James Sipp has his hands full. As chairman of NACORE, he is busy helping the organization search for a new executive director, improve its certification program through its Institute forand plan its international expansion chapters. All this while preparing for its upcoming 23rd annual symposium and exposition, Oct. 5-8 in Tampa, Fla.
If that weren't enough, Sipp is also vice president in charge of real estate at White Castle International Co., Columbus, Ohio, where his job entails finding the company's future expansion sites, administering its real estate holdings and helping to plan its strategic moves both nationally and internationally.
These qualifications make him the perfect person to talk to about the present and future roles of the corporate real estate executive.
NREI: What do you think are some of the important trends that are occurring right now in corporate real estate?
Sipp: I think that corporate real estate has gone through some rather dramatic shifts over the last several years. As companies have been "rightsizing," all phases of a corporation have been downsized, and corporate real estate certainly has not been immune to that reduction. There has been a rather dramatic move to outsource real estate departments, where a firm may come in and hire most or all of the real estate department, and they will do the real estate services for a corporation. I think the result of that has been that a number of people have left the field or are retiring as a result of the downsizing. And so the pool of people who can be categorized as corporate real estate is smaller than it was three to five years ago. But the impact of that outsourcing, from everything we can see, is that's its not fully known. Costs do not necessarily go down for a corporation and, in some cases, corporations are coming back and rehiring, people because they'd rather be doing it in-house. The end result of all this is that I think it's still in a state of flux, and we're in the process of trying to study the trends.
We're also trying to analyze our own professional association to determine its impact on us. Generally speaking, for quite a long period of time, members in not only our association but others were categorized as regular members, that is they worked for corporate real estate departments, or service providers, real estatetitle insurance companies, attorneys, etc. We've been studying that for the past few months to make sure our association fairly represents the interests of the industry.
NREI: What about the relationship between NACORE and the IDRC? Do you think we'll ever see a merger of the two associations?
Sipp: It's hard to say. I cannot speak for them obviously. But to give you some background, NACORE and IDRC had some discussions several years ago about coming up with a joint certification for the profession and a designation that would be test-based. We have had our Institute for Corporate Real Estate for 17 or 18 years now and, by meeting certain requirements, you get the designation of Master of Corporate Real Estate or MCR. Over time, this MCR program has gained more in substance; it is taught by people who are in corporate real estate today, and it is administered by an educational professional who has her PhD. Over a period of time, we had developed a program which was becoming widely accepted and respected.
We had some discussions over a period of about six or eight months (with the IDRC) and were not really making much headway. We had talked with IDRC about the merger of the two organizations. We even tried to suggest that we ought to have some timetable of working toward merger but, by having a timetable, it would mean that there was at least a commitment. We received notice from IDRC that they had considered it, that they were not interested in merger of the two organizations and, as a result of that, we decided that we should probably go our separate ways, and we would continue to work on expanding and improving upon our own MCR program, which we in fact are doing.
We are anxious to build relationships with other organizations that in one way or another service the corporate real estate profession. And I can give you several examples of those: We are perhaps furthest along with The American Real Estate Society (ARES). ARES is composed of professors of real estate in colleges and universities across the country. We have a person from NACORE who sits on their board, and their executive director attends our board meetings. Together we have formed the NACORE/ARES Foundation. Two members from each of the two groups serve on the foundation's board along with the executive director of IFMA, International Facilities Management Association. The purpose of the research foundation is to work with, right now, the major accounting firms to take issues of importance to corporate real estate and to conduct research on those issues and then publish the findings. That foundation was formed about a year ago, and we're working on a few things right now, but it's somewhat on the back burner as we are in the process of finding a new executive director.
As implied by the NACORE/ARES foundation, we're also working on trying to establish cooperative ventures with IFMA. Dennis Longworth (their executive director) and I have had a number of conversations, and we're exploring ways we might be able to cooperate educationally as well as networking. The two fields are crossing more as time goes on, and so it is a natural combination for us.
We've had some very preliminary discussions with Building Owners Managers Association, BOMA, and Chip Joulin, their current president, and I are trying to find ways that we might also cooperate. I think this makes a lot of sense for these efforts to be undertaken. There is some blurring of responsibilities today, and I think that it's important for people in the industry to understand these changes and to be able to adapt to them if they're going to perform their functions properly for their corporations.
