As commercial real estate managers look to cut costs, some look to energy savings

Renegotiating energy contracts is just one way commercial property managers are reducing their operating costs.

Commercial property managers have a juggling act on their hands, often striking a balance between the financial needs of the building and the needs of the tenants.

As reported in Nevada Business Magazine, the focus for property managers when the housing market was strong rarely set its sights on operating a leaner business. But, according to Frank Gatski, president and CEO of Gatski Commercial Real Estate Services, the property management side to commercial real estate has become a challenge. In a slim economic environment, property managers need to continue to pay for services, bills and maintain the property with less money.

"It's not about just collecting rents," Mike Mixer, managing partner of Colliers International, told Nevada Business Magazine. "It's about managing the entire process of a building from cost expense to revenue to its look and feel in the community."

Thankfully, due to high demand, the national vacancy rate is relatively low and the multifamily sector is performing well. However, like all things real estate, there are sharp geographic distinctions and for some areas struggling to keep their buildings full – cutting costs is as much about survival as it is about efficiency.

According to Meaghan Levy, director of asset services for the Las Vegas office of CBRE, the owners and managers have a greater investment in paying attention to the minute details of a building's financial snapshot. Even costs of services that are traditionally invisible, such as energy and trash removal, are evaluated.

"Keeping the tenants happy for the owner is of paramount importance," Mixer said. "We have to dance in between keeping tenants happy and successful while at the same time, make sure the property has enough revenue to maintain itself."

Energy management
One innovative way many commercial properties are cutting costs while maintaining relationships with their tenants is through skillful energy supply negotiations. 

There are some utility companies forming real estate teams specifically designed to service commercial property owners. Texzon Utilities is one such company in the Dallas area.

Acting as an "impartial advocate," these management teams will engage in contract negotiations between a number of utility companies to secure the best rate, provide energy consultations, and monitor rates to ensure the energy cost savings are hitting the intended target.

In an environment where commercial properties exchange hands frequently in a competitive environment, cost saving strategies involving energy use is just one of the ways commercial property managers can streamline their budget and reduce their expenses.

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