In high-growth times, real estate is almost a second thought as leases are signed and buildings constructed to accommodate expansion. When contraction hits the market real estate is often on the target list for cost cutting. By thinking about your portfolio cost takeouts in a proactive and multi-strategy manner, you can maintain service delivery capabilities and create a more effective organization in good times and lean times.

1. An Economics Perspective
on Real Estate Portfolio
Cost Takeout Strategies
Achieve Equilibrium by Focusing on Drivers of Supply, Demand, and Cost/Price

2. Reduce the Supply1
• Dispose of excess property and leases and accelerate the
disposals process
• Leverage short-term arrangements such as executive suites for
initial market-entry endeavors
• Mothball non-operational properties and reduce run-rate costs
• Identify land holdings that can be sold in whole or part
• Merge IT data centers where possible
• Avoid over-engineering space and move towards flexible
design policies
Real Estate Portfolio Cost Takeout Strategies – Achieving Equilibrium

3. Reduce the Demand2
• Collocate and consolidate fragmented space and leases.
• Implement workplace strategies for flexibility and mobility.
• Backfill vacant available space first.
• Implement technologies that reduce the need for additional
space.
• Increase utilization through better asset availability.
• Identify multi-use functionality at existing facilities.
Real Estate Portfolio Cost Takeout Strategies – Achieving Equilibrium
D2
D2

4. Reduce Cost/Price3
• Conduct own vs. lease analysis on current and future locations.
• Renegotiate lease terms and rates.
• Establish energy management and conservation policies and
strategies.
• Use value engineering and earned value management
techniques on construction projects.
• Use tax reduction strategies to defray/offset costs.
• Negotiate better SLA terms and monitor warranties.
• Benchmark operating costs and target high-cost areas with
cost control strategies.
Real Estate Portfolio Cost Takeout Strategies – Achieving Equilibrium
D2
D2
S2
P2