DAX companies could save 10% annually on RE management

German DAX-listed companies spend €30bn a year on real estate management and could save 10% or more by centralising this function, according to a new, first-of-its-kind survey by property adviser CBRE.

After analysing the practices and expenditures of the 30 major firms included in the Frankfurt exchange's premier index, CBRE identified four cost-saving components:

1) consolidating floor space to optimise long-term profitability, particularly if located in a premium rental area; 2) sourcing cost-efficient locations attractive to the workforce, for example by separating premises by function such as headquarters, back office and administration; 3) improving facility management, saving up to 25% of costs by efficient energy and preventative maintenance; and 4) setting the right ownership strategy – rent, or own outright - to take account of potentially costly re,furbishment, particularly when it comes to M&A activity.

According to Martina Williams, head of client solutions at CBRE, in a note: “Leading German companies could save at least 5% of their overall profits if they take a more strategic approach to property portfolio management. A non-uniform and single country approach limits cost-saving potential.

Instead, if a holistic big picture strategic view is taken, combined with active monitoring of leases, locations, and maintenance costs, then real estate savings can run into the double-digit range.” The €30bn management figure includes maintenance costs, repairs, rents and insurance premiums.