The spend reality
Operating a commercial property portfolio means buying the same core services over and over: janitorial, security, landscaping and snow removal, HVAC preventive maintenance and repairs, elevator and escalator maintenance, waste and recycling, pest control, window washing, fire and life safety testing. Each is essential, each is recurring, and in most portfolios each is contracted property by property.
That’s how buildings accumulate. Assets are acquired with their existing contracts, property managers negotiate locally, third-party managers bring their own vendor relationships, and service agreements auto-renew with escalators nobody revisits. Over time the portfolio ends up paying for the same service in many different ways — with different scopes, pricing units, term lengths, escalation clauses and termination rights — and no common basis for asking whether any of it is competitive.
The economics add another layer. Much of this spend is recovered from tenants as operating expenses, which makes it easy to treat as someone else’s cost. It isn’t. Occupancy cost affects leasing and retention, base-year and gross lease structures leave increases with the owner, and recoverable expenses are open to tenant audit.
What’s actually broken
No normalized unit cost. A janitorial contract priced per square foot can’t be compared with one priced per labor hour or as a monthly lump sum without normalizing for cleanable area, frequency and scope. Security bills per guard hour, but the bill rate hides different wage, overtime and supervision assumptions. Without a common unit, the most expensive contracts are invisible.
Contracts that renew themselves. Many service agreements carry automatic renewals, annual escalators and short notice windows. If nobody tracks the dates, the portfolio re-signs by default, and the leverage of a competitive process is lost for another term.
Scopes that drifted from the building. Specifications written years ago no longer match occupancy, floor use or tenant mix. Buildings pay for frequencies nobody needs in some areas and buy extras on work orders in others.
Elevator and HVAC terms nobody reads. Full-maintenance and parts-and-labor coverage differ materially from oil-and-grease or preventive-only agreements, and what counts as a covered repair versus a billable one is buried in the contract. Reactive work, overtime callbacks and excluded components drive cost that isn’t visible in the base fee.
Waste invoices full of fees. Hauling is billed per pull or per lift, with container rental, fuel and environmental surcharges and contamination charges layered on top. Service levels are often set once and never right-sized to actual volume.
Top addressable categories
- Janitorial and day porter — scope, cleaning frequencies, pricing unit, supply provisions and labor model.
- Security services — guard hours, bill rates, post orders, supervision and the balance between staffing and technology.
- HVAC maintenance and repair — preventive maintenance scope, rate cards for reactive work, and the split between covered and billable repairs.
- Elevator and escalator maintenance — coverage level, callback terms, OEM versus independent service providers, and modernization timing.
- Waste and recycling — hauling frequency, container sizing, surcharges and recycling programs.
- Landscaping and snow removal — seasonal versus per-event pricing, trigger definitions and site-level scopes.
- Specialty services — pest control, window washing, fire and life safety testing, and other recurring compliance work.
- Technology and telecom — property management and work-order platforms, building connectivity, and the software renewals behind them.
Where value leaks
In real estate, value rarely leaks through one bad contract. It leaks through the inconsistency between many reasonable-looking ones.
Illustration: an owner holds a portfolio of suburban office buildings, several acquired with their existing service contracts. Janitorial is priced per square foot at some buildings, per labor hour at others and as a flat monthly fee at the rest. Each contract looks reasonable on its own, and each renews automatically with an annual escalator. Only when every contract is converted to cost per cleanable square foot at a stated frequency does it become clear that comparable buildings are paying very different amounts for essentially the same scope — and that most of the renewal notice windows have already passed for the year.
The same dynamic runs through security, elevators, waste and landscaping. The fix is a normalized cost baseline, a portfolio view of renewal dates, and consistent specifications that let vendors compete on the same scope.
The S2V approach for commercial real estate
Potential. We collect service contracts and invoices property by property and normalize them to common unit costs — per cleanable square foot, per guard hour, per unit per month, per pull. That shows where comparable buildings diverge and which terms, escalators and exclusions are driving it.
