New technologies and trends are transforming the corporate real estate world rapidly.
When it comes to selling office space for companies, agents and investors need to make sure they’re marketing to startup founders.
Real estate agents, on the other hand, have to accomplish their own corporate selling goals.
How do successful corporate real estate sellers keep score? By tracking the right metrics. Agents won’t have a clue how they’re performing in the corporate world without them!
Here are 10 crucial corporate-based real estate metrics employers should pay attention to.
We also included 10 essential real estate metrics the agents can use to track corporate sales.
10 Corporate Real Estate Metrics That Actually Matter
If you own corporate real estate and want to maximize your productivity, you should focus on metrics in their niche. These metrics will help your employees improve their performance.
1. Total Occupancy Costs
Total occupancy costs account for the total costs of renting the property plus operating expenses. You’ll have to include property insurance, taxes, insurance, maintenance, and amenities in the calculation. You won’t see a high return if your occupancy costs are too high.
2. Capitalization Rate
The capitalization rate is your anticipated return on a real estate investment. You can calculate the capitalization rate by dividing the net operating income by current market value. If you’re selling, you want the capitalization rate to be lower because the property’s value is higher.
3. Utilities, Rent, and Employee Costs Per Square Foot
The average business spends $3 on utilities, $30 on rent, and $300 on employees per square foot of office space. These ratios can give you an idea of how much you’re supposed to spend in each area. If costs are too high, consider investing in energy-efficient technology.
4. Percentage of Revenue
Calculate the percentage of revenue by dividing your adjusted gross profit by total occupancy costs. When you have this number, you’ll know how much your real estate costs in relation to everything else. Keep in mind that a healthy profit margin is 10%, while a high margin is 20%.
5. Occupancy Rates by Floor
What percentage of your floor space is currently being used? Monitoring this metric along with annual headcount and space utilization will help you forecast future business growth. You’ll want a building large enough to account for more employees but not so large that it bankrupts you.
6. Annual Headcount by Building
Several business owners have adopted hybrid or fully-remote workplace models that reduce the overall headcount in their offices. As a business owner, you’ll want to balance headcount with the total size of your office space to ensure you’re not wasting money on rent and utilities.
7. Space Utilization
Most organizations only use 50-70% of their total office space
. Instead of spending an extra $40 million a year in operating costs, calculate space utilization by dividing occupancy rates by capacity. Promoting flexible seating arrangements can significantly improve space utilization.
8. Average Check-In Times
In a scenario where all of your employees arrive at once, there shouldn’t be a 10-minute wait to get from the lobby to your business. You also want to make sure everyone inside the building is supposed to be there. Use key cards and check-in software to track this metric for payroll.
9. Average Service Request Response Time
The building’s maintenance staff, whether shared throughout the building or hired directly by the employer, are an important asset to your business. To track how quickly maintenance responds to your requests, use a service request software that assigns work to each technician.
10. Employee Feedback Rating
Getting feedback from employees is incredibly important and should be integrated into your business. If your employees like you, they’re more likely to refer you to other potential employees. Happy employees attract more profits as they’re more productive and efficient.
10 General Real Estate Metrics That Also Matter
This section will primarily focus on realtors and brokers who buy and sell corporate real estate, but employers and investors can look at most of the following metrics when buying or selling.
Agents can use real estate transaction software to improve their experience as an employee. And employers could benefit from learning essential real estate terms to ensure the space they purchase is well-equipped for their business.
1. Average Commission Per Sale
How much are you making on each corporate building sale? Selling a property takes a large amount of time and effort, so it makes more sense to sell higher-priced commercial buildings that give you a bigger piece of the pie. Ideally, this metric will increase as you gain experience.
2. Average Commission Per Salesperson
What is the average amount of money a real estate agent makes per transaction? If you’re a broker that staffs several real estate agents, you’ll want to evaluate each agent’s performance over a specified period of time. This can help brokers focus on pain points and development.
3. Number of Properties Advertised vs. Real Estate Agent
Use a percentage calculation to calculate the number of properties advertised per real estate agent. That way, agents that tend to advertise more properties won’t win out by sheer numbers. If this metric is low, brokers should consider training agents on how to market more effectively.
4. Year-to-Year Variance on Sold Average per Square Foot
This metric can also help employers who are looking to buy new business properties because it compares corporate building price fluctuations. If an employer sees that their building is worth $10,000 more, they can sell for a profit. Agents can use this metric for setting sales goals.
5. Year-to-Year Variance on Sold Listing’s Dollar Volume
The dollar volume of sold listings metric looks at the entire value of real estate sold over the years. Employers can use this metric if they wish to bulk-sell their properties and move into an even larger building. Agents and brokers can track an agency’s growth or decline in the market.
6. Average Mortgage Rate
Here’s another metric both employers and agents can use. When buying corporate real estate, employers need to keep track of the average mortgage rate across all of their properties. Investors can look at the current index mortgage rate to see if they should refinance or not.
7. Sold Properties vs. Available Inventory
Real estate agents that need to shed light on the current market conditions in their area should use this metric. It analyzes how many homes are sold when compared to available inventory. If several homes are sold in an area, it indicates high neighborhood desirability.
8. Number of Visits Per Sale
To determine how many visits it takes for the agent to sell the property, use this metric. If your corporate office space isn’t priced correctly, it will take longer for it to sell. Lowing the price of your property could increase the number of people who walk through your building.
9. Number of Days on Market
There are several reasons why properties stay on the market for longer than expected. Regardless of why it’s taking so long, investors may pass up on real estate if it’s been sitting there for a number of months. With this metric, agents can locate market problems.
10. Asking Price vs. Selling Price
The asking price tends to be higher than the selling price, so this KPI determines how much lower the property was sold at compared to what the buyer asked to sell it for. The lower the KPI, the higher the ROI. Investors should price a bit higher when selling to account for this.
