Reducing Facility Costs

3 Things You Can Do Right Now to Reduce Facility Costs

Every company we talk to is looking for ways to reduce their facility costs.  At a minimum they want to better align facility and other administrative costs with their current revenue structure.  There is nothing new here, but CEO’s everywhere are challenging their CFO’s to make things happen.

Here are three specific things you can do right now to reduce facility operating costs.

3 – Reduce Energy Costs.  While turning off lights when not in use is a great practice, to get at serious savings you need to evaluate your cooling and heating systems (HVAC).  These are unquestionably the biggest energy hogs in your portfolio.  Consultants that combine engineering expertise with building management savvy can often find, propose and implement solutions that deliver immediate savings.

One such firm is Seven Oaks Company (www.sevenoakscompany.com), a private asset management, development and re-development company.  With more than 60 years experience as both owner and manager, Seven Oaks knows how to unearth the skeletons, or more likely the out-of-spec systems, in your facility portfolio.  In one recent building analysis, they discovered that the boiler-fed heating system was running around the clock, putting an immense strain on the cooling systems thereby creating significant and unnecessary additional costs.

If new HVAC or other energy management equipment is needed, there are many companies who not only provide the analysis, they finance the solution.  One such company is Empower Ennovation (www.empowerennovation.com), an investment and service company that invests and provides energy conservation products and services that guarantee energy cost savings.

2 – Audit CAM Billings.  As vacancies rise, landlords aggressively try and push more common area and building management costs onto tenants.  One such trick is to hire a third party management company and charge both the third party firm’s expenses as well as a landlord management fee to the tenants.  A well worded CAM provision in your leases can offer significant protection to you as tenant.  On the other hand, lease language may be “the law”, but you still need a “cop” to enforce and protect your rights.

For large office leases, KBA Lease Services (www.kbalease.com) is an industry leader.  They excel in eliminating landlord billing errors, recovering rent overpayments and ensuring lease compliance.  With legal, management, software technology expertise, they also employ good old fashioned common sense and savvy negotiating skills to recover significant dollars for their clients.

1 – Align Real Estate Strategy with Business Strategy.  When business people hear the word “strategy”, they often think of a wordy document that spells out a many-months-to-implement plan.  Nothing could be more misleading.  A thoughtful, focused Real Estate strategy may only require one page to describe actionable cost saving measures.  The key here is aligning your real estate with your business.

Many businesses have changed significantly to adapt to a stubbornly sluggish economy.  These business changes may dictate necessary real estate or facility changes.  Seasoned real estate strategists can identify smart options for reducing your portfolio footprint or combining uses to minimize duplication of supporting functions.  Without necessarily expending a lot of capital, alignment can yield big savings.  

Contact Galaxy Partners for a free over the phone initial consultation.