Why you should read this
The chances are your organization is overpaying for real estate but lacks a clear view of the scale.
Portfolio decisions are made without the full picture. Space is underutilized, lease exposure isn't visible, and cost reduction targets land on real estate and facilities teams who can't tell you exactly where the savings are. Most organizations are leaving money on the table.
If any of that sounds familiar, this business case is for you. What follows is a realistic scenario that shows what portfolio optimizations look like in practice, using publicly available benchmark data from JLL, IREM and BOMA. For our example organization, the numbers point to a net annual benefit of around $3.21M.
The context
A large, multi-site organization operates 8 regional offices, 2 distribution hubs, and 100 smaller locations across multiple regions. Most of the portfolio is leased, with some sites owned outright. The real estate team manages space, leases, and facilities operations across this distributed portfolio, supporting established hybrid working.
The challenge
The board has set a target to deliver a 6% reduction in indirect operating costs over the next three years. To meet this target, the CFO must identify concrete savings opportunities across the organization's major cost categories. Real estate and facilities represent a significant and recurring expense, making them a natural area to examine potential cost reduction.
The organization has made meaningful progress on its digital foundations. Core systems are in place, lease data is largely centralized, and space management processes are standardized across most of the portfolio. But having data and being able to act on it are two different things.
What's missing is the portfolio-level insight needed to turn that data into decisions. Space allocations don't yet reflect hybrid working realities. Cleaning, energy, and maintenance costs don’t correlate with headcount and workplace attendance. Lease renewals are managed locally rather than strategically, quietly locking in costs that a portfolio-wide view would have challenged. Without a consolidated picture of where costs are incurred versus where value is being delivered, the CFO can't confidently identify where the 6% reduction will come from.
Industry benchmarks show that this situation is common. JLL Global Occupancy Planning Benchmark Report 2026 puts average office utilization at around 56%, while target utilization has risen to around 74%. For distribution hubs, WERC's DC Measures research reports a median capacity used of 85.7%, and cites 80–85% as the range that leaves a facility able to absorb shifts in demand. Together, these benchmarks show how far many organizations still need to move before their real estate footprint reflects actual demand.
Every square foot that is paid for but poorly used also carries ongoing operating costs, from maintenance and utilities to cleaning and other facilities services. Total operating expenses for US office buildings average $10.33 per rentable sq ft per year ($111 per m²), before rent is considered, covering administration, management, repairs and maintenance, utilities, taxes and insurance (IREM/BOMA Income/Expense IQ, 2024 operating data).
The solution
To move from portfolio data to portfolio decisions, the organization sets an objective to improve its digital maturity and optimize its portfolio.
An IWMS (Integrated Workplace Management System) is used to combine finance data from the core business ERP with real estate and facilities data. Space utilization, operating costs, lease exposure and upcoming renewal decisions become visible in one place, using the organization’s existing analytics and reporting tools.
With that consolidated view in place, the real estate and facilities team can for the first time assess portfolio optimization scenarios with confidence, quantify where costs don't match usage, and bring the CFO a clear picture of where the 6% is available and how to get there.
The team identifies that:
- Several offices are used well below 56% utilization
- Hub utilization sits around 75%, below the 80–85% healthy operating range (WERC)
- A significant amount of space is paid for but effectively unused
- A number of leases have upcoming break options or termination windows that have not been actively linked to utilization and cost data
Within weeks, the organization selects a practical optimization plan: consolidate underused office space, right-size distribution hubs, and use upcoming lease break and termination options to exit or renegotiate space that no longer makes financial sense.
Note for SAP customers: Planon is the only SAP solution extension for Real Estate and Facilities Management, integrating operational RE/FM data with SAP’s lease management software, for aligned financials and portfolio analysis in SAP Analytics Cloud.
The results
| Value Driver | Annual Impact |
|---|---|
| Rent savings (freed space) | $1.10M |
| O&M savings (freed space) | $0.51M |
| Rental income | $0.77M |
| O&M efficiency (remaining footprint) | $1.27M |
| Lease leakage reduction | $0.15M |
| Gross annual benefit | $3.81M |
| Annual software subscription | ($0.6M) |
| Net annual benefit | $3.21M |
| 5-year NPV (10%) | $10.38M |
| Payback period (post go-live) | 6.7 months |
Note: Figures are pre-tax operating savings, shown as a steady-state annual run-rate. The one-off implementation investment sits in the payback and NPV calculations, not the annual figure.
Based on base case assumptions and industry benchmarks, the proposed portfolio optimization program delivers a net annual benefit of approximately $3.21 million. This value is driven by a combination of footprint reduction, avoided operating costs, rental income, occupancy cost reduction and improved efficiency across the remaining estate.
