As the UK economy slips into its first recession for 17 years, there is no escaping the fact that times are hard and businesses must cut costs in order to stay competitive.

Given that property is the second largest business cost after staff, what can you do to reduce this expense? In the past, some companies have looked at ‘mothballing’ – closing up a building temporarily while planning the property’s future – to reduce costs. However, with the abolition of business rate relief on empty commercial properties with a rateable value exceeding £15,000, this is no longer viable.

So what are the alternatives? You might decide not to renew certain leases if you have properly analysed upcoming lease events. But then you will be driven by the chronology of lease renewals, rather than by the business imperative. Is there a way of cutting property costs without adversely impacting your business operations? At NB Real Estate, we believe there is.

Property costs: Fixed or variable?
Typically, property is perceived as a fixed cost. But we believe it doesn’t have to be: you can turn property into a variable cost and, in some cases, an additional revenue generator. It’s simply a case of being creative in the way that you use property to optimise its contribution to your business.

The Occupiers Property Databank (OPD) – sister organisation to the Investment Property Databank (IPD) – establishes standards to measure office utilisation by identifying the optimum square footage per person. The focus is on staying cost competitive. Effective property strategy and management is an absolute must for every successful business.

Utilising your resources
But how can you plan an effective property strategy? You probably already have the vital information and resources you need. The key is to know how to use them.

Your property managers will typically have a detailed list of your locations, their square footage, lease renewal dates, running costs, state of repair and spending plans. However, in isolation, this information doesn’t tell you much about how your property is actually performing.

For a clear view of the value your property brings to your business, you need to combine your property data with business information held in other departments – including staff turnover from HR, branch revenues from Sales & Marketing, and Profit & Loss from Finance. Full, detailed and accurate information is fundamental to planning an optimal property strategy.

Interrogate to accumulate
Having the information is one thing; collating and managing it in a way that can help you to make informed decisions is quite another. Structuring and interrogating data is a specialist skill: it’s all about knowing which data is specifically relevant to your business. Making decisions about property costs without access to the right information could result in disruption and chaos. But when you’re informed, you’re in control.

Our CRE Consulting division has a wealth of experience in analysing business and property data to assess the contribution that property is making to the business. We can work with you to analyse the performance of your property. We will then combine this information with our extensive property knowledge of market conditions to enable you to take advantage of market cycle opportunities that can make your property more productive – without disruption.

Identifying your options
It’s not a ‘one size fits all’ solution; we will use our understanding of your business and the current property market to plan a property strategy to meet your business needs. Whether through space optimisation programs, restructuring leases or creative solutions to surplus space, we will help you to be more creative in the way that you use property to deliver bottom line performance.

Our CRE Consulting division has recently devised and implemented a plan for a leading UK retailer which has generated annual savings of £2m through making the portfolio work harder.

If you are looking to make smart changes to optimise the contribution your property portfolio brings to your business, our CRE Consulting division can help.

To discuss your options further, please contact me, James Crisp, Director of CRE Consulting, on 020 7544 2229 or at jcrisp@nbrealestate.co.uk. I look forward to hearing from you.