Expert panel explores reducing costs. (Transcripts).
Peter S. Brooks of Ernst & Young moderted the panel; which featured Hussain Ali-Kan executive managing director at the News York Times; Suzanne Heidelberger director of corporate real estate for law firm Skadden Arps; Gerald Nocera, executive vice president of SL Green Realty Corp.; and Wayne Taub, managing director of Insignia/ESG.
The industry leaders discussed various cost-reducing measures, including renovating existing facilities, upgrading mechanical equipment, constructing new facilities with state-of-the-art systems, outsourcing facilities management to service providers, and reducing energy consumption.
Peter Brooks cited two ironclad laws of reducing costs on property management. First, do not take more space than you need.
Second, do not spend more on the space than you have to. The challenge, according to Brooks, is to identify and measure costs, and then to employ effective methods to reduce them. Luckily, landlords and tenants are frequently able to join forces in a common effort to reduce management costs.
"We've had good experience with landlords helping us to reduce costs," said Ali-Kahn of the Times. "Everyone is motivated to learn how to work together and make this work."
"The goal is to manage occupancy costs, and to keep them in alignment with your core business needs," said Suzanne Heidelberger of Skadden Arps. "And obviously, it's crucial to examine energy and HVAC costs during lease negotiations.
Wayne Taub of Insignia/ESG agreed, noting that energy is the largest operating expense facing property managers.
"If the building is not operating in the top 25% of energy efficiency, it is vital to build a roadmap and figure out how to get there," Taub said, recommending attendees to investigate the EPA's "Energy Star" program.
Taub also said that many owners and managers could do more to decrease their real estate taxes. "You must have someone with local expertise to help reduce these expenses," Taub said.
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|Publication:||Real Estate Weekly|
|Date:||Apr 30, 2003|
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