How to save money on your property portfolio

In a recession, companies need to make the most of all their assets and look for savings across the board. John Gotley, MD of managed office solutions firm Portal, has ten tips for reducing the cost of your commercial property.

by John Gotley
Last Updated: 09 Oct 2013

These days, business owners and senior management aren't as obsessed about the office on Berkeley Square or a floor in the Shard. It's not about kudos when the national economy is in a downturn. They want a property portfolio that works with the longer term goals of the business. This means greater cost transparency, and a degree of flexibility when it comes to negotiating rates and contract models. Here are ten ways to ensure that your property portfolio works for you.

1. Compare and contrast the property models

When comparing property solutions, whether it’s a lease, purchase or managed solution, you need to research the long-term costs before committing.  Independent organisations such as Actium Consult who produce the industry benchmark standard Total Office Costs (TOCs) survey will enable you to perform like-for-like cost comparisons.

2. Weigh up whether you should make a capital investment

Investing in property is no longer the safe bet it used to be. The recession has left many organisations with legacy property they cannot shift, that is either the wrong size, in the wrong place or unfit for purpose.  Rather than buying premises, consider whether an operational contract that agrees a fixed monthly cost could offer more flexibility, reduce exposure to risk and avoid a hit on the balance sheet.

3.  Beware of hidden extras

Remember there may be other significant costs besides the space itself.  Acquisition, negotiation, design, fit-out, legal and exit fees, facilities management, IT, security, plus on-going support and management, the list is seemingly endless. But these are all elements that need to be considered when constructing a meaningful costing comparison model.

4. Rid yourself of redundant property

Remove the expense of retaining property that you no longer need.  Ask your property consultant whether they could take on the financial burden of your legacy portfolio as part of the deal.   

5. Go bespoke

Make your property fit the needs of your business, not the other way around.  Use a specialist partner that can source, deliver, and fit-out a property to your exact requirements, without compromise or incurring the price premium sometimes associated with serviced offices.

6. Motivate staff

According to the CBI the cost of absenteeism in the UK workforce last year was a staggering £17bn. If you want to keep your employees happy and more productive then you need to invest in a workplace that can portray brand values but at the same time promote well-being. Offices should also be designed to reflect the changing trends of more ‘virtual’ staff – less time is already being spent in a traditional office.  In the future there will be even greater demand for ‘on-demand’ space to serve the mobile and/or home-based worker.

7. Plan your exit route

The costs of exiting a property can sometimes be so prohibitive that even when you have reached term, the business can’t afford to leave and is forced into accepting a lease renewal that it doesn’t really want.  Make sure you negotiate a clean exit at contract term, so you can walk away at the end of the contract, with no responsibility for dilapidations, legal fees or overhang lease liabilities.

8. Do what you do best

Managing infrastructure such as, facilities management, IT and telephony installations can have a serious impact on a senior executive’s time. If you outsource this, you can focus your time and energy back into your business and not waste precious management time on property issues.

9.  Ensure your contract has the flexibility to move with your business

Insist on terms that enable you to adapt your accommodation portfolio as your business needs change. This will allow you to react more quickly to new opportunities, and give you competitive advantage in your sector.

10. Save costs and the planet

The UK is committed to cutting UK carbon emissions to 50% of 1990 levels by 2025. By choosing an energy-efficient property you can boost your green credentials, avoid fines and save on your energy bills.

John Gotley is managing director of managed office solutions specialist, Portal

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