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Corporate Real Estate-Strategy and Accountability Are Key

Corporate real estate end-users, enterprises whose primary business is not real estate (Sprint, Hallmark, Cerner, etc.), account for approximately 75% of the United States’ commercial inventory. These end-users are the source of cash for the majority of all real estate. Whether the enterprise is a global Fortune 100 firm or a regional privately held firm with a handful of locations, the role of the internal real estate manager is changing. Real estate service providers must 1) master the core knowledge taught as part of CCIM’s education curriculum and 2) enhance the commercial real estate manager’s impact on strategy through better real estate decisions.

Super Nucleus

The combination of an increasingly flatter world and a chronically volatile global business environment has inspired a growing number of enterprises to adopt a “super nucleus” approach whereby shared service centers (like HR, Real Estate, IT, and Finance) work together to serve all business units. This is much like a traditional shared-service model except that leaders of each service center are expected to elevate their contribution to strategy. While tactical items for real estate (lease administration, transaction management, incentive compliance, etc.) remain important, internal real estate managers spend less time on these tactical issues and more time on strategic issues like workplace, sustainability, enterprise alignment, location strategy, etc.

Strategy

The gap in in understanding and championing strategy-how an enterprise creates a competitive advantage that is sustainable over time-will determine who will lead this super nucleus. As the world becomes flatter and transaction and portfolio management become more mechanized, many of the traditional efforts of the typical commercial real estate manager can be outsourced or swallowed up by another entity. 77% of commercial real estate managers recently surveyed agreed or strongly agreed that real estate business objectives and goals will become more integrated with the enterprise-driving more sophisticated and complex procurement by 2020. 78% agreed or strongly agreed that real estate service providers would be responsible for data access and usage as it becomes more widespread as a means of delivering real estate strategy.

Because real estate managers are typically generalists, most commercial real estate managers have a strong understanding of the overall business and the experience and collaboration skills to identify and lead strategic initiatives. If real estate can learn to apply measurement controls on tactical items related to transaction/portfolio management, site selection, and public incentives negotiation/compliance, they can outsource those tasks and focus more on strategy. Examples of strategic initiatives championed by the following corporate real estate leaders:

Strategic Domain

Real Estate Leader

Summary

Enterprise Leadership

Dan Boutross

Bank of America

Dan leads the development of workplace solutions that elevate the brand, promote culture, and assure employee engagement.

Partnering With Key Support Functions

Brian Smith

Wagner Logistics

Brian included his real estate provider, Copaken Brooks, in the sales process to help solve difficult facility challenges for Wagner’s external customers.

Portfolio Optimization and Asset Management

Management Team

ARC Physical Therapy +

Copaken Brooks assisted with ARC’s creation of a policy for lease acquisitions and disposals. The policy has fostered a much more efficient move process that has saved time and money.

Service Providers

Where do service providers fit in? The service provider must help centralize, standardize, and mechanize tactical functions like transaction management, portfolio management, site selection and public incentives negotiation/compliance. Performance must be measured in each transaction and across the entire portfolio, according to what is most important to the client and the performance goals that are mutually determined. Furthermore, the importance of a true single point of contact across multiple projects/markets continues to be more critical since the decisions become more centralized at the super nucleus level.

Bill Early leads the Tenant and Corporate Services Group at Copaken Brooks and has spent 17 years helping corporate real estate end-users make faster, better real estate decisions and Kansas City and abroad.