Commercial real estate (CRE) for the corporate owner has become more and more complex in recent years, requiring more strategic management and placing a greater demand on your team. Whether your company’s business is expanding or consolidating, you must be agile and focused in order to represent each stakeholder’s interest.
If you’re being tasked with controlling and reducing the cost of occupancy across your company’s portfolio while the company is expanding, this may seem like an impossible feat. Many professionals responsible for managing a corporate real estate portfolio work diligently to try and balance the expectations of growth while reducing their business’s overall occupancy costs.
The truth, however, is that there are several strategies that can help you take control in this area, unlocking often overlooked opportunities to create meaningful bottom-line savings in your commercial real estate portfolio.
1. Think Differently
Busy CRE teams sometimes lack clarity and strategic vision regarding their ability to improve an organization’s bottom line by way of a CRE portfolio. They may be stuck in old ways of thinking. Fundamentally shifting your mindset about corporate real estate and its potential impact on your company’s profitability is necessary to reap the full benefits. This paradigm shift allows you to think about your portfolio at a higher level.
Take a step back and look at how you can streamline operations and make changes in your portfolio. Think strategically in terms of collaboration, physical presence and waste reduction. Dig in to both fixed and variable costs. By adopting more agile principles and approaching your portfolio from a lean perspective, you can eliminate as many wasteful operations costs as possible.
2. Consider Capital Expenditures
Now may be a good time to consider capital expenditures to improve or extend the life of physical assets, like buildings, technology and equipment, or to acquire a new facility or green-light a long-awaited expansion. These capital expenditures can save you money in the long run, so don’t dismiss the idea simply because it will cost your company initially.
For instance, a manufacturing business may have tolerated outdated and inadequate production space for years, but now – with improving market conditions and more available capital – it’s ready to upgrade its assets. Another business may decide it’s time to ditch its sterile, cubicle-laden office space for a more attractive, open and collaborative workspace that reflects its modern company culture. Both of these are examples of finding better ways to manage a CRE portfolio, as more modern equipment will make production more efficient.
3. Opt For Outsourcing
As CRE teams become increasingly globalized, more and more demands are made on them. The smartest CRE teams recognize that certain specialized areas of expertise are better served by a network of trusted outsourced professionals, including IT support, facility management and commercial property tax management.
Navigating the complex commercial property tax system is not something you need to handle on your own. By working with commercial property tax consultants, you may find that you’ve been paying more than your fair share of taxes. With the help of expert professionals guiding you through the tax assessment appeal process, you have the potential to lower your cost of occupancy simply by paying less in commercial property taxes.
Too often, cost of occupancy is treated as just another fixed expense, when in fact, there are many opportunities to significantly reduce it. This requires adopting new strategies, exploring new avenues for savings and outsourcing some of the aspects of managing your portfolio to specialized professionals. Take the time to really analyze your cost of occupancy, and you may find that your company can realize great savings.
Are commercial property taxes hurting your bottom line? Download our free infographic to find out.