The Pareto Principle says approximately 80% of effects come from 20% of causes. Or to put it in real estate financial terms, 80% of sales/profits/savings come from 20% of properties.  If you were to rank your leased locations in descending order by annual lease expense, you will find that the Pareto Principle is in effect and if you focus on the top 20% of those leases, you will see big payoffs in dollar savings.  At the same time, the remaining 80% of those leases require most of your time and work.

If you focus on the top 20% of your leased locations, spending more time and effort on those transactions and properties, you will see a greater return than if you were to focus that same energy on the other 80%. Without sacrificing attention to your tenants or properties, you should create a process that deals with the high value leases to save the most money. And create a second process for the 80% that handles the larger volume of work with efficiency to maximize your productivity.

-Ted Parcel

Ted Parcel is Executive Vice President of Corporate Services for NAI Global.