Feb 12th, 2020, By

What is Office Optimization?

Imagine if your company's portfolio of offices cost as little as possible while generating as much revenue as possible. That's the goal of office optimization. You get there by collecting data about your locations, building a cost model, building a use and productivity model and then bringing sites in line with those models.

 

Data Collection for Office Optimization

The first step in optimizing your company's offices (or other commercial real estate holdings) is to collect all of your lease data. Software like REoptimizer® gives you a systematized place to enter lease abstract data and operating data. This lets you quickly view data on each site in isolation or in comparison to its peers. While there are administrative benefits to this -- like having all of your crucial dates tracked in a single place -- the ability to compare sites on multiple metrics is what drives optimization.

 

Building a Cost Model

What's your average cost per square foot for office space? What does a typical build-out cost you? How long does it last? These metrics are the ones that drive your cost model. Creating a baseline for what a given space should cost puts you in a position to quickly compare offices to see which ones are too expensive. 

 

It's reasonable to have some regional variation, but these benchmarks can be very useful. You'd expect your location in New York City to have a higher rent than one in Columbus, but if Cincinnati costs significantly more than Detroit or Cleveland, it's a red flag. If electricity usage is much higher in Tucson than in Phoenix, it's another potential sign of an issue.

 

Understanding Use and Productivity Metrics

Use and productivity metrics tie to cost and revenue. Metrics like desks per office, percentage utilization and square footage per employee show you how well the space works relative to others in your company. When you start looking at metrics like productivity per employee, sales per square footage and the like, you get a sense of how the office actually performs from the revenue side. While you'll need to do some unwinding to separate the impact of management from the impact of the space, you can't do the unwinding without the data.

 

Execution -- Achieving Office Optimization

Finally, data doesn't optimize your offices. Execution does. Knowing which spaces operate at unreasonable cost allows you to build a plan to shut down the location, resize it, move it or renegotiate it. If you know you have too much space, you can downsize it and if you have too little, you can upsize it or reconfigure it for great efficiency.  Spaces that work well for your employees become models for new spaces or for fixing spaces that don't work.

 

Office optimization isn't a simple process. It requires collecting and entering significant amounts of data. That data only adds value to your organization if you can analyze it, form an action plan, and execute on it. This process isn't one that you have to do alone. Commercial real estate office optimization software helps with data collection and entry, and outside experts can help you understand the messages in that data and execute on your plan. That way, you get the benefits of a truly optimized office portfolio.

 

Here are a few other articles we think you'll like:

Top 5 Things CEOs Want From Offices

9 Reasons You Need a Tenant Rep Broker on Your Side

Optimizing Your CRE Portfolio: What You Should Know

 

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