While corporate real estate departments can be close to optimize their portfolios, CFOs and other C-suite leaders are typically more open to paying closer attention to their real estate portfolios. After all, real estate expenditures are usually in a company's top three cost centers, while the long term nature of real estate obligations complicate strategic planning. Here are three reasons that the C-suite should lead from above when it comes to commercial real estate optimization.
Greater Access to Data
Business leaders know that information is their most important commodity. More data leads to better insight, enabling better decisions. This rule of thumb carries through to the corporate real estate sphere just like every other part of the business. The key to getting a portfolio optimized is to capture all of its data.
The process of capturing corporate real estate data is not as simple as simply tracking transactions or using RFID tags to manage a warehouse. Crucial CRE data frequently gets stored in non-machine readable legal documents or is calculated by comparing internal documents to externally generated bills, statements or reconciliations. Commercial real estate optimization software helps to standardize this data so that it can be accessed quickly across your company's entire portfolio of properties.
Easier Strategic Planning
The critical date management function present in some commercial real estate optimization applications is more than a glorified calendar. It also lets you make long-range strategic decisions for your company vis-a-vis its physical locations.
Knowing which leases are up for negotiation when doesn't just let you forecast shifts in your expenditures. It also allows you to make plans for when you can make moves.
For instance, if your Omaha location is underperforming, knowing that you can move out of it in nine months can help you build a strategy to scale up your Des Moines or Kansas City operations to make up for its closure. On the other hand, if you have six years left on your lease, you'll know to either start looking for a subtenant or to dedicated additional management resources so that fix the problem and not have to throw away years of rent as you wait for the lease to roll.
Commercial Real Estate Optimization and the Bottom Line
Last but definitely not least important, commercial real estate optimization is good for the bottom line. Most real estate portfolios are filled with opportunities for cost savings.
- Repairs can reduce the operating costs for spaces sullied by malfunctioning mechanical systems.
- Redesigns can increase a space's efficiency
- Green upgrades can reduce lighting, heating and cooling costs.
- Giving back unused space can decrease the number of square feet per employee.
- Surveying the market can help identify more competitively priced space, enabling either a move or an aggressive renegotiation with a current landlord.
All of these processes require the same thing to start -- a good benchmark. With benchmarks, you can quickly see which spaces are performing well and which are performing poorly. Then, you can focus your attention to make the quickest and easiest cuts -- and generate the quickest and easiest savings.
These three reasons cover a small portion of the benefits of commercial real estate optimization. Contact us to learn more about how our REoptimizer® software can help your company reduce real estate expenditures and increase operating efficiencies.
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