Globally we are experiencing varying degrees of recovery and "after shocks" from the impact of the worldwide recession. Lessons have been learned in all sectors of the industry and we can closely evaluate the revolutionary changes and sharpen our tools to identify current trends propelling development into the next millennium. The survivors are wiser in developing innovative ideas to face the challenges of project delivery and cost control worldwide. There are new players and rules, but the primary concepts of teamwork, flexibility and diversification are prevalent in serving as a framework for the future.
Next month over 5,000 real estate professionals from 48 countries will gather at MIPIM (International Property Market) conference in Cannes, France, to exhibit, network, cross-exchange techniques and court the lifeblood of the international real estate market -- the end users and investors. As a U.S. developer of a Swiss-owned office building, I find it interesting to note the flexibility and diversification that are necessary to success in the real estate arena on both sides of the ocean. In particular, the international experience of Hanscomb, a construction management firm with 40 offices in 11 countries, is noteworthy.
Hanscomb has positioned itself to capitalize on global changes and trends, having realized years ago that to effectively compete, one must be prepared to react anywhere in the world. According to Brian Bowen, principal in the Atlanta office, "Recognizing that it is cost-prohibitive to physically manage and market an office in each country, we have chosen those select countries and locales where we can develop liaisons and affiliations with other experts in construction management and quickly respond to our clients' needs." This was clearly evident with the company's recent German relationships.
For BMW, Hanscomb completed the German automaker's first major investment in a full auto assembly plant in North America, a 1.5 million sq. ft. facility, in a record 15 months, ahead of schedule and under budget. As Dr. Helmut Panke, chairman and chief executive of BMW (US) Holding, proclaimed at the opening festivities on Nov. 15, 1994, "The BMW plant in Spartanburg has achieved the fastest rollout of any automotive plant in history." The facility will ultimately employ 2,000 and produce 400 cars a day.
Hanscomb's role as construction manager included not just orchestrating 110 bid packages and 11 prime contractors, but the merging of U.S. and German construction management techniques. "Recognizing the necessity of fulfilling BMW's requirements, Hanscomb was able to tap into its existing familiarity with German private sector methods for putting projects in place and could anticipate BMW's needs in the management and control of the Spartanburg project," says Michael Morris, president of Hanscomb in Alexandria, Va.
While overseeing the BMW plant in the United States, Hanscomb was called upon by Sen. Wolfgang Nagel, Berlin city and state minister for construction and housing, to assist the government during the critical pre-development planning and value engineering phases for the massive Messe Berlin Project, a 2 million sq. ft. expansion of the existing Berlin Exhibition Hall. At the time, the project was estimated to cost over $3 billion DM. Through extensive design and cost workshops, Hanscomb's team was successful in eliminating over $1 billion DM (approximately $600 million) from the costs and is now serving as project manager for the city.
Multinational industry owners/users realize the rewards to be reaped by assembling the most effective team for a particular project -- use experts where necessary -- and work together to establish trust, clearly communicate and build global bridges. An example of creative international teamwork was the completion a few years ago (ahead of schedule and under budget) of a $100 million, 500,000 sq. ft. luxury office tower, Carillon, in downtown Charlotte, N.C. Inklebarger Enterprises led this team as developer, which included architect Tom Ventulett of Atlanta-based Thompson, Ventulett & Stainback. "The Swiss owners/investors of the project, Hesta Ag., were key members of the design/construction team. We needed to recognize and understand the importance of their input in the design, while creating a project that architecturally possessed artistic human scale with marketable features. Patience was imperative," recalls Ventulett.
Patience is a virtue also needed by the pioneer entrepreneurs and service providers seeking opportunities in Russia. Here, diversification, that is, the ability to be a generalist who can evaluate individual situations and command the know-how to transform into a specialist upon demand, can serve a company well. While numerous companies from Europe, the United States and Japan have been entering this market, not many are actually set up to effectively operate in what is a difficult business environment.
When Hanscomb was awarded the construction management for the new British Embassy office in Moscow, the company opened an office there in 1993 at the request of the British government. This contract led to several other embassy offices and corporate tenant work, including fit-up for such firms as Citicorp, Unilever, British Airways and the British/American School. However, when Citicorp turned to Hanscomb to manage its facility, it was time for the company to switch gears and wear a new hat. "We could not just turn to the yellow pages under property management, and Citicorp was in need," says Bowen. "Hanscomb now has a 20-to 30-person property management staff cleaning, doing windows, whatever it takes to get the job done."
For years the real estate industry has exchanged techniques and methods for development -- whether in brokerage, financing or construction. With the added dimension of the Information Highway, global exchanges of ideas can take place in minutes. Whether we will see universal standards for valuation and financing or whether fast track, design/build and other methods of construction will ever help to achieve unity in development worldwide is as uncertain as the creation of a common EC monetary system.
Nevertheless, cross-exchanging of technology is occurring. Japan is moving away from its traditional design/build method and is more intrigued with American construction management methods, while Americans are moving more to design/build. The U.K.'s traditional operating procedure of using Bills of Quantities for pricing is moving toward lump sum as used in the United States and elsewhere. Americans are beginning to use a modified form of Bills of Quantities for maintenance and renovation work through the European experiences of the U.S. military, and they are expanding this method to other governmental departments. It has been used recently in the private sector.
Increasingly, American corporations are taking their team of experts to projects overseas, sharing knowledge but simultaneously acquiring new techniques which are being brought home for implementation. It is cross-exchanging for a more profitable, global future.