Trend Watch from CoreNet Global News Alert
Financial Week (02/18/08) ; Byrt, Frank

Soaring real estate prices, coupled with the prospect of weaker earnings, have prompted an increasing number of companies to intensify their efforts to rethink office-space costs. Corporate real estate cost controls can range from closing underused facilities and moving workers to cheaper locations to demanding more services or flexibility in office leases. One particular option is having a clause placed in lease accords that allows a tenant to buy its way out of the lease in the event of a substantial downsizing. Eric Bowles, CoreNet's director of global research, singled out Bank of America and Rockwell Automation. Both had the foresight to do sale-leasebacks of office properties a few years ago, which now potentially gives them substantially more leverage in managing leased space in the event of layoffs. Hewlett-Packard is another firm taking action in this regard, having recently stated its goal of lowering its per-employee real estate costs 33 percent by the end of the decade. The company's cost-reduction efforts are viewed as some of the most advanced, since the company tracks space costs per employee on a yearly basis, reports Bowles. Sprint Nextel, meanwhile, has had success with its "office hoteling" software program, which manages employee shared office space so that those who work at home or on the road have dedicated space when they come into regional headquarters.

Read the full article