Knowing the surface area and costs of your real estate portfolio

Knowing the surface area and costs of your real estate portfolio

Every so often that dreaded meeting comes up – you know what we’re talking about, the one where you get asked the hard questions, such as:

  1. How many m²/sqft does our organization have?
  2. How many m²/sqft do we actually need?
  3. What is our space cost and can it be reduced?

The answers are of vital importance – despite the rise in remote working and the growing integration of physical and virtual settings, real estate remains one of the most expensive assets. And many organizations are finding it difficult to align their portfolios of buildings and sites with ever-changing business strategies and new ways of working. Admittedly, making bricks agile is a challenge. Nevertheless, in order to remain competitive, corporate real estate managers need to ensure that their buildings fit the core business needs of their organization and bring agility to the workplace.

How to get started?

It starts with knowing your m²/sqft which is already a challenge – not only because there is often a deviation between the officially leased and the real surface areas, but also because global corporations commonly do not use one single space standard; and global reporting is not possible when using multiple space standards.
Knowing your surface areas therefore implies capturing all space data in a standardized way (e.g. ISO, EN, BOMA), storing it in one place (single source-of-truth) and centrally managing this data.
To gain insights into space usage, data visualization is key; this can be done by converting CAD drawings into spatial data (that can be visualized on floor plans), and – if you want to go a step further – integrating with BIM (Building Information Models), GIS (Graphical Information Systems) and sensor networks.

How to assess your space needs?

Once you know what you have, how to objectively determine what you need?
This requires combining different types of information:
Occupancy measurements: tracking occupancy of meeting rooms, workplaces, etc.
Headcount planning and projected workplaces, depending on HR strategy
Desk sharing ratios: a smart working strategy aims to reduce this ratio, without reducing comfort and productivity
Space allocated per workplace, which depends mainly on the type of office design you opt
By integrating all of this data, corporate real estate managers are able to track and optimize the organization’s spatial needs and uses.

Gaining insight into the total cost of housing

Now you know the space that you have and need, but how much does this space cost (all-in)?
By converting the collected data into ratios like gross/net/usable m² and cost/FTE, real estate managers can objectively assess and benchmark their space costs.
The total cost of your buildings is of course more than the single rent liabilities of your leased space – it includes rent, charges, services, energy, maintenance, projects, etc. Only when taking all these costs into account, will you be able to determine the total cost of housing. The next step is to benchmark the results with market-conform buildings, which will enable you to evaluate building performance. Armed with these insights, you can then look at the potential for performance improvement within the current portfolio, or investigate and evaluate alternatives that are available to you on the market.