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Commercial real estate portfolio optimization is the process of managing a diverse range of real estate assets to maximize efficiency and return on investment. It involves a strategic analysis of different properties in a portfolio and their performance over time, including their occupancy rates, resource utilization, rental and operating costs, and overall value to the business. The goal of optimization is to allocate resources and investments in a way that maximizes returns while minimizing risks.

Commercial real estate (CRE) portfolio optimization is crucial because it allows organizations to enhance employee productivity, control costs, and maximize returns while minimizing risks. By optimizing a portfolio, real estate executives and workplace professionals can allocate resources and investments in a way that optimizes workplace velue and efficiency.

Optimizing a commercial real estate portfolio involves analyzing all aspects of how your team uses a workplace. Occupancy and resource utilization data are essential elements of this process. Additionally, identifying market trends and identifying opportunities to improve the performance of individual properties within the portfolio are important elements of the discipline. 

In conclusion, commercial real estate portfolio optimization is critical for achieving long-term financial goals, managing risk, and increasing the value of a portfolio. It is a strategic process that requires a thorough understanding of market trends and the performance of individual properties

By optimizing the use of space, companies can reduce the amount of unused or underutilized space, which can result in lower occupancy costs. More specifically, by consolidating office space, companies can reduce their rent and utility costs. By disposing of underperforming assets, companies can reduce costs associated with maintaining these properties. This can include rent, property taxes, insurance, utilities, maintenance, cleaning and other expenses associated with owning and operating a property.

Additionally, optimizing utilization on an individual property level can empower companies to reduce operating costs. By regularly monitoring and evaluating the performance of the portfolio, companies can identify areas for improvement and make adjustments to reduce costs. This can include identifying opportunities for process improvement, negotiating better vendor contracts, or making other changes to reduce costs over time.

Read our portfolio optimization solutions brief.

Commercial real estate (CRE) portfolio optimization can enhance the use of space and create a more efficient and functional work environment better suited to employee needs. By providing employees with the resources and amenities they need to be productive, such as comfortable workspaces, access to natural light, and opportunities for collaboration, companies can create a more engaging work environment that fosters employee productivity and well-being.

Investing in high-quality properties that are well-maintained, configured to the growing need for team collaboration, and equipped with modern amenities creates a positive company impression and helps attract and retain top talent. 

Further, by regularly evaluating the performance of the portfolio and making adjustments as necessary, companies can ensure that the work environment remains up-to-date and relevant to the needs of employees. For example, companies that proactively adjust their portfolios to current and likely future space needs balance the need for minimized costs with the desire to deliver a high-energy office vibe that fosters maximum engagement. This can include identifying opportunities for improvement, such as rationalizing occupancy and resource utilization, upgrading technology infrastructure, improving security, and adding new amenities.

Finally, by creating a safe and healthy work environment, companies can promote employee well-being and reduce absenteeism and turnover. This can include investing in high-quality air filtration systems, providing ergonomic workstations, or offering wellness programs and resources.

Conducting commercial real estate (CRE) portfolio optimization is a multistep process, and the time commitment required varies based on objectives, breadth of the portfolio, and other issues like the availability of robust real-time occupancy and utilization data from all areas. The first step of the process is to define objectives for the portfolio and set quantitative targets on metrics like office space and resource capacity utilization. The output here is a set of goals and standards which can be applied to all holdings in the portfolio. 

The second step is to evaluate the performance of the existing portfolio. This involves conducting a detailed analysis of each property’s occupancy, resource utilization, employee and team feedback, financial performance, including income, expenses, and overall value. 

The third step is to identify areas for optimization within the portfolio. This can include identifying underperforming properties, determining the best courses of action to address shortfalls, and evaluating the potential for cost savings.

The fourth step is to develop a strategy for portfolio optimization. This can involve a range of activities, such as identifying new investment opportunities, disposing of underperforming assets, and optimizing space utilization within existing properties. Property managers may also consider strategies for managing risk, such as diversifying investments and developing contingency plans.

Finally, ongoing monitoring and evaluation are essential for successful portfolio optimization. Property managers should regularly review the performance of the portfolio and make adjustments as necessary. This can include adjusting investment strategies, reevaluating individual properties, and making other changes to improve the overall performance of the portfolio.

Occupancy sensors and analytics are essential tools for commercial real estate (CRE) portfolio optimization. They can provide valuable insights into how spaces are being used and help to identify opportunities to improve the performance of individual properties within the portfolio.

One of the most significant benefits of occupancy sensors is that they can help to reduce energy consumption and costs. By detecting when spaces are unoccupied, sensors can automatically adjust lighting and HVAC systems, reducing energy waste and costs. This can result in significant savings for companies.

Occupancy analytics can also help to optimize space utilization within a portfolio. By tracking occupancy rates and patterns, real estate and workplace teams can identify underutilized spaces and make adjustments to improve utilization rates. This can help to reduce costs and increase the overall efficiency of the portfolio.

