Real estate consultant Avison Young reports that the persisting impact of Covid-19 is leading many businesses to minimise their estate costs to conserve cash until the economy revives.
The advise comes as the health crisis is simultaneously creating inflationary pressures such as workplace social distancing measures, lower occupancy densities, higher standards of cleaning and air filtration.
The property consultant says that in most organisations, costs need to be at least contained if not cut and but this need not necessarily lead to a reduction in service quality. Rather, it can accompany performance improvement and business and carbon benefits. And, it adds, it is paramount that such measures are sustainable and support longer-term business vitality.
The adviser outlines several long-term strategic moves and ‘quick wins’ that companies should consider to contain if not drive down costs and generate business benefits.
- Rightsize and relocate: Review the purpose, size, space mix, location and configuration of the company’s portfolio. Is there scope to eliminate surplus space and move to lower-cost locations?
- Many staff have become used to working from home. Consider the long-term potential for smart working and flexible space.
- Think about reaping the benefits of lower overheads and better performance from embedding smart working.
- Sell and leaseback: Considered your property portfolio as a source of finance.
- Explore lease opportunities: Engage with your landlord and explore options to improve cash flow.
- Reduce rate liabilities Use the government’s Covid-19 relief scheme to best effect to minimise liability for empty space.
- Service charges: Negotiate reductions in service charges through the lockdown period and beyond.
- FM services: Align FM operating costs and contracts to new ways of working
- Energy efficiency and net-zero carbon: Decarbonising the portfolio and cutting costs is a win with increased efficiencies and up to 30% savings on energy bills.
- Managing debt: Use the government VAT deferment scheme and engage with sub-tenants to maximise cash flows and protect value.