When 80 Florida CFO’s of companies averaging over $500MM in revenues were asked to identify their top challenges for 2026, real estate footprint and occupancy costs ranked dead last—barely registering at 2% of responses.
Meanwhile, cost inflation, margin compression, and talent challenges dominated the conversation, capturing the attention of 40-50% of respondents. This data tells a fascinating story, but not the one you might expect.
While CFOs don't see real estate as a primary concern, their top three challenges are intrinsically tied to real estate strategy and decisions. The companies that recognize this connection—and act on it—will gain a significant competitive advantage in 2026 and beyond.
A cognitive bias is at play here. When business leaders think about "real estate footprint and occupancy costs," they're thinking narrowly: square footage, lease rates, and property taxes. It's seen as a fixed cost, a necessary evil, perhaps even a solved problem after the pandemic-era adjustments.
But real estate strategy isn't just about the four walls you occupy. It's about where those walls are located, how they're configured, who can access them, and how they enable or constrain your business operations. When viewed through this lens, real estate becomes a strategic lever that directly impacts the very challenges keeping executives up at night.
Here’s how the top three concerns connect to real estate decisions in ways that could fundamentally alter your bottom line.
Cost inflation in labor, materials, and insurance topped the list of 2026 concerns. On the surface, this seems unrelated to real estate. Look closer, and the connections are undeniable.
Consider a technology company currently headquartered on Brickell Avenue in Miami's Financial District. With inflation driving up labor costs across the board, every dollar spent on compensation matters more than ever. Yet this company's real estate choice may be costing them 30-40% more in salary expenses than necessary.
Why? Because employees demand higher salaries to afford the cost of living near expensive urban office locations. By maintaining a rigid "return to office" policy tied to a premium downtown location, the company artificially inflates its wage requirements. An employee who might accept $120,000 to work remotely from Orlando will demand $180,000 to commute daily to downtown Miami.
Progressive companies are reconsidering their real estate footprint entirely. Instead of one flagship office, they're establishing regional hubs in mid-tier cities—places like Nashville, Raleigh, or Salt Lake City—where talent is abundant but cost of living is 40% lower. This real estate strategy directly combats labor cost inflation by allowing competitive compensation packages that cost the company significantly less.
Insurance costs present another connection. Commercial property insurance in certain locations has skyrocketed, particularly in areas prone to natural disasters. Miami faces hurricane-related insurance premiums that can be triple those of a comparable space in Charlotte. As insurance inflation continues, real estate location decisions have direct P&L implications.
The connection is even more pronounced for companies managing warehouses and distribution centers. Material cost inflation doesn't just mean paying more for goods—it means paying more to move those goods. Distribution has just three levers - real estate, labor and transportation. You want to optimize for the combination, not just any one alone.
A regional distribution company operating from a single 400,000-square-foot facility on the outskirts of a major metropolitan area faces compounding inflation pressures. As fuel costs rise, last-mile delivery becomes increasingly expensive. As material costs increase, carrying excessive inventory in expensive warehouse space becomes prohibitively costly.
Smart operators are rethinking their real estate footprint entirely. Instead of one mega-warehouse, they're establishing a network of smaller, strategically located facilities closer to end customers. This might increase absolute real estate costs by 10-15%, but it can reduce transportation costs by 25-30% and enable just-in-time inventory strategies that free up working capital.
A food distribution company relocated a 200,000-square-foot facility from a congested urban area to an interstate-adjacent location 45 miles away. The move reduced rent by $3 per square foot annually (~$600,000 in savings), and more importantly, it cut delivery routes by an average of 30 minutes per truck, saving an estimated $1.2 million annually in labor and fuel costs—costs that are both inflating significantly.
Margin compression happens when your costs rise faster than your ability to raise prices. In this environment, every operational inefficiency gets magnified. Real estate is one of the largest operational inefficiencies many companies haven't optimized.
The typical office building is occupied by employees roughly 30-40 hours per week, or about 24% of the total hours in a week. For the remaining 76% of the time, companies are paying rent, utilities, maintenance, and insurance on empty space. In an era of hybrid work, actual utilization has dropped even further—most offices now see 50-60% occupancy even during traditional work hours.
This represents an enormous opportunity. Companies maintaining pre-pandemic office footprints while operating hybrid policies are hemorrhaging margin on unnecessary real estate costs. A company paying $12 million annually for 100,000 square feet that's half-empty is effectively doubling its per-employee occupancy costs.
