The process of commercial real estate benchmarking encompasses three broad steps. First, you compare a given space to itself to see if anything has changed over time. Second, you compare it to the rest of your portfolio to see if it is an outlier in any area. Finally, you compare your portfolio to competing properties. This three step process helps you ensure that you are getting the best possible performance out of your portfolio both in terms of cost and other factors.
Benchmarking-to-Self
Given the right workplace management or commercial real estate benchmarking software -- like REoptimizer® -- benchmarking a property against itself is relatively simple as long as you have historical data. To do this, you can compare just about every conceivable metric in a given period -- like the current year -- against past periods. While some metrics -- like rent per square foot -- will probably have automatic escalations built in, others can give you insight in the space's operation. For example:
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Barring weather shifts, a spike in electricity usage could indicate failing equipment or a need for efficiency upgrades.
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Significantly higher property taxes could give you a reason to look into appealing your assessment.
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Much higher utilization rates could show a space that is beginning to need expansion
Portfolio Benchmarking
Benchmarking sites against other sites in your portfolio can be somewhat like comparing apples to oranges. However, while apples and oranges might be different things, they also have a great deal in common -- both are sweet, both are edible, both grow on trees, both are full of water, and both are relatively round. While it might go without saying that space in San Francisco, CA has higher rent than space in San Francisco, NM (the apple and orange), you can make other comparisons.
Two retail outlets in areas with similar weather should have the same electric usage per square foot. Two similar regional distribution centers should hopefully have similar utilization. These types of examples exist throughout your company's portfolio, and the properties that are less efficient than the norm need fixing while those that are better could be models for future portfolio-wide improvements.
Learn about REoptimizer's Benchmarking Capabilities
External Commercial Real Estate Benchmarking
While many companies stop with the first two types of benchmarking, adding market intelligence gives you an additional level of insight. Commercial real estate benchmarking your portfolio against other properties in the market -- which is a service that REoptimizer® supports -- helps you understand your expenditures in a broader light while you are using your spaces. This data also helps you make better decisions vis-a-vis renewing or moving spaces while also empowering you to be a better negotiator when working with existing or new landlords.
Commercial real estate benchmarking helps you cut costs throughout the tenancy or ownership cycle of every location your company controls. Done right, it also helps you make better big picture decisions and negotiate from a stronger position. Beyond cost, though, a benchmarked portfolio is one that consumes less energy and is more environmentally friendly. It is also one that operates better, potentially improving your company's revenues, as well. REoptimizer®'s built-in benchmarking tools can help you bring the power of commercial real estate benchmarking to your portfolio.
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