Create a Strategic Real Estate Plan

There are many strategies that a high growth company can employ to best manage the risks and maximize the returns from its real estate holdings.

As one of its key tactics, the company should prepare a strategic real estate plan that reflects current and future real estate needs based upon its anticipated growth. This plan should be developed in coordination with the company’s enterprise-level strategic plan and encompass the views of the company’s leadership. It should include how the company’s occupancy costs currently impact its overall budget and the stated objectives the company might have to minimize those costs.

If the company determines that the reduction of occupancy costs is a strategic objective, then the plan should outline the possible approaches for achieving that goal. These could include reducing the amount of required space, relocating to less expensive neighboring jurisdictions (i.e., move from the city to the suburbs), employing innovative design tactics to use its space more effectively and efficiently and enhancing the use of technology for its core business operations (such as by transforming the company’s offices to paperless environments, resulting in a dramatic reduction in required filing space).

The plan should also contemplate the company’s ultimate exit strategy as a general matter and specifically for particular geographic areas or business divisions. Future planning about how the company plans to implement its macro or micro exit strategies should be tied to the company’s approach to its real estate. The company’s strategic real estate plan should aim to enhance the company’s existing operations, accommodate its future plans and at all times enable the company to closely manage its occupancy costs.

Has your high growth company prepared a strategic real estate plan? If so, what components does it include beyond those described in this post?

Permalink: http://fastrealestategrowth.blogspot.com/2012/02/create-strategic-real-estate-plan.html

Intro to Real Estate for Fast Growth Companies

This is the inaugural post for a new blog we are launching that will focus on real estate issues aced by high growth companies. When we refer to a high growth company, we are thinking about a company that is in upward projectile, with steadily increasing year over year revenues. We also have in mind a company that may have employee ranks that are growing annually at north of 100%. Through organic growth, merger and acquisition activity, or both, the company we are focused on is moving to the next stage of its life cycle – it is becoming a big deal.

We intend to explore the real estate implications of this company’s tremendous success. For example, if this company is growing organically, it will likely need more occupancy space before the end of its existing lease term to accommodate its expanding work force. If the company is in merger and acquisition mode, it will probably face geographic redundancy for some of its leases and possibly excess space in certain locations, in particular if it is acquiring other companies in similar industries who tend to be located in the same areas where the company already operates. The company might also find itself expanding into new and previously unchartered geographic locations where it has no meaningful sense of prevailing rental rates and other market-based
economic terms.

How should this high growth company best position itself to address these issues? How can the company maximize its increasing “real estate” clout in the marketplace? Stay tuned for some key insights on these topics and feel free to jump in with your thoughts.

Permalink: http://fastrealestategrowth.blogspot.com/2012/02/intro-to-real-estate-for-fast-growth.html