In today's world, where the only constant is change, there can be no cookie cutter approach to managing corporate real estate. Strategies must be tailor-mad for every business and offer unprecedented flexibility.
Yet, our research shows that there are some common threads in delivering top notch corporate real estate services. Here are 10 tips for generating high-performance corporate real estate service, base on a new Corporate Real Estate 2000 research report, Generating High-performance Corporate Real Estate Service, compile by Sandra Lambert of Massachusetts Institute of Technology for the International Development Research Council (IDRC):
1. Benchmark. Real estate units need to initiate basic benchmarking processes to determine how their services stack up against companies they consider best in their class. Equally important is operational benchmarking against external service providers. Of the 82 companies surveyed by M.I.T., 42% rarely or never benchmark against corporations in the same industry, 56% against corporation outside their industry and 61% against outside service providers. Self-assessment not only pinpoints gaps in performance processes and practices, it can also lay the groundwork for gaining greater access to internal customers' business plans.
2. Collaborate. Creating high-performance teams is a critical success factor in corporate real estate service today. Draw on resources from other departments, share information and form cross-functional teams with your counterparts in finance, human resources, information services and operations, as well as with other business units and outside service professionals.
Collaborations can be especially effective in bolstering efficiency and resources when corporate real estate executives face the significant challenges of delivering services with small core staffs. At Merck & Co., for instance, the real estate services department drew on staff from elsewhere in the corporation to gear up for some of its work. Likewise, the real estate department at Southern New England Telephone Co. hired a strategic planner from corporate administration to help during a transitional phase.
3. Communicate. More than 20% of the business units surveyed reported that their corporate real estate units rarely or never communicated available services. Your internal customers may have narrow expectations of your capabilities unless you make crystal clear the range of services offered. Quarterly and annual progress reports, marketing brochures and value-added scorecards are just a few of the ways to "advertise" your services in-house.
4. Automate. To make the complex and fast-paced decisions that businesses demand, real estate professionals need to have current, meaningful, high-impact information at their fingertips. Online information networks and supporting technologies are a must for tracking space inventories, unit and standard costs, maintenance schedules, construction and engineering specifications and other data that can change on a daily basis.
5. "Informate." Corporate real estate professionals, however, need to go beyond "automate" strategies. They need to "informate," or synthesize additional data, which can help them better organize and analyze their work.
Key "informate" goals include: 1) analyzing both historical data and current space utilization, 2) planning new occupancy strategies, 3) forecasting trends that will affect future plans and 4) integrating real estate plans into the broader internal business unit and company needs. Corporate real estate units on the leading edge of information systems can become a catalyst for strategic thinking about real estate in relation to the company's other vital resources - people, technology and capital.
6. Measure performance by business standards. Our research shows that wide gaps exist between the performance measures corporate real estate professionals and their internal business unit customers use to regularly monitor the performance of their leased and owned space.
While the performance measures most frequently used by real estate executives revolve around occupancy costs, square footage per employee and employee satisfaction with the work environment, senior management is more interested in the measures of return on equity, return on assets (ROA) and return on sales.
Of those surveyed, only 6% report using ROA as a performance measurement, and 24% say they rarely or never receive useful information about results achieved on their behalf. Real estate professionals need to understand their business units' priorities and use the same performance measures if they want to demonstrate value added through real estate.
7. Disseminate results. Although many corporate real estate executives are documenting impressive gains through new workplace strategies, very few are reporting the results to senior management or business units. Only 28% of the business units surveyed report receiving cost savings data, and more than two-thirds of those units received cost reports on a project-related basis only. In today's dynamic environment, disseminating reports of annual cost savings and other competitive advantages to senior management can be a powerful tool for real estate executives.
8. Evaluate. With outsourcing of real estate services showing no signs of abating, the need to carefully evaluate service provider relationships and performance is critical. The time and effort involved in soliciting long-term service provider relationships, selection criteria, pricing strategies and new methods of performance evaluation are four areas that warrant special consideration when new relationships are being forged.
9. Educate yourself. With corporate real estate and business in general changing at breakneck speed, corporate real estate professionals need to make training and education an ongoing commitment. Read everything you can get your hands on, including the latest research in the field. IDRC's Corporate Real Estate 2000 research reports, for instance, have become a valuable resource for many.
Attend continuing education classes, seminars and special programs. Consider pursuing your Certification in Corporate Real Estate (CCRE), a comprehensive, industrywide certification program that demands in-depth knowledge in five core competencies ranging from location analysis to strategic planning.
10. Network. It may sound trite, but corporate real estate professionals need to network. There is no substitute for exchanging "war stories" with your peers about what works and what doesn't. Join trade associations and be active in them. Attend conferences, and participate in roundtables and panel discussions. IDRC, for example, holds two World Congresses each year where more than 2,000 real estate executives, economic development officials and service providers come together to network and learn from each other and expert speakers. Above all, keep your antenna up and stay tuned.