Cost Reduction Strategy

Newmark Knight Frank (NKF) Cost Reduction Strategy services identify target cost categories for saving opportunities using a baseline Total Cost of Ownership (TCO) framework to track savings over a multi-year plan. Cost reduction strategies focus on an organization’s current spend and performs an operating expense cost analysis using internal and external benchmarking information.

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The operating expense cost analysis is the first step towards an in-depth cost savings initiative and establishes a baseline for current TCO spend and highlights variances. Internal benchmarking compares like facilities within the portfolio while external benchmarking utilizes broader research data to be used as a guideline.

Costs metrics are collected to benchmark clients Total Occupancy Expense (TOE):
 

  • Rent - Rental Income Received + Depreciation + Cost of Funds + Taxes + Insurance + Total Primary Operating Expenses (Janitorial + Landscaping + Repair and Maintenance + Utilities + Security)
  • Data is classified as best in class, industry median and high (non-structured organizations)
  • Data is stored by facility type, leased verse owned and industry

Cost reduction opportunities are presented at the property level. The potential cost savings and revenue opportunities discovered following a cost reduction strategy serve to optimize operating costs and positively impact shareholder value.
 

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