassessed. This could lead to dramatic reductions in tax rates. You may even find that your company can qualify for tax breaks in areas where economic redevelopment are in place.
Eliminate Unused Space
Studies have found that many industrial facilities are only 48 percent occupied by tenants. If your usage is hovering around this mark, you're paying more for occupancy costs than necessary. Take a close look at wasted cubic footage. Get creative and see how you can make better use of it. You might be able to eliminate an offsite storage facility or create an industrial-chic work area for a department or two in another building. If you cannot find a way to use the space to the fullest, consider subleasing or even buying out your lease to move to a smaller location.
Try our free Warehouse Optimization Calculator!
Invest in Maintenance Technology
If you have your own team completing work orders on-site, a mobile work order dispatch application can reduce the need for personnel and lower costs. These systems make it possible for just one or two people to input and manage all work orders and allow for a faster response that cuts down on the need for a large team of maintenance workers.
Renegotiate Your Lease
Do some market research to find out what other companies are paying for industrial space like yours. Then, head to the negotiation table. You may be able to lower your monthly rental rate in exchange for extending your lease. If not, your landlord may be willing to cover the cost of energy-saving green improvements that will lower your operating costs in the long run.
Other industrial articles to check out:
Subscribe to our blog for more CRE tips!!
