Key Takeaways

• What is involved in real estate portfolio optimization?
• Why is it important?
• 5 actionable steps to optimize your real estate portfolio.

For most corporate leaders, optimizing their real estate portfolio is a top priority.

Time is important when you’re trying to save money and make the most of your corporate real estate portfolio since many decision-makers are optimistic about 2024’s economic situation.

As a corporate real estate leader, you have three choices for each of your assets: get rid of it, keep it as it is, or make it work better.

This article is about the last option—making things work better.

What is Involved in Real Estate Portfolio Optimization?

Optimizing your portfolio means retaining every asset, whether leased or owned and ensuring each operates as efficiently as possible. This way, you extract the maximum value from every square inch of space.

This leads to a reduction in the financial and environmental costs of maintaining your current portfolio and enhances the overall workplace experience.

Optimizing your real estate portfolio is like reviewing your long-neglected credit card bill and realizing you forgot to cancel that Netflix subscription you signed up for six months ago to watch a series once. At $22.99 per month, that’s a savings of almost $275 per year.

Getting rid of assets in your real estate portfolio is like canceling the entire credit card – a decision that might have irreversible consequences down the line.

Why is Real Estate Portfolio Optimization Important?

The choice to optimize instead of dropping assets may be influenced by circumstances. For instance, being bound by leases for the next year with no option for subleasing.

However, optimizing your real estate portfolio is generally a wise move. This is because it helps corporate real estate leaders extract the maximum value from each asset before deciding to downsize or adjust the size. Optimizing should arguably be the initial step before considering dropping or acquiring new assets.

Even with major tech companies reducing office space, holding onto specific assets might prove beneficial in the long run, although that may not be entirely evident now.

Following these optimization techniques could make your real estate portfolio cost-effective in the long term. Here are the actionable steps from CARMEN Corporate Real Estate experts you can take to achieve that.

• Consider Broader Business Goals

The offices within your corporate real estate portfolio play a crucial role in shaping the success or challenges faced by employees as they strive to meet organizational goals.

Quarterly and yearly objectives have a profound impact on the workplace, and in turn, the workplace influences how these objectives are accomplished.

Returning to the planning stage to determine precisely how corporate real estate aligns with broader business objectives should always be the initial step in the optimization process. This approach ensures that any adjustments to workspaces or processes are in sync with the direction of the business.

• Collect Floor Plans for Entire Real Estate Portfolio

Bring in current floor plans that detail every conference room and hallway, down to the square inch. Every space, no matter how small it may seem individually, holds potential for optimization. While each space may not appear significant on its own, the cumulative impact across multiple offices results in substantial cost savings.

• Plan the Utilization for Each Floor

Line up space utilization data onto each floor plan based on the related zone or neighborhood. Identify areas with low utilization rates throughout your entire portfolio – these become your optimization zones.

Aligning floor plans with utilization data enables the creation of a heatmap illustrating how each part of your real estate portfolio is used. This approach ensures that any modifications to workspaces integrate seamlessly into the work process without disrupting the overall workplace experience.

Consider examining daily and weekly utilization rates to identify patterns and trends. Optimization opportunities may arise only on specific days or weeks.

• Optimize the Use of Energy and Facilities

The areas you identified for optimization in the previous step are likely zones where you can reduce the use of heating, cooling, and lighting. For instance, if it’s clear that the third floor of a building has only a 5% utilization rate on Fridays, consider closing it off entirely and directing the few employees using it to different floors.

If you apply this optimization strategy across multiple buildings, it results in significant cost savings and an enhanced employee experience, as the underutilized space isn’t making people regret coming in on a Friday.

These optimization zones are also ideal for adjusting investment in facilities management. For instance, if three office buildings have lower utilization rates on Mondays and Fridays than expected, use this data to optimize the cafeteria’s food orders and adjust staffing accordingly, aligning with the number of people having breakfast and lunch in the office.

Optimizing the use of energy and facilities management not only reduces costs but also makes the entire real estate portfolio more sustainable by minimizing power consumption and waste.

• Rethink Underutilized Areas

Optimizing corporate real estate can involve rethinking its functionality. As people come to the office for connection and collaboration with colleagues, traditional office layouts with individual desks might now offer more space than necessary.

Adapting the space to provide employees with the functionality they require can significantly increase the return on investment in corporate real estate. When the word gets out that the office layout supports everyone in doing their best work, it’s likely to attract more people back to the office.

Need assistance in single/multi-site real estate portfolio optimization? CARMEN Corporate Real Estate is what you need. We combine our years of experience to make leaders (like you) successful in real estate.