The solution isn't necessarily downsizing—it's reconfiguring. Forward-thinking companies are moving to hotel desk models, collaboration-focused layouts, and membership-based workspace solutions that align real estate costs with actual usage. A 40% reduction in dedicated office space, reinvested into flexible workspace and remote infrastructure, can save $4-5 million annually while actually improving employee satisfaction and productivity.
Margin compression in industrial operations often stems from inefficient space utilization and operational workflows. A poorly designed warehouse can require 30% more labor hours to fulfill the same volume of orders as an optimized facility.
Consider a third-party logistics provider operating in a 15-year-old warehouse with 24-foot ceilings. Modern facilities with 36-40 foot clear heights can store 50% more inventory in the same footprint through improved racking systems. The math is compelling: relocating to a modern facility might increase rent from $5 to $7 per square foot, but it allows the company to reduce its footprint from 300,000 to 200,000 square feet while maintaining capacity. The net result? Occupancy costs drop from $1.5 million to $1.4 million annually, while operational efficiency gains reduce labor costs by an additional $800,000.
Proximity to transportation infrastructure matters tremendously for margins. An industrial user located 15 miles from the nearest interstate might spend an extra hour per truck in transit time. For a company running 50 shipments daily, that's 250 hours per day of additional labor and fuel costs—potentially $3-4 million annually in margin erosion that could be eliminated with a strategic real estate relocation.
The war for talent rages on, and real estate strategy is one of the most underutilized weapons in the arsenal.
Today's workforce, particularly younger employees, prioritizes flexibility, commute times, and work environment quality. A company with a rigid five-day office requirement in a suburban office park inaccessible by public transit is fighting talent battles with one hand tied behind its back.
Real estate strategy can be a talent differentiator. Companies offering flexibility through multiple office locations, co-working memberships, or strategically placed satellite offices can attract talent that competitors miss. An employee who won't commute 90 minutes to a downtown office might eagerly work from a suburban hub 15 minutes from home three days per week.
The quality of office space matters enormously for retention. Employees spending mandatory days in dated facilities with poor natural light, inadequate collaborative spaces, and subpar amenities are actively looking for their next opportunity.
Reinvestment in office quality—enabled by footprint reduction—can transform real estate from a retention liability to an asset.
The industrial sector faces acute labor shortages, and real estate location is a critical factor. Warehouses in isolated areas with limited residential neighborhoods nearby struggle to maintain adequate staffing. Facilities located near public transportation or in areas with available workforce housing have significantly lower turnover and easier recruiting
A distribution center operator in the Midwest discovered that relocating a facility just eight miles—from a rural area to a location on a bus line serving two working-class neighborhoods—reduced annual turnover from 85% to 45%. The real estate decision reduced recruiting costs by $400,000 annually and dramatically improved operational consistency.
Working conditions matter too. Modern warehouses with climate control, better lighting, and ergonomic design retain workers longer and attract better candidates. In a tight labor market, the company with a facility workers want to work in can offer slightly lower wages while maintaining superior staffing levels.
The survey data reveals a blind spot in strategic thinking. Executives see real estate as a solved problem or a minor expense, ranking it last among 2026 concerns. Yet the challenges dominating their attention—cost inflation, margin compression, and talent pressures—are all significantly influenced by real estate decisions.
The companies that will thrive in 2026 won't just manage their real estate footprint; they'll weaponize it as a strategic tool for cost management, operational efficiency, and talent competitiveness. They'll recognize that the question isn't whether real estate matters, but whether they're making real estate decisions that align with their most pressing business challenges.
Your real estate strategy might not keep you up at night, but it should—because it's quietly determining whether you succeed or struggle with the challenges that do. Areas with available workforce housing have significantly lower turnover and easier recruiting.
A distribution center operator in the Midwest discovered that relocating a facility just eight miles—from a rural area to a location on a bus line serving two working-class neighborhoods—reduced annual turnover from 85% to 45%. The real estate decision reduced recruiting costs by $400,000 annually and dramatically improved operational consistency.
Working conditions matter too. Modern warehouses with climate control, better lighting, and ergonomic design retain workers longer and attract better candidates. In a tight labor market, the company with a facility workers want to work in can offer slightly lower wages while maintaining superior staffing levels.
Want help bringing clarity to your real estate strategy? The ClarityKit™ framework we've referenced includes practical tools to evaluate sites, track decisions, and align your team around what truly matters. Reach out if you'd like a copy of the ClarityKit Real Estate Pathfinder™—it might transform how you think about your next real estate decision.
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