Moreover, occupancy sensors and analytics can help to improve employee satisfaction. By tracking occupancy rates and patterns, property managers can identify areas that are in high demand and make adjustments to meet team needs. This can include adding or removing amenities, adjusting the layout of spaces, or making other changes to improve the team experience.

Finally, occupancy sensors and analytics can help to improve the overall value of a portfolio. By reducing energy costs, improving space utilization, and enhancing  satisfaction, workplace leaders can increase the appeal and value of their properties. In conclusion, occupancy sensors and analytics are critical for commercial real estate portfolio optimization. 

Computer vision occupancy sensors are more valuable for agile workplace design projects than other types of sensors like infrared, WiFi, Bluetooth, or RFID for several reasons:

Higher Accuracy: Computer vision occupancy sensors use advanced image processing algorithms to accurately detect the presence of people in a space. This approach provides a higher level of accuracy than other sensors that rely on simple proximity detection or signal strength. Privacy preserving computer vision sensors provide all this additional accuracy and specificity while ensuring the highest standards of security and employee privacy. For example, XY Sense sensors leverage a technology called edge processing that ensures that no images of the workspace or occupants are ever stored or transmitted at any time.

Granular Data: Computer vision occupancy sensors provide granular data on the occupancy of different areas within a workspace. This data can be used to analyze how space is being used, which areas are underutilized, and how different spaces are being used at different times of the day. The best workplace occupancy sensors, like XY Sense, are so accurate that they detect the precise location of every individual within one square foot, enabling precision insight on which resources like work stations are in use at any time. 

Real-Time Data: Computer vision occupancy sensors provide real-time data on the occupancy of different areas. This information can be used to optimize the use of space, identify areas that need improvement, and make changes to the workspace on the fly. XY Sense is a leader in this area, with sensor data that are updated every 2 seconds throughout the day. Many other sensors scan spaces every ten-to-twelve minutes, providing a far less accurate level of insight and data.

Flexibility: Computer vision occupancy sensors can be easily installed and repositioned, making them highly flexible and adaptable to changing workspace needs. XY Sense has added to the advantages here by pioneering innovative “daisy chain” installation methodologies that reduce cabling by 80% and dramatically reduce the amount of e-waste versus competing sensor solutions.

Computer vision data enables organizations to optimize the use of space, identify areas that need improvement, and make changes to the workspace that improve productivity, collaboration, and employee well-being.

Learn more about the various types of sensors and their characteristics in our Occupancy Sensors 101 blog post.

The typical process for conducting commercial real estate (CRE) portfolio optimization involves several steps. 

The first step is to define the needs of the company and the role that each location plays in the portfolio.  Does the space reflect the current and likely future needs of the team it is intended to serve? The second step is to evaluate the performance of the existing portfolio. This involves conducting a detailed analysis of each property’s utilization and occupancy, as well as a more granular analysis of utilization for individual resource classes and assets. The third step is to identify areas for optimization within the portfolio. This can include identifying underperforming properties, evaluating the potential for cost savings, and assessing the potential for value-added investments.

The fourth step is to develop a strategy for portfolio optimization. This can involve a range of activities, such as rightsizing spaces, reallocating space to reflect underserved needs, and understanding the needs for different days throughout the week. This last form of analysis is particularly important when you are deploying a hybrid work policy. 

Finally, ongoing monitoring and evaluation are essential for successful portfolio optimization. Workplace leaders should regularly review the performance of the portfolio and make adjustments as necessary. 

Download our solution brief for CRE portfolio optimization. 

Occupancy sensors are a valuable tool for commercial real estate (CRE) portfolio optimization, providing data on how spaces are being used and enabling companies to make informed decisions about how to optimize their real estate portfolio. There are several valuable occupancy sensor metrics that companies should consider when conducting CRE optimization:

Occupancy rate: This metric measures the percentage of time that a space is occupied. By tracking occupancy rates over time, companies can identify patterns and trends in space usage and make informed decisions about how to optimize space.

Utilization rate: This metric measures the percentage of time that a space is being used for its intended purpose. By tracking utilization rates, companies can identify underutilized spaces and make informed decisions about how to repurpose or reconfigure those spaces.

Dwell time: This metric measures the amount of time that people spend in a particular space. By tracking dwell times, companies can identify which spaces are most popular and make informed decisions about how to allocate resources and amenities.

Traffic patterns: This metric measures how people move through a space. By tracking traffic patterns, companies can identify areas of congestion or bottlenecks and make informed decisions about how to improve the flow of people and resources.

Environmental factors: This metric measures factors such as temperature, humidity, and lighting levels. By tracking environmental factors, companies can identify areas where conditions may be less than optimal and make informed decisions about how to improve the work environment.

Download our solution brief for CRE portfolio optimization.