(FORTUNE Magazine) – Forget "location, location, location." Now the three keys to real estate success are "lease, lease, lease." Once viewed as a fixed cost--a necessary evil--property has come to be seen as a liability in the drive for corporate efficiency. Managers faced with rising competition are treating it like any other asset, demanding it provide a decent return or be eliminated. As for shareholders, well, they'd rather not see real estate on the balance sheet at all.

Leasing, however, gets property off the balance sheet, usually eliminates depreciation expenses, and boosts return on assets. Plus, selling buildings frees up much-needed cash. And according to Marc Louargand, managing director of Cornerstone Real Estate Advisers in Hartford, today there are plenty of buyers driving up prices, thanks to a market full of REITs (real estate investment trusts) hungry for acquisitions.

By some estimates, though, American corporations still have $1.7 trillion of property--70% of all commercial property--languishing on the books. "Think about what you could do releasing all that capital," says Michael Silver, president of Equis, a real estate consulting firm in Chicago that supervises Chrysler's $8 billion portfolio as well as holdings of Coca-Cola, NationsBank, and the U.S. General Services Administration. "You can shrink brick and mortar by selling to a hungry marketplace, and with what's remaining, you can lease--and lease flexibly."

That flexibility comes a lot more easily now, thanks to a number of new financing structures. Shorter-term leaseback deals allow companies to sell property and then lease space in the same buildings without having to commit to rigid 20-year terms. Synthetic leases function as operating leases for financial reporting purposes--i.e., they're off the balance sheet--but give the company ownership of the property (and the right to deduct the depreciation) for tax purposes. A quirk in the tax code even allows managers to exchange one property for another--with no tax due until the new building is sold.

On average, Silver estimates he can slice a company's occupancy costs by 25% and improve its return on real estate by a similar amount. Equis' own revenues doubled, to $45 million, last year; Silver predicts they'll double again in 1998. Looks as if shareholders were right all along: If you're not in the real estate business, get out of it.

--Jeremy Kahn