Undertaking a regular ‘health check’ or review of the leases and properties in a portfolio is vital for occupiers to ensure both are still performing efficiently in line with their overall business strategy and objectives.
But what does a portfolio health check include and how often should you carry it out?
At its simplest, it is an opportunity to audit real estate data and identify gaps in the information to ultimately manage risks. The health check is essentially a regular review looking at how each location is performing against a series of different metrics, which may include market rents, occupancy costs, and sustainability measures, as well as end user and site-specific factors.
It generates benchmark outputs to help inform the ongoing management of each property, as well as the overall portfolio strategy, while also highlighting a number of ‘opportunity’ locations where immediate value may be realised.These outputs help generate a portfolio plan to schedule and prioritise actions that may improve efficiencies and enhance an organisation’s overall estate.
Running the exercise at portfolio level drives performance standards. It also creates the opportunity to capture and measure emerging metrics, for example inclusive design adoption. This method can also assist in prioritising locations where there is scope to unlock value or savings and will inform forecasting for future lease events and associated costs across a portfolio.
At a more strategic level it can help kick-start discussions around design and occupancy standards, building selection, alignment to the organisation’s sustainability roadmap and the impact of changing legislation.
Periodic reviews are a great discipline to ensure the real estate strategy is continuously aligned to business objectives. This in turn can help with positive stakeholder engagement, internal communications and change management.
The exercise is as much about identifying and managing risks as it is about maximising opportunities. The results of the review are a springboard to build from, creating a clear plan around data management as well as transaction management and strategy.
In the current period of uncertainty where businesses are still defining the role of their workplace, trying to attract staff in and recruit new talent against a backdrop of economic contraction, it is essential to maintain a level of agility. Companies can do this by being completely connected across all portfolio activity to capitalise on opportunities to repurpose, renegotiate or relocate, ultimately making informed decisions to fully leverage their position.
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