Corporate Real Estate Concerns

Corporate real estate can be a very lucrative venture, but it is not without its headaches. Various surveys over the years have shown that there are several key worries for corporate real estate executives. These include everything from finding space for expansion to high fees for re-leasing to finding flexible leases.

Here are some of the top concerns for corporate real estate executives:

Securing Enough Space for Expansion

While this is not always a concern in down economic markets, when things perk up, business can often face difficulty in finding available, affordable corporate real estate to house their expanding offices. Corporate spaces in major cities are often too expensive and real estate outside of city limits may not give a company enough client exposure or it may take too long to build.

Finding Flexible Lease Options

The state of the economy can be volatile and that can make predicting the needs of a corporate real estate lease unpredictable. Six month leases can seem long, and 12-month leases can sometimes feel like eternity when the markets are low. Executives are often looking for leasing options that will provide the most flexibility possible to accommodate fluctuations in market conditions.

Getting Rid of Excess Property

This is a large concern during recessions and near-recessions. Fees and costs can climb too high when there is not enough business to fill the leased space. This can ultimately end in corporate real estate foreclosure if the extra properties are not disposed of in a timely fashion. And of course selling off real estate is difficult when financial times are hard. It is a tricky cycle that executives try hard to avoid.

Bringing Down Facility Costs

The most expensive facility costs for most companies are utilities like power and water. In some parts of the country these resources are limited, making them more expensive. And even where they are not in short supply, the power demands of business can push up the costs. The trouble with finding inexpensive solutions is that most utilities are owned by a single entity in any given area, creating a monopoly and leaving little room for price negotiation.

Reducing Re-leasing Fees

When a lease runs out, there are plenty of fees to be paid including commission charges for brokers and leasing consultants as well as legal fees to make sure the new lease is legally sound. Longer leases would mean fewer fees, but not many businesses can afford to lengthen out their leases beyond their economic crystal ball predictions.

Consolidating Facilities

Corporate real estate executives often have the task of consolidating several facilities in order to be cost effective. This means cutting back on employees as well as on office space like reception areas and cafeterias. Fewer properties can also mean less security concerns and lower securities costs.

So while there are many issues that corporate real estate professionals must deal with, the good news is that the corporate market tends to be somewhat more stable than the residential market and typically much more profitable.

Corporate Real Estate Concerns