A Recession’s Impact on Future Corporate Real Estate Strategies

Like the great depression of the 1930s the current recession we’ve been in for the past couple of years has forced senior management to establish the discipline to reduce all operating expenses that, we believe, will fundamentally change the way companies will manage their corporate real estate in the future.

We’re now operating in an era where “having to do more with less” isn’t always a bad thing. The recent initiatives put in place intended to reduce operating expenses out of sheer necessity could have a very positive effect when the inevitable rebound occurs.

Initiatives that are highly likely to become permanent CRE strategies include:

  • Emergence of alternative workplace strategies and mobile workforces – reduces the need for space; contribute to energy efficiency by using less; eliminates commute times; enhances workforce job satisfaction; and recruits more tech-savvy employees.
  • Implementation of sustainable design practices – promotes use of innovative energy efficiency techniques; reduces emissions; and, contributes to corporate social responsibility objectives.
  • Reliance on occupancy cost reductions – senior management’s use of performance metrics analytic tools will establish new, lower benchmarks for costs/SF that will drive future leasing and ownership decisions and property/space management strategies.

For the most part, challenging economic times can take a devastating toll on the way companies view essential employees, maintain levels of quality services/products and manage their workplaces. But, for those companies with the foresight to create innovative solutions can help their organizations survive the toughest of times and achieve profitability which, will enable a faster recovery and contribute to longer-term success.

It’s hard not to view the economic downturn as a bad thing. But, it’s the CRE professional who can make the most out of a tough situation by effectively managing one of their organization’s largest operating expense and contribute to a brighter financial performance of their company’s real estate holdings.

What initiatives have you put in place out of necessity that you believe will remain as an integral part of your CRE strategy?

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3 Responses to A Recession’s Impact on Future Corporate Real Estate Strategies

  1. Bob Cook says:

    The new lease accounting standards likely to be finalized in a little over a year are going to help bake in thinking about the three trends you see — alternative workplace, sustainability, and occupancy cost reduction. Once companies have to put future lease obligations on the balance sheet, the size of these obligations is going to be eye-opening to investors and company executives. They are going to push for more cost-effective real estate plans and because of how the new accounting treats options to renew, are going to want in place asap plans that outline how the company intends to reduce its real estate footprint. I’ve been blogging on these issues at http://bobcook1234.wordpress.com

  2. Coy Davidson says:

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    Coy Davidson
    Colliers International

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