How Governments and Universities Can Optimize Their Real Estate Portfolio
As the director of real estate for your government agency or university, you're managing the largest line on the balance sheet. These assets likely include an interesting variety of land parcels, buildings, leases—both as lessor and lessee—and various easements and other use entitlements.
The elements in your portfolio can change pretty quickly, often due to activities outside of your control. Your city could acquire a property due to tax liens. Or, a college alumna could gift the deed to her cabin in the Catskills to your university, her alma mater. Information related to these real estate transactions goes back decades and is distributed among many different filing systems—some digital, some not.
Given these challenges, how do you ensure you're delivering the greatest value from your portfolio to your organization? Start with the basics.
1. BUILD A STRONG DATA FOUNDATION.
Any building and infrastructure management challenge starts with knowing exactly what you have, where it's located, what condition it's in, and what its value is. This may sound obvious but can be more challenging than it sounds. You need to aggregate as much property information as possible into one inventory.
Basic information should include the location, acquisition date, recent valuation, and a brief description of the property type and use. Digital representations of the relevant documents should be pulled together for quick and easy reference. Photos of your properties can often be very useful when evaluating fit for purpose and supporting disposition activities.
2. ADD COSTS, REVENUES, AND CAPACITY DATA.
To the extent possible, aggregate cost, revenue, and capacity data associated with each portfolio property. This will likely come from a variety of sources. Some cost data may be described in lease documents. But for most properties, you'll find this data from a combination of your financial systems and other online cost information aggregates. Energy CAP is an example of an online energy spend aggregator that can be very useful when evaluating overall cost profiles.
Remember that capacity measures may vary with the type of property. Office building capacity is typically measured in personnel headcount, whereas the capacity of parking facilities would be measured in the count of parking spaces. All this information will be important when we start to analyze optimization scenarios.
3. GIS INTEGRATION ADDS STRATEGIC CONTEXT.
By integrating your property portfolio with your organization's GIS, you can begin to better understand the alignment of your portfolio with your organization's strategic objectives.
Where do you have properties in a flood plain that may represent an unacceptable risk? Where do you have properties in economic empowerment zones that represent specific tax advantages or align with the city's economic development plan? Business demographics layers can add great insight as you evaluate optimization scenarios.
4. OPTIMIZE THROUGH SCENARIO PLANNING.
Once you have the essential data elements pulled together, you can start to evaluate different combinations of acquisition and disposition activities as we move to deliver the optimal performance from your property portfolio.
Using your property portfolio data, you can begin to answer questions such as:
- What would be the net change to costs, revenues, and parking capacity if we sold these three parcels in a re-development zone and acquired a parking garage?
- What would be the impact on our costs and office capacity if we disposed of this lease in center city and acquired two new leases on the outskirts of town?
- How much revenue could we generate by disposing of these five properties acquired due to tax liens?
This kind of scenario modeling tracks back to cost, revenue, and capacity metrics, ultimately allowing you to optimize your overall portfolio's performance as conditions change. Which they always do.
I hope these tips will help your team start delivering the greatest possible portfolio value to your college, university, or government agency. Want to learn more about how Cartegraph property portfolio optimization software can help overcome your challenges? Visit our web and video resources, or drop us a line to chat about how we can get started on this journey together.
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