The archenemy of any corporate real estate director is vacant office space. It is the most difficult obstacle when achieving corporate real estate optimization. It's not valuable or useful, but it consumes capital and eats up management time and resources. However, handling it is a necessary evil. Here are five tips that can help to lessen the impact of carrying vacant space.
1. Adopt a Buy Out Strategy
Corporate real estate optimization is usually about saving money, but sometimes the route to savings starts with writing a big check. Talk to your landlord and find out what it would cost to buy out your space. With any luck, there will be tenant demand for the space and the landlord will be willing to work with you. Barring that, it still may be less expensive to pay cash up front than to continue making rent payments and managing the space. It also removes liability to pay operating costs which could increase in the future.
2. Monitor the Space
Under your lease, you are usually responsible for the space and its upkeep even if it is vacant. When the space is nearby, such as one of multiple floors in an office building, monitoring can be as easy as having a facility staff member check on it periodically. When the space is located away from your staff, see if the building management will keep an eye on it for you. If they agree to, sign a written agreement that can waive you of responsibility if they don't check on it. The key is to not let out of sight space be out of mind, even if that requires setting up a wireless security camera for remote monitoring.
3. Sublease the Space
Subleasing the space is usually the best option. Given that you are going to be paying rent for the for the remainder of its lease, any money that you get out of subleasing goes right to the positive side of your corporate real estate optimization ledger. A short lease or a significant delta between your rent and market rent could limit how much you recover, but in this case, there's always benefit to collecting revenue. One strategy can be to contact other tenants in the building to see if any of them need additional space - even if it’s just for storage.
4. Find a Replacement Tenant
While a subtenant is better than none, getting rid of an unwanted lease completely can be an even better corporate real estate optimization strategy. Bear in mind that landlords usually don't like having subleased space in their buildings since many of them become vacant in the future. As such, your negotiating position with your landlord can be stronger if you have a tenant that is ready to occupy the space for the long term. Any money that you save by escaping your lease also helps you sweeten the pot to attract a tenant.
5. Look at the Bigger Picture
When you have vacant space because your company simply needs less space, look carefully at your entire portfolio. You might be able to relocate nearby workers into vacant space if their current office’s lease is due to rollover. A whole portfolio-wide view can help make strategic decisions that improve corporate real estate optimization and reduce the impact that vacant space has on your bottom line.
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