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.


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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