If you are running your company’s corporate real estate portfolio, you are always looking for areas to cut costs and increase efficiency. However, knowing where to start can be difficult with so many factors at play.  

There is always an opportunity to streamline your CRE, and if you are overwhelmed, don’t worry. That is where we come in. We are tenant reps, commercial real estate experts, and pros at helping our corporate clients consolidate their CRE portfolios and reap the maximum benefits. 

So, if you are curious about how to do this, this article is for you. Let’s go through what optimizing your CRE means, how you can achieve it, and who can benefit the most from this process.  

What Does Optimizing CRE Mean? 

Essentially, optimizing your commercial real estate portfolio is identifying where the physical space doesn't meet the needs of your company. Doing a deep dive on your properties will point to areas where you are under or over-utilizing space. 

It is a profile audit that points out your highest costs or overages compared to the current market value. Closing in on these areas will allow you to save money while increasing employee morale, productivity, and overall quality of the working environment.   

Who Can Benefit From CRE Optimization? 

Any organization can benefit from making their CRE a more efficient expense. However, the companies that can really benefit from analyzing their space utilization are companies that have a large enough footprint to have significant potential for wasted space.

The larger the portfolio, the easier it is to lose track of where you are under or over-utilizing space. You also have more opportunities to renegotiate the terms and rental rates of your leases to get back to or under the current market value. As these utilization adjustments add up, you will find that the savings will be much larger. When you see the big picture in terms of your portfolio, you can understand how larger organizations have more room to create more substantial savings through optimization. 

Still, any organization can assess its real estate needs. If people have been sent home to work remotely with no plans of returning or you have desks in hallways, there is a window for you to improve your utilization and cut unnecessary costs.  

How Can I Optimize My CRE? 

CRE Optimization sounds great, right? It’s not too good to be true. It is an authentic process that has helped organizations, like yours slash their overhead costs and introduce efficiency in their real estate operations,  

Let’s go through the points to consider when optimizing CRE to understand better how the process works to save you money and hassle.  

Right-Sizing 

Right-sizing your space is often the first step you can take. It is an internal check on the way your company uses space. To measure the optimal space utilization, you can use a simple calculation.

However, depending on the type of office space, the factors within this equation will highly vary. This is a simple run down you can try but know that there are more complex calculations and circumstances at play that can better track your utilization. They may require the help of an expert, but let’s go through where you can start to right-size. 

Take the number of your current employees and multiply it by the square footage necessary for each employee. The number you end up with is the amount of usable square feet you need to operate within a building. 

Do the same thing with the stats you have now. Are the two numbers the same? If not, you have room to improve the efficiency of your space utilization. There is no use in paying for wasted space each month or operating in a building that does not fit your current needs. 

If we take this calculation and consider it in the scope of an entire portfolio, you can see how right-sizing can improve budgetary and productivity concerns. 

Right-sizing works beyond this calculation. It is an entire assessment of your real estate needs in conjunction with the bigger picture goals you want to achieve. This could mean many things. Based on the market you are in and unique property requirements, the road to right-sizing could look completely different. For example, it could be combining smaller satellite locations within a specific geographic region, subleasing out extra warehouse space, or ditching all the additional office space because most of your workers are working from home. 

Renegotiating 

If you find that you are not running at your optimal space utilization, you have options. Conducting market research will inform you of the current asking rates of properties that have the features you want. You can go back to your landlord and leverage your demands against your tenancy with this knowledge. 

Now more than ever, the value of tenancy is at a premium. Landlords do not want to lose their sources of income. As a result, they are more willing to open up lease renegotiations. You have the power to assert the clauses, terms, and prices that will work for your organization. 

Proper renegotiation can close in on the adverse effects of incorrect space utilization. It can also reset your elevated rent payments to the current market value. There is no shortage of benefits you can receive through reopening arbitration of your existing terms. 

Relocating 

If your landlord does not want to concede to your asking points during renegotiation, you can always see what else is out there. 

The market has changed since you first signed your lease. If your property and area were the best options then, it is wise to reassess if they still are. You may discover that certain geographic alternatives will give you more benefits for less. 

 
Whether it is moving down the street, into the suburbs, or across the country- your organization may find that relocating can create big savings in tax, rent, and payroll costs. 

Relocating to areas more sensible for your business's long-term success is key to optimizing your portfolio. Right now, there is a corporate exodus occurring from business-unfriendly states. Organizations like Tesla, Goldman Sachs, and Hewlett Packard slashed overhead costs by moving their operations to more advantageous regions.  

Captains of industry have been taking advantage of states like Florida and Texas, where you can simply get more bang for your buck. It is up to you whether you want to join them.  

You don’t have to move across the nation to benefit from relocating. But, being open to what’s out there will isolate where you can find your preferred features and price in a commercial space.  

Software and Specialists to Help With CRE Optimization

If you are having trouble keeping track of these factors, there are certain aides you can rely on. 

There are many technological means of tracking utilization and capitalizing on it. Certain software programs can help you make educated CRE decisions through measuring space and lease management. They can also conduct market analysis to pinpoint regions where the most advantageous properties are located. 

If you are looking for a more personal touch, tenant representatives can walk you through the entire process. They are experts of market evaluation and arbitration who can land you the most optimized space and price. Their experience proves invaluable when overhauling a portfolio. They know where the common areas to save are and are keenly aware of market trends. 

Tenant reps also have access to software and programs out of reach of other professionals. In addition, they come prepared with a vast network of other real estate professionals who can aid the process of finding and securing corporate space. 

Next Steps to Optimize Your CRE

As discussed, there are many methods you can employ to cut down on costs and pockets of inefficiency in your real estate. Depending on your needs and current practices, the exact steps may vary. However, most organizations can benefit from right-sizing, renegotiating, or relocating. 

Let tenant reps handle your next steps if you feel you want a helping hand in this process or don’t even know where to begin. They can identify where you can save, leverage the value of your tenancy against landlords, and determine the best areas for you to move. Their representation cuts through the hassle and stress of corporate real estate. They also only represent tenants, so you know your interests will be safeguarded through the entire process. 

Ready to talk to a tenant rep? Schedule a quick meeting with one today!