How to save money and create value in a tough economy

Categorized | Whitepapers

How to save money and create value in a tough economy

Posted on 08 July 2009
Tags: Barkley Advisory Group, Cost reduction, Credit Crunch, Planon, Value

Today on IWMSnews.com we publish a white paper that was written by Mr Barkley of the the Barkley Advisory Group, LLC. Mr. Barkley possesses a Bachelors degree in Economics and Finance from Drake University and a Masters in Corporate Real Estate (MCR) designation from CoreNet Global. He is on the faculty for CoreNet Global Learning and is the author of numerous articles appearing in a variety of trade journals. The article was commissioned by Planon, Inc.

Problem Statement: Challenges, Opportunities and ROI.

There is an unrealized opportunity to decrease operating expenses and improve shareholder value and profitability through improved management of real estate and workplace assets. This is due to the absence of the following: an awareness of the potential available, a single “source of truth’ containing reliable and complete data, a performance measurement system, and a rigorous management approach based upon financial performance targets.

A recent report by CoreNet Global surveyed 100 firms regarding space utilization offers some relevant information. The report revealed that utilization rates range from 45%-65%. This means that at any moment on average, 55% of the existing office space is vacant. Colliers International reports that there currently is 4.7b square feet of commercial office space in the North American Market. If we assume a very conservative rate of $15.00/square foot that means there is close to $40b of overpaid rent being paid each year.

A recent report in Commercial Property News indicated that in 2007 there was $56b of Global Sale-Leaseback Transactions. This strongly suggests there are rich targets of value creation and cost reduction in real estate assets.

Introduction and Background:

For many organizations, the management of real estate and the workplace remains a somewhat opaque and arcane area. Often this function is viewed as a pure cost of doing business. And, while this can be the reality, more often it can be a potential source of value creation and can be a positive contributor to profitability and increased shareholder value.

So, why do many organizations overlook the financial opportunities that reside within this area? We believe that this situation can be traced to the following factors: ……