10 Effective Ways to Lower Real Estate Occupancy Costs

With high interest rates, a tight labor market, and low office occupancy due to remote work, landlords and tenants are seeking ways to cut costs. Here’s a simplified guide to help reduce real estate expenses while adapting to the market.

1. Rethink Space Usage

Shift your approach to space by using data to assess how much and what type of space you truly need. With hybrid work models, prioritize shared spaces over private ones and avoid over-reducing space to prevent costly future leasing.

2. Consolidate Space

Strategically consolidate your real estate footprint. Determine why you need certain spaces and align them with goals like cost savings, employee experience, and sustainability. For example, focus offices on collaboration or centralize operations in modern hubs.

3. Unlock Value from Real Estate

Consider sale-leasebacks or selling underused properties to access capital. While the demand for office space is down, industrial properties and data centers can still attract strong financing opportunities.

4. Relocate to Lower-Cost Markets

Move operations to emerging markets with less competition and lower costs with better talent pools.

5. Leverage Business Analytics

Use integrated data systems to make informed decisions about space usage, expenses, and operations. This can streamline decision-making, like divesting properties post-merger or optimizing resource allocation.

6. Focus Your Capital

Redirect capital wisely to achieve cost reductions:

• Use third-party financing for upgrades, turning capital projects into manageable operating expenses.
• Bundle smaller projects to reduce costs.
• Make early equipment purchases to avoid delays and inflation impacts.

7. Invest in Green Initiatives

Explore installing EV charging stations, solar panels, and efficient HVAC systems to reduce utility costs. Upgrading older lighting and control systems can also improve energy efficiency and lower expenses.

8. Create a Decarbonization Plan

Develop a strategy to reduce your carbon footprint and avoid potential regulatory fines. Focus on energy efficiency, renewable energy, and reducing supply chain emissions to align with sustainability goals.

9. Use Smart Facility Management Technology

Adopt advanced technologies like building automation and AI to optimize facility operations. For example, align maintenance schedules and energy usage with actual occupancy levels to save costs.

10. Streamline Real Estate Operations

Move away from fragmented management systems. A unified, holistic approach to managing your real estate portfolio can reduce inefficiencies, improve decision-making, and lower overall costs.

Each of these strategies can help you reduce costs while aligning with today’s evolving workplace trends. Explore which steps work best for your business to maximize savings and efficiency.