The NYSE has taken hit after hit. If you’re like most executives, you’re probably bracing for a crash and how it will inevitably affect your company and its profit margin. Especially since its pretty much unanimous (98%) among CFOs that we’re entering a recession, the demand to tighten corporate spending (especially in real estate) is even more pressing.  

But before you start making budget cuts and laying off half your company, take a look at these 5 suggestions for ways to avoid going under. 

1. Keep Your Employees  

The immediate reaction of those fearing an economic downturn is to downsize their staff and cut their biggest expense: payroll. Don’t. Keeping your employees employed helps everyone, including the overall health of the economy. If workers stay employed, the unemployment rate doesn’t rise, consumers keep spending, and the market continues on its path to recovery.  

“Instead of resorting to layoffs, CFOs should be focusing their efforts on ways to optimize costs like benefits and engage the people they are worried about losing,” Tim Glowa, principal of human capital services for Grant Thorton. This is especially true since layoffs appear to be a transitory fix. In fact, it will further complicate recruiting abilities in the future. According to CFO Magazine, “companies that choose layoffs will put themselves in steep hiring competitions to refill their workforce post-recession — a competition that’s already impacting organizations across the board now.” 

On top of that, finding top notch employees equipped with the knowledge and dedication of having worked in your company for however many years is rare—don’t hurt those who don’t deserve it.

Learn about How to Leverage your Corporate Real Estate to Curb Layoffs

2. Reevaluate Your Second Biggest Expense 

Real estate, office space, industrial warehouses- these priorities all rank extremely high (usually the second or third) on a company’s expense list, but they don’t have to be. Reconsider your leases; spend more time on researching the best prices; negotiate with power. => 

You might be surprised at how much you stand to save. For example, does it make sense to still base your commercial real estate in metropolitan areas? Workplace flexibility is driving people out of metropolitan areas. High crime, expensive cost of living, and complicated commutes don’t seem to stack up against the option to work from home. Instead, businesses are finding that Americans are more willing to work in suburban marketplaces. As a result, there has been a migration to the suburbs for people and companies alike. 

According to GlobeSt,“Suburban office outperformed Central Business District (CBD) markets over the past two years, serving as a “middle ground’” between working from home and commuting to an urban core. Suburban office absorption hit 2.2 million square feet in the first quarter, while CBD office markets posted negative 2.6 million square feet of absorption during the same period.” 

Relocating to the suburbs will leave you with an office building with the same (or better) premium features as your city office, but for likely a fraction of the price. Never underestimate the value of rethinking your existing properties- the chances are you can improve on them. 

If you’re reconsidering your location, there’s a lot of factors you can’t mess up. So, if you’re looking to relocate to the suburbs or anywhere else, you should prepare yourself with the information you need to land your optimal property. Learn how corporate tenants can find the best office space in the free course below. 

3. Work With What You Got 

Consider how your company is using its office or industrial space. Calculate your employee/square footage ratio—is your space being properly utilized? Has your business expanded enough to require a larger space? Or have you downsized enough to consider a smaller work area? Try to consolidate in spaces that need it; use flexible workspaces; consider cloud technology in favor of bulky file cabinets and internal servers. 

The way to identify whether you are running at your ideal utilization is by Right-sizing. This method will consider the employees regularly visiting the office and the optimal square footage denoted for each one. It will also take into account the proper spacing for common areas like cafeterias, mailrooms, etc.  

If you find you’re left with a lot of extra space, you might even consider leasing out part of your office. Subletting could help you make back some of what you are losing entirely.  

4. Benchmark Rents to Market Conditions 

After reevaluating your lease, or looking up different venues for tenancy, make sure you do your research by benchmarking rent rates. It’s an extremely important step in ensuring that you’re getting the best space for the least amount of overhead. It can also be used as ammunition in your “My rent is too high” gun if you decide to approach your landlord about this.  

Only 30% of tenants have had the option to renew pre-pandemic leases. So, you can be sure that there’s another wave of businesses planning to ditch their offices entirely. And this new wave has CRE owners more on edge than ever, increasing the likelihood of footprint negotiation. With 70% of tenants who signed pre-pandemic commercial leases yet to approach renewals, commercial real estate markets are soon to be even more saturated with tenants pulling out of their leases. 

Data source: The study “Work from Home and the Office Real Estate Apocalypse”

If you signed your lease in a period of high demand, you have the most to benefit from the climbing office space vacancies. Not only are you paying a high base rent determined by a period of increased demand, but the compounding escalations of previous years as well! 

However, never forget that you have the power to renegotiate and now is the best time to do so. Your building owner will likely bend over backward if you’re willing to take on a bigger space or a longer term in this fiscal environment. So, use this to your advantage and reset your rents to current market value. You have the potential to save millions over a term. 

This is why you want a True Tenant Rep™– someone who gives you unbiased market intelligence. 

5. Use REoptimizer^® to Cut Your CRE Expense 

Shameless self-plug here, BUT we can do all of the above (aside from retaining your employees) and with one easy piece of software. REoptimizer^® organizes all your sites into one database, helps you manage and maintain each one individually, while benchmarking your lease prices to those currently on the market. The days and weeks of monotonous rent research is already done—compare your rates quickly and efficiently, courtesy of REoptimizer^®. You’re guaranteed to save at least 30% on your lease rates, and of course, consolidate your time using one handy program.  

Not only this, but if you’re looking for new space, REoptimizer^® will let you keep track of what’s important. Now, of course price is important- but as you know, the right choice is not always the cheapest option. You need to identify the solution that is instead, the most bang for your buck. REoptimizer^® will allow you to work through your team’s KPIs and identify which deserve priority. Then you can weigh each of the features you’re looking for against each other to easily identify which property is the best option.  

For example, for some companies, price will be the most important searching term. But for others, it’s corporate expandability, aesthetics, or location. Without REoptimizer^® software how would you benchmark these separate features against each other? These weighted property features are known as Key Site Drivers. Learn how they ease your property search in this article: KSDs are the Key to an Efficient Property Search 

Prepare your company for potential economic hardship ahead of time by saving money now. Avoid detrimental job cuts; save the economy; reevaluate your expense list for commercial real estate sites; sign up for REoptimizer^®. Easy, right? 

Safeguard Your CRE with a True Tenant Rep™ 

Determining the right solutions for your business during an economic downturn is a stressful job. Luckily, you can work with a True Tenant Rep™ expert at iOptimize Realty^® who will save you time, stress, and money by taking on CRE responsibility and due-diligence where you need it most. 

The True Tenant Reps™ at iOptimize Realty^® will analyze where the terms and rental rates of your original lease show room for improvement. Then, they execute by adopting a strategic approach to optimizing your leases. This means discovering when (and what) your optimal renewal period is, deciding the terms and price that make the most sense, and negotiating with your landlord to make sure you get the most out of your renewal option. And, if you want to start early, they’ll help you forecast. 

They can guide you through any commercial real estate concern your business may have (and even the ones it didn’t even know existed). All said and done, they’ll help you feel proud if your signature is the one that appears on the dotted line. Talk to a Tenant Rep at iOptimize Realty^® today. 

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 If you want to read more about how tenants can work with a Tenant Rep to thrive despite a national financial downturn, check out How to Optimize your CRE for the Recession.