Paying greater attention to your real estate assets: whether owning, leasing or divesting, CFOs face critical real estate decisions, particularly as they work to maximize their company's financial position in the economic uncertainty.

• Author: Brala, Patrick J.
• Position: REAL ESTATE

No matter your industry, there are no shortages of challenges facing the chief financial officer these days The current recession has only magnified the daily challenges of managing payroll costs, retaining talented employees and staying on top of ever-changing tax laws and financial reporting requirements.

But, given the times, one place where CFOs may want to focus their attention is the real estate that the organization controls, both owned and leased.

Today's CFOs may never see real estate opportunities like these again.

We've all heard about the severe downturn in the world of real estate. SNL Financial LC data shows that 11 percent of commercial real estate loans made by commercial banks were delinquent in 2009, almost double the amount in 2008. But that's precisely where the opportunity lies. While it may be more obvious to identify ways to cut costs by downsizing staff or managing production costs, some of the greatest cost savings and opportunities may be realized through a comprehensive assessment of a company's real estate holdings and lease arrangements.

For the organization that owns real estate, now is the time to ask critical questions: Do we need to be owners of real estate? Are we getting the best return from our real estate assets? Is it strategic to our business strategy to have all this capital tied up in real estate?

Now is the time for the executive team to roll out a list of real estate assets and identify the ones not considered core to the business. For example, such an assessment may find that the company is using an entire wing of a high-rent office building simply to stash corporate documents that could easily be kept in lower-priced space or with an off-site storage company.

Or occupancy costs at a particular owned manufacturing facility could be significantly decreased by leasing space at a more modern facility owned by someone else.

For this reason, the executive team should be critically analyzing exactly which properties are worth keeping and which ones should be sold or leased out. Though the CFO may be skeptical as to whether a buyer or tenant can be found--particularly in this down economy--the benefits of responsibly analyzing or leasing out underused real estate can be significant and are worth strong consideration.

To illustrate, a major electronics manufacturer inherited a 560,000-square-foot property in Pittsburgh through a merger. After realizing that a significant portion of its space was being...