When companies look to cut costs during a recession, real estate is often one of the first places they look.
But reducing an office footprint isn't the only way to pare down lease costs. In a recent report entitled, "Strategic Cost Considerations for Corporate Employers," CBRE contends that moving jobs to lower-cost locations creates a much greater return on investment (ROI) than just cutting office space over the long term.
Labor costs make up as much as 85% of a company's operating costs. So, relocating offices from high-cost areas to emerging hubs can produce massive cost savings. For instance, moving software engineering positions from San Francisco to an emerging market like New Orleans saves $24,000 per job per year, according to CBRE. Moving 250 of those positions saves $6 million per year or $60 million over 10 years.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