Priority. We rank opportunities by value, feasibility and timing, with particular attention to renewal notice windows, termination rights, recoverability under lease structures and the operational risk of changing vendors in occupied buildings.
Performance. We standardize specifications, run competitive processes by region or portfolio, renegotiate coverage and rate cards, and right-size service levels to how each building is actually used. We work with property managers and building engineers, because they own the vendor relationships day to day.
Value. We track realized results in actual invoices, building by building, and put a contract calendar and vendor scorecards in place so the portfolio doesn’t drift back to auto-renewals — then surface the next wave of opportunity before the next renewal cycle.
Data readiness in commercial real estate
Real estate data is organized around properties, not suppliers. Invoices and operating expenses sit in property accounting systems such as Yardi or MRI, often in separate databases or entities per property or fund. Service contracts live in shared drives, email and property managers’ files. Work orders sit in a separate platform, and third-party managers may run their own systems entirely.
The same vendor appears under different names across properties, GL account structures differ between acquired assets, and chart-of-accounts codes don’t map cleanly to service categories. Cleanable square footage, unit counts and service frequencies — the denominators needed for any unit-cost comparison — are rarely stored alongside the spend. Before any analysis or AI tooling, we establish a common property key, a normalized vendor list, a consistent category taxonomy and the building attributes that make comparison possible. If that foundation isn’t there, we tell you and scope it separately rather than burying it inside a fixed-fee project.
Outcomes we target
In commercial real estate, success is measured in comparable building-level costs, defensible operating expenses and a portfolio that stops renewing by default.
S2V works strictly on the buy side: with property and portfolio managers on what they buy from FM providers, and with FM providers on what they buy from their own supply base. We never provide bid support or pricing strategy to help anyone win work. For a deeper look at building services procurement for property managers, portfolio managers and FM providers, see our Facilities Management page.
- Realized savings, validated in invoices — results confirmed building by building against actual service invoices.
- A normalized unit-cost baseline — every service contract converted to a common unit so comparable buildings can be compared.
- Renewals managed, not missed — a portfolio contract calendar that surfaces notice windows and termination rights before they pass.
- Consistent specifications across the portfolio — scopes and service levels right-sized to each building and competed on the same basis.
- Vendor scorecards — service providers measured against contracted service levels, not anecdote.
- Defensible, audit-ready operating expenses — documented, competitive sourcing that holds up to tenant audit, on a data foundation that keeps costs visible.
Every result is tracked to realized value — measured in invoices and operating performance, not negotiated estimates.
Related spend categories
- Facilities & Janitorial Services
- Insurance & Benefits Brokerage
- Enterprise Software Renewals
- Telecom & Wireless
- Marketing & Agency Spend
- Energy & Sustainability
Frequently asked questions
Why is it so hard to compare service costs across our buildings?
Because each property typically contracted on its own terms. Janitorial may be priced per square foot at one building, per labor hour at another and as a monthly lump sum at a third, with different scopes, frequencies and escalators. Until those contracts are normalized to a common unit — cost per square foot per cleaning frequency, cost per guard hour, cost per unit per month — portfolio comparisons are guesswork.
If most of our operating expenses are recoverable from tenants, why does procurement matter?
Recoverable costs still shape occupancy cost, which affects leasing competitiveness and tenant retention. Under base-year and gross structures, increases above the base often sit with the owner. And recoverable spend is subject to tenant audit, so a documented, competitive sourcing process is also a defensible one.
Do you work with owners, third-party property managers or both?
Both. Owners want portfolio-level visibility and consistent terms; third-party managers buy on the owner's behalf under management agreements and need a process they can defend to the owner. We work within whichever structure is in place and align the two where they diverge.
Do you help facilities services providers win our business?
No. S2V works only on the buy side. We help property owners and managers buy services from FM providers, and we help FM providers buy from their own supply base. We never provide bid support or pricing strategy to help anyone win work.
Where does an engagement usually start?
With an assessment of property-level service contracts, invoices and data — the S2V Compass. It normalizes what you pay to a common unit-cost basis and produces an opportunity portfolio sequenced around contract expirations and renewal notice windows.