NREI: You mentioned looking for a new executive director. You now have an interim executive director. What plans are there as far as hiring replacements for Mark Hoewing and Glenn Dickson?
Sipp: Sure, first of all a little bit about Gordon (H. Gordon Wyllie MCR, the interim executive director). He was with Southeast Bank out of Miami for quite a few years. He was chairman of the board in 1977-79, was on the board and board of trustees until about seven years ago, something like that. He has done development work and still does real estate consulting. Gordon was a great choice for us. We were looking for someone who thoroughly understood the profession number one and, number two, had an equally thorough understanding of NACORE. He's on a short-term contract of at least six months. The board feels that this is a great time to just take a step back. We have an opportunity tO take a fresh look at how we're organized and what makes sense for us today and is also right for the near term future.
We have signed a contract with a search firm that specializes in searches for associations, and that firm is aggressively moving through the search process now. The total process takes probably 10 to 12 weeks at the minimum. We don't want to go too slowly. On the other hand we don't want to move to rapidly either.
NREI: What does your job at White Castle entail? Who do you report to?
Sipp: I have a number of functions. I have responsibility for all of the corporate real estate assets and, in that capacity, I report to the chairman of the board and CEO.
The company is still owned by the founding family; this is our 75th anniversary this year. Everything that we do in terms of expansion is financed out of cash, and we have no franchises in the U.S. So my responsibility starts with location research, which is a demographic arm of the division. We also have responsibility for meeting the expansion goal of the company, which for our size is relatively modest. We do somewhere between 10 or 12 on the low end and 25 on the high end a year. But given it's paid out of cash, that's a fair commitment. We have 302 stores; we operate in 12 separate operating areas so we also administer as well as the existing stores, area offices and warehouses in each of our operating areas.
In addition, we have a wholly owned subsidiary that is dabbling in the international arena. And we are looking to franchise the "slyder," as our hamburger is known by our customers. So we - "we" being me - have been spending a lot of time learning about international business and the quick service industry in various parts of the world and doing research as to where we might go. We currently have a franchisee in Mexico that is just getting started and doing well. We're doing research in Germany and the U.K. And we've also been talking to a major firm in South America. So that's also part of my responsibility, and I'm also part of the strategic planning part of what the company does.
NREI: How has your job changed in the last few years? Has your company downsized or outsourced any services?
Sipp: No, we have not, and probably for a couple of reasons. The company recognizes that for a niche player like ourselves, it's more important that we obtain the best site that we possibly can. So if we don't get 20 one year, that's ok. They're more interested that we get 10 or 12 or 15 quality sites. So it's less of a pressure in terms of trying to produce sites. And so, there has never really been much consideration in terms of trying to send this work outside. We work with a real estate department of three people: a director of real estate and two real estate managers. All of them cover territories and do a lot of travelling. They work with brokers, but they manage the process. And we find that works better for us.
Where my work has changed is with the addition of the interational. So far this year, I've spent at least seven weeks in Europe and probably a week to 10 days in Mexico. I have one assistant in the international arena, and I'm moving him to Mexico probably in another week, So that means I'll be doing more myself.
NREI: What about the international expansion of NACORE?
Sipp: We have, as an organization, recognized that there is an opportunity for a corporate real estate professional association in other parts of the world as well as the U.S. So we have had a chapter in London for at least five or six years. We have a chapter in Frankfort, one in Paris and one in Milan. We approached, initially, the development of Europe as if it were identical to the United States. The Europeans, rightly, objected to that.
We're trying to work out separate arrangements with each of the chapters, recognizing that each country is a little different and, while some of the basics can be the same, we need to have an arrangement that's tailored to the needs of the country. We're also going to help constitute a NACORE European board that will have two members from each of the chapters plus two from the U.S. board, the idea being that this is a board where each of the individual countries can come and talk about problems.
I feel very positive about the leadership of the respective chapters. They're very dedicated people who see the need for an organization like NACORE and are willing to commit the time and resources to helping get that going.