CFO Briefing: The Multiplier Effect of Corporate Real Estate Spend

Today’s CFOs have access to large quantities of data turned into analytics that can drive quality decision making.  Analytics are already used in many aspects of the business.  Yet, real estate which is the second largest cost to a company is still relying on limited data.  Data analytics allow for better understanding of how this significant company resource is being utilized and how to allocate limited resources most effectively. Analytics empower CFOs to exercise more data-driven business decision-making.

It is critical to understand that companies have been cutting costs, and mere square footage reduction does not necessarily deliver on company goals.  Not to mention, that many companies are growing.  How do organizations allow for the ebb and flow of the real estate resources?

Real Estate analytics can produce insights that debunk myths or accepted wisdom that can reside within the business. Analytics can demonstrate their value in bringing to the business data-driven insights to questions such things:

  • How much space do we need & what should its complement of spaces be?
  • How much can we grow in our current footprint?
  • How are departments collaborating?
  • How mobile are your employees?

Through benchmarking we have discovered that a large number of Fortune 500 companies utilize less than 50% of their office space, spending millions of dollars on under-utilized assets. Cost-savings from that space can be redistributed within the organization to optimize the workplace, invest in R&D, enhance employee benefits, and/or additional sales support.

A company has millions of square feet of offices, whose average annual rent is $35 per square foot. If a company can obtain data- driven analytics to measure space utilization accurately and can achieve at least a 5%-10% incremental real estate reduction or avoided growth each year, this will yield additionally millions of dollars of annual savings on rent alone.

Analytics can allow companies to tell a compelling story supporting business cases.  According to Peter Sondergaard, “Information is the oil of the 21st century, and analytics is the combustion engine.”

Optimo X is the engine for real estate analytics – the results of data-driven decisions based on these analytics have indirect benefits as well.  Those indirect benefits are of equal importance to CFOs: employee engagement, enhanced collaboration, virtual presence as well as productivity.

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