Real Estate Optimization
Real estate — well located, properly sized and appropriately priced — is critical to every retailer’s success or failure. Real estate typically is the second largest operating expense after payroll. Nevertheless, many retailers do not explicitly integrate real estate considerations into their operating strategies nor deploy continuous and effective procedures for monitoring real estate performance.
FTI Consulting provides proprietary methodologies that help retailers ensure that their real estate strategies align with and support their business plan. We evaluate store performance by identifying attributes contributing to success and underperformance. Our professionals are experienced in assessing liquidity impacts of store openings, relocations, remodels, and closings. In addition, we advise on administration and facilities management (including owned real estate) to minimize occupancy expenses and improve efficiencies.
Our nationally recognized Retail and Real Estate professionals have been involved in some of the most significant public retail assignments. In helping retailers optimize their leased and owned real estate portfolios, we:
- Determine attributes associated with the best (and worst) financial performance and apply that knowledge to the entire store portfolio
- Review projected performance of new stores and remodels based on key investment criteria
- Assist with budgeting and capital improvement plans
- Evaluate lease vs. own decisions
- Benchmark occupancy expenses
- Review the lease administration function, including integration with ERP systems
- Optimize the leased portfolio:
- Early renewal and lease extensions
- Rent reductions
- Early terminations/exercise of kick-out clauses
- CAM (common area maintenance) audits
- Landlord compliance with co-tenancy clauses, exclusives, etc.
- Other opportunities to negotiate landlord concessions
- Assess market value of surplus real property interests on a store-by-store basis
- Rationalize distribution and administrative cost structures
- Provide solutions and timelines for exiting unprofitable real estate out of court