Compared to past pandemics, COVID-19 has had a major and immediate impact on the CRE industry. When properly executed, CRE portfolio optimization enhances business and workplace performance and unlocks opportunities with data-driven strategies. This article aims to showcase the reasons to optimize your CRE portfolio during the COVID-19 pandemic.
1. Enhanced Employee Productivity
A fully optimized CRE portfolio enhances employee productivity due to the utilization of the various metrics obtained. When you analyze your office space by checking the details in your agreements with your landlords and evaluating details such as the number of empty desks you have in your back office as well as which office is seeing consistent 5 percent annual operating expense increases, interesting patterns begin to emerge which can be useful in optimizing your CRE portfolio for enhanced employee productivity.
2. Enhanced Workplace Culture
Optimizing your CRE portfolio goes beyond the building even though enhancing physical office spaces is important to today’s workforce. Companies with a vibrant workplace culture continue to attract great talents.
When you properly optimize your office, the environment brings obvious organizational benefits such as; great first impressions for guests, ease of communication, and the ability for managers to engage their team. According to research conducted by Paula Davis-Laack in 2014, strong social connections and relationships with others lead to employee resilience.
3. Reduced Costs
An office space that is suboptimal costs more money. Not only does bad office space affect morale, but it is also a waste of resources. When an office space is too big, it dissipates energy and reduces collaboration. Poorly configured office space can lead to workplace accidents. This is why corporate leaders need to start paying attention to the optimization of their CRE portfolio especially during this COVID-19 pandemic. Spaces in excellent locations can attract new customers and encourage employees to come to the office.
4. FASB Requirement
The 2018 revised FASB Lease Accounting standard was scheduled to go into effect for everyone else on December 15, 2020, which requires you to optimize your CRE portfolio.
To properly account for anything but the shortest-term leases, you will have to separate the actual lease value (your right of use, which is an asset) from the underlying financing (your payment stream, which is a liability) that is implied by the lease. Breaking these aspects of the lease out requires you to understand the underlying value of your right of use of the property and to clearly understand the payments that the lease requires you to make during its term and its option term. To do an office optimization, you're going to need to have all of this information anyway.
5. Accommodation of Growth
When you fully optimize your commercial real estate portfolio, you can know if your current portfolio can accommodate future growth. For instance, data acquired in the process of optimizing your space will enable you to know if you are at peak space optimization or there is room to maneuver in terms of growth. Hence, you will be able to develop an action plan to accommodate new changes.
Here are a few other articles to check out:
8 Working From Home Tips You Should Know
4 Site Selection Tips When Looking for Office Space
5 Tips When Moving Your Office From Big Cities to the Suburbs
Subscribe for more great CRE tips!!
