How to Save Your Money On Operating Expenses
Image by By Syda Productions from Shutterstock
As with any business, careful assessment of operating expenses is crucial to the success of a commercial property. When you reduce your operating expenses, you increase your cash flow and ultimately the value of your property. With commercial properties, there are many steps you can take to reduce your operating cost.
Go Green
In today’s market, many commercial property owners are opting to go green. In a research report from Dodge Data & Analytics and United Technologies Corporation, the study finds that according to property owners, the number one business benefit to green building is lower operating costs, such as reduced energy costs and total lifecycle costs.
Lighting both the interior and exterior of any commercial building can add up to a significant expense over the course of the year. Installing LED lighting reduces monthly overhead costs while also triggering special government incentives for the property owner.
Changing the landscaping of a property can also be a substantial source of savings when it comes to operating expenses. Switching to plants that are less water dependent can help reduce monthly water bills. In fact, there are many aesthetically striking plants that grow with lack of water and can also add appeal to the commercial property. This alternative is particularly lucrative in locations that do not get much rain such as commercial real estate in Orange County.
Energy Efficiency
Commercial real estate properties require a substantial amount of energy for daily operations. Approximately thirty percent of the energy consumed by commercial properties across the United States is used inefficiently or needlessly. As a commercial property owner, it is essential to determine where energy is going to waste.
Take the time to inspect all windows, doors, walls, roofs, and even the foundation of your commercial property for leaks in the barriers. When there are leaks in the barriers of the building, the property requires more energy for heating and cooling. Particularly in warm climates, such as commercial real estate in Orange County, air leaks in the summer months can cost you a fortune.
Energy efficient appliances can further reduce your operating costs. Evaluate your building equipment, including HVAC systems, thermostats, water tanks, piping, and air filters to ensure everything is operating efficiently. Installing solar systems has also become an increasingly popular method for harnessing sustainable and cost-effective energy. Though it may seem like a significant investment upfront, installing solar systems will help you substantially decrease your operating cost in the long-run.
Preventative Maintenance
No matter what type of commercial property you own, it pays off to have a carefully designed preventative maintenance plan in place. Preventative maintenance tasks are performed on a regular basis to ensure the building is functioning as it should. These tasks, while they may cost you some money, are designed to avoid larger and expensive repairs down the line. This approach not only helps mitigate operating expenses, but it also prolongs the life of the property by anticipating wear and tear and potential problems.
Every commercial property should be inspected bi-annually at a minimum. Mechanical systems such as HVAC and plumbing should be examined for any excessive wear and tear. It may even be a good idea to modernize all the mechanical systems in the building as a preventative measure. Building grounds, both interior, and exterior must be inspected for leaks, debris, and damage. If you catch a problem in the early stages, it will likely cost you much less than a full-blown property emergency. For instance, repairing a small leak is much more cost effective than mold remediation.
Every commercial property owner should have preventative maintenance checklist as a guide to ensure the property is operating at peak efficiency. Checklists should include items such as:
· Building/Mechanical & Electrical System Condition
· Fire Sprinkler System
· Roof Inspection
· Property Exterior
· Landscaping
· Elevator inspection (if applicable)
· Plumbing
· General Site Conditions
· Efficiency Inspection
Orange County property management company, the Kelemen Company, offers a free property evaluation service. Their full property inspection covers everything on the checklist and more at no charge.
Vendor Negotiations
When managing a commercial real estate property, you have to work with vendors for various services from building maintenance to repairs and amenity upkeep. It is important to find trustworthy and qualified vendors that could do the job correctly the first time around.
As with most things in the realm of business, the prices for each vendor are negotiable. Negotiations begin with an understanding of the market for each service and where pricing should fall. Always take the time to negotiate the best possible rate and bid all services annually to ensure vendors are held accountable. However, never sacrifice quality for the price. Hiring an unqualified or uninsured vendor will cost you more in the long-run.
If you hire a reputable property management company, they take care of all vendor contracts. Many Orange County property management companies have pre-negotiated rates with the best-qualified vendors.
Inspections and Analysis
In business, it is always important to run the numbers and assess the data. When managing a commercial property, make sure to remain organized and implement systems for reviewing your operating expenses. Understand exactly where you are spending your money and which of those costs incurred are unnecessary. From there, it will be easier to create benchmarks and set goals to help you reduce your operating expenses associated with the property. An excellent starting point is to take advantage of the free property evaluation offered by the Kelemen Company in Orange County. The complimentary service will provide you with a constructive assessment of your operating expenses and cost efficiency.
Image by Nattanan Kanchanaprat from Pixabay
Increase Profitability
Whether you own an industrial building, office building, or retail center, there are many modifications you can make to reduce operating costs. The bottom line when it comes to assessing operating expenses and making adjustments is to increase the profitability of the property.
However, reducing costs is a delicate matter that should not be taken lightly. While there are various means to cut costs and improve efficiency, it is essential that these reductions are never made at the expense of quality or service. A qualified property management company can effectively implement systems to help you reduce your operating costs while increasing efficiency.
Orange County property management company, the Kelemen Company, has years of experience in the commercial property space. They have an aptitude for enhancing operating efficiency and reducing expenses while maintaining the highest standards of quality and service. Schedule a free property evaluation for valuable insight on your property.
