When and How Can I Optimize My Real Estate Portfolio?

In many scenarios, a shift in economies or pivot in strategy forces companies to reevaluate their business goals and, in turn, reevaluate their real estate portfolio. To ensure your CRE portfolio remains aligned with your overall business strategy, it’s always wise to revisit, reevaluate, and reoptimize your real estate portfolio.

Real estate portfolio optimization is the process of evaluating your real estate assets and operations to identify efficiencies, reduce costs, create strategy, and maximize value. 

While it’s always in a firm’s best interests to revisit their strategies and real estate portfolios, doing so can become a complex process. In this post, we help you understand when and how to optimize your portfolio, and why it’s beneficial to you.

6 Reasons to Optimize Your Real Estate Portfolio 

No two organizations’ needs, goals, and situations are the same; firms wisely and routinely pivot on their strategies to meet objectives and ensure a better space to reach those goals and to grow. Still, there are a variety of reasons organizations may need to optimize their real estate portfolios. 

  • Expanding to new markets often requires new physical locations. 
  • Shifting to a remote workforce means divesting of expensive real estate assets.
  • As one of the largest company expenses, real estate strategy can help you realize impacts to short- and long-term cash flow.
  • Downsizing a commercial real estate portfolio allows companies to cut costs and save money.
  • A new location or network may better align with business goals and key stakeholders.
  • In order to improve employee productivity and outward appearance to customers, and supplement talent recruitment, some companies must find a nicer or more conducive space.  

How to Optimize Your Real Estate Portfolio in 3 Steps 

Whether your situation aligns with those above or you have other motivations, here are a few simple steps to follow to ensure you fully explore your existing portfolio and are confident in your approach to optimizing it.  

  1. Review your assets in relation to your business goals. Conduct a current state assessment to evaluate how your assets impact your business goals, and how the people, processes, and technology impact your CRE. 
  2. Identify the unsupportive, supportive, and missing (gaps) assets in your portfolio. Determine the role each of your assets plays in your overall strategy. Is the space a liability? Is it supporting your goals? Or is there an opportunity to improve portfolio performance? 
  3. Know your options for each type of asset. Once identified, you can then begin to explore how to rid yourself of unsupportive assets, capitalize further on supportive assets, or fill the gaps in your portfolio with new assets. 

Unsupportive, Supportive, and Missing (Gaps) Assets  

One of the primary goals of portfolio optimization is to identify the unsupportive, supportive, and missing assets within your portfolio, then take strategic action to optimize them. 

Unsupportive Assets

Unsupportive assets don’t enhance overall business objectives like your company’s strategy, operational efficiencies, talent acquisition and retention, or financial goals. These assets no longer add value to your business. 

Ridding your business of these assets enables you to dedicate financial resources and attention to resources that do impact your business initiatives. Here’s how a national marketing firm saved thousands through subleasing an unsupportive space. 

Supportive Assets

Supportive assets add value to your business and help you achieve organizational goals. Once identified, supportive assets should be optimized to fully leverage their positive impact through tactics like lease and invoice audits, debt optimization, and energy management, to name a few. 

Here’s how a Fortune 1000 health insurance company consolidated its existing (already supportive) facilities into one fully optimized headquarters. 

Missing (Gaps) Assets

Missing assets are gaps that should be filled within your real estate portfolio or existing assets that could be modified to support your business strategy. To fill these gaps and align your portfolio with overall business objectives, turn to a commercial real estate acquisition strategy. Here’s how Lincoln Electric identified and filled the gaps in their CRE portfolio with a new manufacturing facility.  

Optimizing your real estate portfolio does require due diligence, but has the potential to yield tremendous benefits: 

  • Reduced costs and improved cash flow.
  • Strategic alignment of real estate to business goals.
  • Better management tools, dashboards, KPIs, and clear financial controls.
  • Increased efficiency and real estate aligned with new working patterns. 

Align Your CRE Portfolio With Business Strategy   

Corporate real estate optimization is fundamental to achieving your business goals and responding to new challenges. To learn how your CRE supports overall business strategy, download our free guide, Corporate Real Estate Portfolio Strategy: Your Business’ Competitive Advantage.

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