Over time some companies end up expanding their commercial real estate portfolio and opening offices in different markets. Some of your properties maybe office, retail, industrial, or a combination of the 3. While you may think that all your sites are being used efficiently & producing there is a good chance that you have too many sites in which some could be consolidated. Below are a few factors to think about as you review your commercial real estate portfolio.
Commercial properties that overlap geographically
If you have locations that are in the same neighborhood or city those could be good sources of consolidation. If possible you could distribute business from one location to another. This is something that you would want to strategically do over time…..not all at once
Unused Commercial Space
If you have many locations in different geographic locations there is a good chance that you have 1 or a few that are not being used to their fullest extent, or that are not producing up to your standards. Thoroughly analyze each location to ensure that there are no redundancies. If there are then consider consolidating the operations.
Locations that are not producing
Markets change and some locations may not be doing as well as when they first opened. Some locations will continue to see increases in sales while others may be deteriorating. If you have exhausted all tactics to revive a location then maybe consider that one for a relocation or consolidation. New commercial properties are being built all the time and locations that were once hot may now be not. It might be time to reevaluate where the more desirable urban and suburban locations are. Unless you have to be in those areas they may be prime targets.
Look at sales per sf and other metrics
If your properties are all retail then take a look at your sales per sf & occupancy costs and compare those to your other stores. Those retail space locations that are ranked at the bottom should be considered for consolidation.
Consolidating Properties Takes Time
Consolidating your commercial real estate portfolio takes time. You have to wait for leases to expire, find new space for others, move business and clients from one location to another in a way to retain as many clients as possible, etc.. There are ways to speed up the process if possible.
- Buyout of your leases – This may require you to pay a lump sum up front either at a discount or the full amount however it could save you on the ancillary costs of having the location open.
- Sale-Leaseback – If you own the property consider having someone purchase your property and lease it back to you. This would free up some cash for reinvestment into your business or other cash producing property.
- Consolidate to larger locations first – If you have a great producing store that is larger than others consider consolidating into that one first since it could absorb the additional staff and clients.
If you have any questions about consolidating your commercial real estate portfolio feel free to contact us.