REoptimizer^® Blog

Diligent companies know the impact that their corporate real estate portfolio has on business performance. Powerful companies align their corporate real estate strategy to business goals.The traditional solution to real estate and business alignment involves creating a flexible portfolio.

It can be effective, but frequently carries very high costs. An inflexible solution that combines strategic owned real estate with long-term leases may reduce costs on a per square foot basis, but increases overall occupancy cost due to the need to carry vacant space. The best solution is a three-part approach that aligns the present and future real estate needs of your business:

The priority of most companies is to scour every aspect of business, identifying ways to eliminate costs and operate at peak efficiency. That is why corporate real estate optimization is a necessity. At a typical company, real estate is the third largest expense, so controlling the costs of your portfolio can make a big difference in your company's bottom line.

Real estate asset management is a sensitive balancing act. If you choose a portfolio that is highly stable, it could be less expensive and easier to manage, but difficult to adapt to your company's changing needs. On the other hand, structuring your portfolio for maximum flexibility with short-term leases and multiple smaller, locations lets you shrink or expand and easily adapt to the fluctuations of business. However, this strategy costs more money and time on a per-square foot basis. Flexible portfolios may be rewarding at times, but they aren't panaceas and carry some risks.

As a corporate real estate executive, you may have to keep track of locations spread across the globe. Whether you're managing sites across town or across oceans, your mobile device can keep you organized and productive. While many apps help you with general productivity or business tasks, five of them stand tall for their ability to help you manage the dollars and cents of your company's portfolio:]

Site selection for a major healthcare facility relocation is very different from the process you'd use for other building types. Many of the concerns that drive office or retail relocations have little, if anything, to do with a health care facility. Some of the things you can largely ignore include:

Load and loss factors both refer to the amount of space that you pay for but don't occupy as a part of your commercial real estate lease. As defined by BOMA standards, most multi-tenant buildings have a mixture of usable space, which is the area inside your walls, and common area space, which is the shared parts of your building's interior. Your rentable space, which includes both types of space, is what you pay for. Load and loss factors are different ways of describing that additional space.

Rent escalations might seem like a fundamental part of being a tenant, but they don't have to be. While occupancy costs typically go up along with inflation, you can protect yourself from unreasonable increases in rents. Some of your protection comes from having a well-negotiated lease document. More protection can come from having a strategy for controlling operating expenses mapped out. Here are three tips for reducing rent escalation expenses: