Navigating Real Estate Costs with 7 Strategic Tips for Operational Excellence
Real estate expenses are becoming more critical to businesses. Big companies are making moves to reduce their costs, and it is time for others to follow suit.
According to a report published on Businesswire by Density, approximately 71% of office spaces can accommodate almost four times their current usability. This study indicates that businesses can find more innovative ways to save money instead of giving up expensive, fancy offices.
Real estate is often one of the most significant expenses on a company’s balance sheet, but there are ways to cut costs without hurting operations. In today’s economic climate, saving money wherever possible is essential. Companies like Facebook and Salesforce have already started reducing their real estate expenses and many are considering doing the same.
This article will explore 7 strategies that can provide businesses the opportunity to save their real estate costs while running efficiently. By using these strategies, companies can achieve their cost-saving goals.
1. Shift focus on space management
Effective building operations management involves monitoring, tracking, and managing physical space inventory. It requires careful consideration of layout, workflow, storage, and aesthetics to create spaces that align with their intended purpose.
The three fundamental elements of building space management are:
- Effective space planning
- Tracking and reporting
Space management enables you to solve space utilization challenges and create better workplace experiences strategically. You can integrate a efficient facility management platform with your building management system to access real-time data from your commercial space’s HVAC (Heating, Ventilation, and Air Conditioning) systems. Additionally, there are a range of IoT sensors for monitoring space occupancy, weather, and operating conditions to enhance the productivity of your indoor environments at their most productive.
You can start by assessing the patterns and trends of space utility or identify over and underutilized areas. Based on your data and observation, you can make decisions that create a cost-efficient yet productive environment. For example, you may notice that the cozy conference room on the second floor is rarely used, while there is a daily shuffle for the collaborative hub on the fourth. You can create an environment that promotes productivity and fosters a positive workplace culture by reimagining your layout to match your employees’ needs.
2. Optimize commercial real estate space
Enterprises can reduce their real estate costs while maintaining operational efficiency by implementing decluttered seating arrangements.
Some strategies to have a decluttered office space:
Flex seating: This allows employees to choose where they want to sit, which can reduce the amount of space needed. For example, employees who need to collaborate can sit together, while those who need to focus can sit in a quieter area.
Hot desking: This system is where employees share desks and utility spaces, which can help reduce the needed space. It can be done by assigning employees a permanent desk but allowing them to work at other desks when their own is unavailable.
Shared workspaces: These are areas where employees can work together, collaborate, or take breaks. The space needed for individual offices can be reduced by utilizing shared workspaces.
Optimizing the office layout: The layout of the office can have a significant impact on the amount of space needed. By optimizing the design, businesses can make better use of their space. For example, they can create more space by removing unnecessary furniture or rearranging the table more efficiently.
Using space-efficient furniture: Many types of furniture are designed to be space-efficient. For instance, desks with built-in storage and chairs that can be stacked when not in use.
Having a clutter-free workspace has a positive impact on employee productivity. A tidy and organized environment can make communicating and sharing ideas easier for employees. When employees work in a comfortable and organized space, it can lead to increased motivation and happiness. Conversely, a cluttered workspace can be a source of stress, resulting in reduced productivity and low morale. By redistributing resources thoughtfully and creating collaborative spaces, underutilized areas can be transformed into hubs of innovation and productivity, resulting in significant cost savings.
3. Break out of stereotype real estate property
The traditional office setup with cubicles and fixed desks is gradually becoming a thing of the past. Nowadays, offices are designed to offer employees freedom of choice and functionality. The one-size-fits-all approach is slowly fading, giving way to customized solutions like hot desking and remote work options.
Adopting flexible work arrangements is not only about enhancing employee satisfaction but also about achieving substantial cost savings. By embracing flexible arrangements, organizations can audit space utilization, ensuring that every square foot of their workspace serves a purpose.
Hot desking, for example, is a proven way to reduce facility operating costs. According to a report published by BBC UK, organizations can reduce facility operating costs by up to 30% by implementing hot desk arrangements, which translates to significant cost savings. Therefore, organizations need to consider adopting flexible work arrangements to optimize their workspace and achieve cost savings.
4. Make improved decisions with data-driven insights
Making data-driven decisions can help businesses reduce real estate costs and improve operational efficiency. Using data, enterprises can make better-informed decisions about their real estate needs, leading to cost savings, increased efficiency, and improved profitability.
Data-driven decision-making also enhances transparency in the real estate market, making it easier for businesses to compare prices and make informed purchase decisions. Managing risk in the real estate market is another benefit of data-driven decision-making, as it helps companies avoid costly mistakes. Finally, data-driven decision-making makes businesses more agile in the real estate market, enabling them to respond quickly to changes and seize new opportunities.
Consider a commercial building where some floors have higher occupancy during certain times. With data at your disposal, you can tailor the lighting, heating, and cooling to match those patterns, resulting in significant savings on energy costs. It’s not only about finding cost-saving solutions for real estate operations; it’s also about providing customized experiences based on genuine needs.
Here are some ways through which enterprises can use data-driven decision-making to reduce their real estate costs and maintain operational efficiency:
Analysing historical data to identify trends and patterns: This can help businesses understand how their real estate needs are changing over time and make better decisions about allocating space. For example, companies can use data to track how often different office areas are used and to identify underutilized areas. This information can then be used to decide whether to sublet or consolidate space.
Using predictive analytics to forecast future demand: This can help businesses plan and avoid overpaying for space. For example, companies can use data to predict how many employees they need and plan accordingly.
Optimizing the use of space This can be done by using space-saving furniture and equipment and by creating flexible workspaces that can be adapted to changing needs. For example, businesses can use hot desks or flex seating to reduce the space needed for individual offices.
Automating tasks: This can free up employees’ time to focus on more productive activities. For example, businesses can use software to automate tasks such as scheduling meetings and tracking expenses.
Collaborating with others: This can help businesses to share resources and expertise and to get a better understanding of the market. For example, companies can collaborate with businesses in the same industry to share information about real estate costs and trends.
5. Centralize your building operating system
When it comes to real estate, duplicated spaces, and resources can be a burden. By centralizing operations, you can create a streamlined and collaborative environment that eliminates excess and enhances communication. A report published by McKinsey shows that businesses can reduce their real estate costs by 20% or more through effective consolidation. However, it’s not just about saving money; it’s also about unleashing the full potential of your teams.
For example, McKinsey’s study on a European digital company that consolidated its scattered office spaces into a single location saw a significant increase in teamwork, knowledge sharing, and reduced real estate expenses. Employees appreciated the newfound connectivity, and real estate reports confirmed the move was cost-effective.
6. Renegotiate leases and contracts
Renegotiating leases and contracts offer businesses flexibility by allowing them to adapt to changing needs. It also helps mitigate risks, such as being locked into a long-term lease with high rent. Renegotiating leases and contracts can improve cash flow by reducing monthly rent payments or terminating agreements. Additionally, it increases bargaining power with landlords, resulting in better business deals.
For Example, if you have leased an office space for a specific period at a particular rate. As time passes, the market conditions change, and you may start feeling that your lease terms are no longer advantageous. This is where the skill of renegotiating comes in handy. You can discover opportunities that may significantly affect your finances by carefully examining your current lease agreements and contracts.
Enterprises can reduce their real estate costs and maintain operational efficiency by renegotiating leases and contracts in several ways, including:
Negotiating a lower rent:This can be done by comparing market rates, highlighting the value you bring to the landlord, and being willing to walk away from the negotiation if necessary.
Asking for a rent abatement: This is a temporary reduction in rent, which can be helpful if the business is experiencing financial difficulties.
Negotiating a shorter lease term: This can give the business more flexibility in the future and help reduce costs.
Subletting unused space: This can help to generate revenue and reduce the overall cost of the lease.
Consolidating space: This can be done by moving to a smaller area or by sharing space with another business.
Changing the lease terms: This could include adding a tenant improvement allowance, getting out of a termination clause, or getting more flexibility in terms of subletting or assignment.
7. Embrace workplace technology
We are in an era where technology is essential in optimizing real estate operations. It is no longer just an accessory. It has revolutionized how we approach workspace management and provided intelligent solutions that adapt to the changing dynamics of occupancy trends.
An innovative building system that automatically adjusts lighting, heating, and cooling based on real-time usage can be attained by integrating cutting-edge technology solutions like a facility management platform. By incorporating technology into space management, real estate firms can maximize space utilization and curtail energy wastage.
For example, if a property management firm has deployed intelligent sensors and occupancy analytics in their office spaces. This system allows leases to identify peak and off-peak usage patterns, enabling them to make informed decisions about space allocation and resource utilization.
Furthermore, implementing intelligent lighting systems in the same scenario significantly reduced energy consumption, leading to considerable cost savings. This highlights the importance of embracing technology to create leaner, more efficient environments that align with financial goals.
Concluding ways to reduce real estate costs
The key is to identify impactful strategies that reduce costs and shape a flexible future. Enterprises constantly seek ways to improve operational efficiency, and reducing operating costs is an effective strategy to achieve this goal. In this blog, we have discussed 7 plans for how corporate real estate can create a cost-efficient operation cost that balances finance with operational excellence.
To remain agile in terms of real estate costs is not just an option, it is a necessity in today’s dynamic enterprise landscape. Regarding real estate management, it’s important to remember that FieldCircle innovation can be an efficient technical aid in managing real estate operational efficiency, leading you to a horizon of cost-saving ability and unparalleled adaptability.
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