In his recent book,The Age of Turbulence, Alan Greenspan compares capitalism to collectivism by remembering a drive that he had in the Moscow countryside in 1989, just before the fall of the Berlin Wall.  There he saw a 1920's steam tractor, which might have been in a museum in the U.S., clanking and belching through a field under a local farmer.  "Why do you suppose they still use that?, Greenspan asked his security man.  "Because it still works?", the man replied.

It is easy to fall into a "real estate rut" just like that farmer.  Are you using your facility the same way a businessperson might have used a similar property in the 1920's?  Perhaps it is time to scrap your steam-engine equivalent and gain some efficiency.

Later in the book, Greenspan also discusses Creative Destruction, a concept popularized by economist Joseph Schumpeter in the 1940's.  In essence, it is the efficient tendency of entrepreneurial organizations to completely rethink their processes and products.  Doing so, they make the old methods obsolete.  Examples:  WalMart to Kmart, Dell to IBM, Etrade to stockbrokers.  And maybe soon:  Google to Microsoft.

If your business uses office or industrial space, ask yourself how that need might change over the next 5, 10, and 20 years.  If office, will you have more telecommuters? Independent contractors? Field personnel working at client sites?  Although we've had the ability to access email and servers from home for close to a decade, the technology has really just recently become truly seamless for many users.  How will that impact where, how, and when your staff works?  More importantly, how can you jump ahead of the competition to leverage that technology and reduce costs?

Distribution and manufacturing users have even more opportunity.  New technology is making it possible to achieve incredible increases in inventory turns.  I have seen the future, and it is Warehouse Management Systems that integrate Point of Sale (POS) and RFID tracking.  Even the smallest of firms need to have a plan to take advantage of these systems or they will go the way of the mom & pop store that folded when WalMart came to town.  Leading the way with POS and RFID?  WalMart.

What does all of this have to do with real estate?  Everything.  One of the largest fixed costs for any business is the total cost of real estate.  This includes rent as well as utilities, property tax, insurance, maintenance, repairs, leasehold improvements, furniture, fixtures, related technology, related interest, and capital costs.  Reducing those costs across the board by just 5 or 10% can have a HUGE impact on profits.

Look in the business mirror.  Don't just renew your lease or take 20% more space because your business has grown 20%.  Rethink your processes.  Get off the steam tractor.  Less is more.