Skip to main content

Commercial Management Blog

How to Streamline Operating Expenses for Increased Profitability in Commercial Real Estate

How to Streamline Operating Expenses for Increased Profitability in Commercial Real Estate

Commercial real estate is a smart investment, especially in a market like Los Angeles where there are interesting opportunities to buy professional space and rent it out to businesses. You stand to earn high returns as an investor, but of course with high returns comes high risk. 

Smart commercial investors will take every precaution and implement every strategy available to maximize profits while minimizing expenses and risks. 

If you can streamline your operating expenses, you’re off to an excellent start. 

When operating expenses are reduced, profits increase, and that means you can invest more money into your properties, grow your portfolio, and achieve financial freedom faster. Let’s take a look at some of the most effective strategies for streamlining operating expenses in commercial real estate, so you can enjoy a better - and more profitable - rental experience.

When Bell Properties talks about streamlining, we mean the improvement of the efficiency of processes you’re using. It often comes from automation, the combination and simplification of tasks, or the elimination of unnecessary steps using modern techniques and technology.

For real estate investors in the commercial space, streamlining means optimization. You’ll find more efficient and automated operations that ultimately minimize costs and maximize profits.

Here’s how to do it.

Leverage Technology to Save Time and Money

Make sure you’re embracing technology and using it to automate as much as you can when it comes to the way you operate your commercial properties. 

There are a lot of established and developing technology and automation tools that can streamline your processes and save you time and money. For example, you can: 

  • Implement cloud-based accounting software to automate financial management tasks like invoicing, expense tracking, and payroll. You’ll save yourself a lot of time, and you’ll also keep all of your accounting more accurate, detailed, and transparent. There’s less room for expensive errors. 

  • Invest in project management tools to optimize workflows, enhance collaboration, and eliminate inefficiencies. You’ll find that you lose less money fixing mistakes and catching up with tasks you forgot were looming. 

  • Create a centralized system of email. A lot of commercial real estate investors rely on email as the main way you communicate with tenants, vendors, lenders, and other service providers. Sticking with one consistent email platform can remove the clutter and waste of combing through different inboxes to find the email you’re looking for.  Set up one email address for your tenants to send their questions or complaints. Set up an email address for maintenance needs. Use another one to gather accounting invoices and statements. When you can filter and direct the flow of email coming in and going out, you can stay more organized and you won’t miss important correspondence. Such a system also prevents urgent emails from being buried under messages with less pressing matters. On top of that, an email service that streamlines all of this communication gives your business a more professional and trustworthy feel.

  • Streamline business tracking and reporting as your assets increase and your portfolio grows. There are expense reporting platforms that can help you stay ahead of your finances and get a good understanding of where you’re spending the most money. As your business grows, so will your properties, your income streams, and your expenses. Your entire operation will begin to scale, and your accounting software has to keep up. As your expenses increase, the need for expense reports grows. Expense reporting is an important part of your operations because it not only tracks expenditures, it also helps you budget. Keep up with good expense reporting software. While it once had to be manual, you can now automate it.

There’s a lot of technology out there that can help you streamline your business expenses and keep your operating budget lean. Be willing to test different software, platforms, and systems until you find something that works for you and your portfolio of commercial properties. 

Negotiate with Suppliers and Service Providers 

Your commercial real estate investments likely require a lot of contracts with vendors and service providers such as landscapers, pest control providers, cleaning crews, maintenance teams, and others. Make sure you’re getting as much as you can from them without overpaying. 

The vendors and suppliers you work with are critical to the success of your commercial properties, and it's important to build strong relationships with them. When you already have robust and positive relationships in place with your suppliers, it’s easier for you to identify opportunities for negotiation when it comes to their pricing. Are you providing them with a huge volume of work? That’s probably worth a discount. Talk about any preventative services they might be willing to include in the existing contract, without an increase in costs. 

It’s always a good idea to regularly evaluate your supplier contracts, compare prices, and negotiate better deals based on your purchasing volume. Consolidate your orders to achieve bulk discounts, whether you’re buying paint or paving parking lots. Explore alternative suppliers who can provide competitive pricing without compromising on quality. You can always work on negotiating better rates and terms. Maybe they’ll be willing to consider specific discounts or longer payment terms. These small changes can add up to significant savings over time.

Prioritize Preventative Maintenance to Save on Operating Costs

Every commercial lease is set up differently. Try to keep things consistent within your own portfolio so you can streamline the work that’s required at each property. When you’re primarily responsible for the maintenance at your properties, make sure you’re not losing money on deferred repairs, unreported problems, and other issues that can be quickly and inexpensively taken care of. 

Preventative maintenance is a powerful tool for reducing operating expenses. Regular maintenance helps detect and fix small problems before they turn into costly repairs. By conducting regular and preventative maintenance, you can extend the lifespan of your building's systems and appliances, and avoid expensive breakdowns that could disrupt your tenants' businesses.

When you’re thinking about keeping maintenance costs under control and reducing what you spend to run your commercial properties, make sure you’re leveraging the technology and products that allow for better energy efficiency. 

Streamline and reduce energy costs, which can be a major expense for commercial property owners, especially if the building was never designed with energy efficiency in mind. By making some simple upgrades, you can significantly reduce your energy costs. For example: 

  • Install smart thermostats that can detect when there are people in the building and when it’s empty (and thus not in need of heating and cooling). 

  • Invest in LED lighting for maximum efficiency. 

  • Buy energy-efficient appliances. 

These upgrades can help you save thousands of dollars per year on energy bills at your commercial properties. You’ll streamline expenses, run a more efficient commercial business, and provide a better experience to your tenants. 

Invest in Excellent Los Angeles Commercial Property Management

Management PartnerWho is your property management partner, and are they providing solutions for how you can streamline what you spend and where you direct your operating dollars? Professional property management is one of the best resources you can access as a commercial real estate investor. Even if you’re experienced and you feel like your properties are basically managing themselves, the expertise and support of a property manager cannot be overstated. 

Professional management is not expensive, especially when you consider the value that’s provided. Technology and operating systems are already in place. They’re efficient and consistent, and they reduce the expense of errors and missteps. 

Instead of coming up with your own ways to automate daily tasks and streamline the business workflows that you rely on, your property manager will integrate your property into the systems they already have in place. We talk to a lot of commercial property owners who waste time and money on manual processes that could be automated. 

Here’s an example: instead of collecting rent from multiple tenants every month in different ways, you could use property management software to automate rent collection. The same software systems we invest in can also help with tenant screening, lease renewals, and maintenance requests. 

These property management insights, analytics, and tools can help you save time and reduce errors, which can lead to significant cost savings over the long-term. There are a lot of things you can do yourself as a real estate investor. However, smart investors know that property management is valuable not only for the support you get from experts, but also for the systems and processes that make leasing, management, and maintenance easy.

By implementing these strategies, you can streamline your operating expenses and increase your profitability in commercial real estate. Whether you're just starting out or you have an established portfolio, there are always ways to cut costs and boost your bottom line. With some careful planning and strategic investments, you can achieve your financial goals and grow your investments for years to come.

We’d love to help you be more efficient and earn more money. Please don’t hesitate to contact us at Bell Properties Commercial Real Estate.