Top-five tips to divest unneeded corporate real estate (Part 1)
There are numerous reasons that can trigger the need for companies to dispose of corporate real estate. The primary drivers are downsizing in response to an economic downturn or expansions due to growth.
Research from our workplace strategy team, which has analyzed more than 170,000 workstations, also shows that the average commercial office has a desk utilization rate of just 48 percent. Therefore the opportunity for many companies to reduce unnecessary expenditure is huge.
However, the world of selling and leasing excess corporate real estate (dispositions) is fraught with pitfalls. Many companies looking to sell or lease excess space find that book values and appraised valuations are often substantially higher than the reality of what the market will actually pay. Transactions can easily unravel due to complexities that non-real estate companies encounter when disposing of excess space, often because they do not have the necessary expertise in-house.
While typical real estate service and brokerage firms have individuals who conduct both real estate acquisitions (securing new space) and dispositions (disposing through leasing and selling), the market does not generally offer any dedicated individuals whose focus is solely on the sale and lease of corporate excess space.
1. Have the necessary internal corporate approvals in place prior to marketing.
Corporations with excess space often go to market without having the approvals that will be required to complete the transaction. This results in corporations taking 20-to-30 percent of property off the market, after they have spent an enormous amount of time and money marketing it. To have an effective and competitive process, it is critical for the corporation to communicate with all internal parties prior to putting the property on the market, including internal users and approvers, tax, finance, accounting, HR, PR, corporate security, employees and all departments that may be involved. If corporate approvals are gained prior to marketing, the team making the sale can respond quickly during the sales process.