Many companies have no corporate real estate department. Instead, they task their operations, finance or accounting staffs with taking care of their company's real estate portfolio. If you're someone for whom real estate is a second job, here are five tips to help with the process.
1. Understand What You Have
In real estate, contracts are written. This might seem like something you'd hear on the first day of real estate class if you were trying to become a Realtor, but it's actually the secret to getting on top of your company's real estate portfolio.
What you need to know about your company's spaces is in their leases. The lease tells you what you have, what it costs, and what you need to do to either stay in that space or to get out of that space. With the information in that lease, you can begin to build a plan and a strategy for how to maximize your real estate.
As you review your leases, you will quickly find out that they're hard to read. That's where your company's legal department comes in. See if they can prepare lease abstracts -- summaries -- for you. Once you have those summaries, you can use them to make it easier to manage your portfolio.
2. Get a Calendar.... Or Software
As you get to know your leases, you'll realize that scheduling and critical date management is a big part of running a real estate portfolio. Paying your rent late by just a few days can increase occupancy costs by 5 or 10 percent just in late fees. If you have triple-net leased spaces, you could face large bills for CAM reconciliations every year. And if you have leases that are nearing expiration, you need to build a plan to find a new space, to negotiate a renewal, or to take advantage of your option to renew before it expires.
Generally, there are two ways to manage dates. You can have your administrative support enter them into your calendar with reminders at appropriate intervals before a given action item comes due. The other option is to use specialized corporate real estate software that has critical date management capability built in.
3. Don't Be Afraid to Stay Home.... Or Travel
As you manage your company's corporate real estate portfolio, you will have to make decisions about new locations and about existing ones. As you look at new locations, take advantage of all of the tools that let you see the world -- and the neighborhood -- from your desktop. While you probably can't choose your next space virtually, you can rule many bad options out.
When you're getting ready to make a decision, though, get on a plane. In the long run, going to see a space -- whether it's an existing office that you need to figure out or a set of choices for a new location -- will give you better information so that you can make a better decision.
4. Prepare for Information Asymmetry
When it comes time to begin looking for a space and negotiating a new lease, be prepared to enter a marketplace where information is hard to come by and where you are probably going to be the least knowledgeable person in the room. Unfortunately, the commercial real estate industry has multiple barriers to keep outsiders out. The terminology and customs of the industry are opaque.
Many spaces for lease are either unlisted or are listed through industry-only channels that are not available to the general public. And market information is typically held close to the vest or not available at all. While you might not be able to solve all of these challenges, being aware of them can help prevent you from moving too quickly into a transaction that might not be favorable to you.
5. Help's Free. Mistakes Are Expensive.
The final tip to remember is that while a commercial real estate mistake can cost your company millions of dollars in lost sales, lost productivity or wasted rent, help is easy to find. Tenant rep brokers specialize in representing tenants can help you to find and lease space. Some can even help you administer your leases and optimize your commercial real estate portfolio while you are not looking to do a transaction. Generally, you won't pay anything for their services, since they get compensated by the landlord when you lease a new space. For this reason, having a tenant rep in your corner can help your company's real estate perform better while leaving you free to do your day job.
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