These savings represent an approximately 6.7% reduction on the current baseline occupancy cost of $48.1 million per year, directly supporting the board-mandated 6% reduction in indirect operating costs. For any organization evaluating corporate real estate ROI, this is a meaningful and measurable result.
Most importantly, the accurate, up-to-date data contained in the IWMS gives the CFO and leadership team clear visibility into where costs sit and when action can be taken. Even under more conservative assumptions, the financial case remains strong, with rapid payback and low execution risk. As a result, real estate becomes a controllable lever for cost reduction rather than a fixed cost, with facilities management delivering demonstrable ROI.
Run these numbers against your own footprint.
The financial impact
Portfolio
- 8 offices @30,000 sq ft each → 240,000 sq ft
- 2 distribution hubs @200,000 sq ft each → 400,000 sq ft
- 100 other locations @10,000 sq ft each → 1,000,000 sq ft
Total footprint: 1,640,000 sq ft
Cost assumptions
- Office rent: $30 per sq ft per year → $7.2M
- Hub rent: $10 per sq ft per year → $4.0M
- Other locations rent: $20 per sq ft per year → $20.0M
- Total portfolio rent: $31.2M
- Total O&M cost: 1,640,000 sq ft × $10.33 per sq ft per year → $16.9M
Total baseline occupancy spend = $48.14M per year
Program costs:
- $1.8M one-time implementation investment (system configuration, data migration and integration)
- $0.6M annual software subscription
Actions after portfolio analysis
- Office space optimization to reach target of 75% (from 56% today, slightly above the 74% global benchmark)
- Hub right‑sizing to reach target of 83% (from an illustrative 75% today, against WERC's 80–85% operating range)
- Generating rental income on 50% of vacated office and hub space, achieving 70% of headline rent on average across the portfolio. For leased space let to a subtenant, this reflects a 30% discount (within CBRE's reported market range of 20–40% for sublease space)
- O&M efficiency of 8% on the remaining footprint
- Lease leakage reduction of 0.5% saving on remaining rent
The ROI metrics of this scenario
- Net annual benefit: $3.21M
- Payback period (post go-live): approximately 6.7 months
- 5-year NPV (10%): $10.38M (held flat across 5 years as a steady-state run rate)
- Approximately 6.7% reduction in annual occupancy costs
Alternative case scenarios
| Scenario | Net Annual Benefit | Payback | 5-yr NPV @10% |
|---|---|---|---|
| Conservative | $2.58M | 8.4 months | $ 7.96M |
| Base | $3.21M | 6.7 months | $10.38 M |
| Stretch | $4.51M | 4.8 months | $15.31M |
Scenarios vary offices & hubs utilization targets, rental income share and discount, O&M efficiency and lease leakage recovery together.
Note: This model captures the core financial impact of portfolio optimisation: space consolidation, hub right-sizing, rental income, O&M efficiency and lease leakage reduction. Additional value drivers (facilities FTE efficiency, energy management, IT rationalisation and maintenance automation) are intentionally excluded, as are real estate transaction costs such as dilapidations, fit-out and decommissioning. The subscription shown covers the IWMS license only; implementation partner fees and internal change management vary by organization.
Exited/vacated space and let space are treated as mutually exclusive, so no square foot generates both a cost saving and rental income. Owned space that is disposed of can also release capital, which is portfolio-specific and not included in the annual figures shown here. Lease leakage is modelled as recurring: across a portfolio of this size, new break, renewal and review decisions arise every year.
Warehouse capacity used and floor area are related but not identical measures. Hub right-sizing assumes consolidation releases floor area proportionally.
Figures reflect the annual position once portfolio targets have been reached, not a Year 1 projection. Timelines depend on lease flexibility, portfolio complexity and internal capacity: some Planon implementations have gone live in as little as 7 weeks, while larger portfolios take considerably longer.
Appendix:
Download full ROI calculations
Benchmark sources
- JLL, Global Occupancy Planning Benchmark Report 2026 — 84 organisations, 716 million sq ft. Office utilisation of 56% actual against a 74% target.
- IREM, BOMA International and Lobby CRE, Income/Expense IQ National Summary, 2024 Operating Data — national aggregate benchmarks for US office buildings. Total operating expenses of $10.33 per square foot, covering administrative, management, leasing, repairs and maintenance, utilities, taxes and insurance.
- WERC, DC Measures 2022 — warehouse capacity benchmarking across 240 respondents. Reported median capacity used of 85.7%, with 80–85% cited as the range allowing a facility to respond to shifts in demand.
- CBRE, U.S. Office Sublease Availability Nearly Doubles Since Pandemic (2023) — 20–40% sublease discount range, applied here to the leased portion of released space. Owned space let directly is not subject to this discount.