Creating Resilience

10 High-Impact Moves to Reduce Total Cost of Occupancy

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September 13, 2022 60 Minute Read

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Strategies for resilience amid economic uncertainty

Corporate Real Estate and Facilities (CRE&F) executives face tremendous financial and productivity pressures. While cost-savings mandates and workplace transformation initiatives are not new, this economic cycle presents CRE&F with particularly significant challenges:

  • Elevated inflation, which impacts everything from capital projects to facilities supplies
  • Central bank monetary tightening, which raises capital costs and heightens economic uncertainty
  • Historically low unemployment rates, intensifying the competition for talent while driving up labor rates
  • Widespread adoption of remote work to influence talent retention, resulting in sub-optimal occupancy in most CRE&F office portfolios
  • Carbon reduction and net zero commitments, which require large financial investments and strategic clarity
  • Uncertainty in world financial markets, impacting budgets and availability of capital

Over the next two months, CBRE Institute will release a series of insights that will explore ten initiatives CRE&F leaders may consider to navigate these new challenges, hedge against inflation, source capital, and mitigate risk.

This series will explore:

  1. Transforming Your Approach to Space

    Revisit your space standards to reflect new hybrid work realities and prioritize capital spend accordingly.
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  2. Shedding Space from the Portfolio

    Develop space consolidation strategies that begin with Line of Business considerations, labor availability, space market conditions and sustainability priorities—resulting in both cost savings and carbon footprint reduction.
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  3. Unlocking Trapped Capital

    Explore sale-leaseback structures and initiatives that reduce operating expenses, improve cash flow and strengthen the balance sheet.
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  4. Relocating To More Favorable Markets

    To optimize labor availability, skillsets, affordability and incentives, explore emerging markets that could futureproof your workforce, provide resiliency against climate risk and give you greater access to green power.
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  5. Organizing to Systemically Drive Down Total Cost of Occupancy (TCO)

    Invest in holistic, “single pane of glass” portfolio analytics to drive transparency to Lines of Business and uncover new cost-savings initiatives. Leverage Performance & Innovation Management Office for consistent execution.
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  6. Preparing for a Capital Scarcity

    Prioritize business-critical plans and bundle recurring projects to increase leverage on cost and schedule. Consider a turnkey approach to mitigate risk and hedge inflation.
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  7. Investing in Energy Efficiency and Onsite Renewables

    Explore electrification of fossil-fuel HVAC and aged lighting systems to decrease costs and energy demand, capture utility incentives, reduce exposure to community pricing, lower technical labor requirements—all while leveraging third-party financing as appropriate.
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  8. Developing a Comprehensive Decarbonization Strategy

    Pursue new energy-purchase agreements and leverage wholesale contracts amid continued market volatility and higher demand for renewable power and voluntary offsets.
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  9. Implementing Smart FM Solutions for More Efficient Operations

    A portfolio-wide review of building service-level agreements is appropriate, given fluctuating occupancy levels. Remote sensors and diagnostics can also validate vendors’ onsite time and ultimately lower costs.
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  10. Transforming Real Estate Delivery Models for a New Era

    Conduct a comprehensive organizational review to explore globalizing your model, consolidating providers, eliminating shadow positions, and right-sizing organizations, ultimately to develop optimal delivery models across all integrated partner organizations.
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Please reach out to your CBRE account manager or CBRE Institute should you have any questions or require information regarding a comprehensive portfolio diagnostic.

Explore all 10 High-Impact Moves to Reduce TCO

Discover strategies for resilience amid economic uncertainty

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Chapter 1 Transforming Your Approach to Space