Academic journal article The Journal of Real Estate Research

Time, Place, Space, Technology and Corporate Real Estate Strategy

Academic journal article The Journal of Real Estate Research

Time, Place, Space, Technology and Corporate Real Estate Strategy

Article excerpt

Abstract

Few corporations take a strategic approach to managing real estate. This survey finds that corporate real estate managers and service providers in Australia, Hong Kong, the United Kingdom and the United States continue to fulfill a traditional transactional role within their organizations. Real estate is not cooperating with other parts of the organization to provide their companies with flexibility that could increase competitiveness. While the use of technology is growing, real estate managers remain uncertain about its role in their future. Corporate real estate managers believe that to be effective in the future they will need strategic planning skills and business knowledge.

Introduction

Although all corporations lease and own real property that they use to support their core business, very few use a strategic approach to acquiring, managing and disposing of real estate. Often corporate real estate officers and others in the organization make daily decisions about facility location, building design, space layout and lease obligations without a plan as to how those real property holdings could contribute to the company's productivity and profitability. To be most effective, organizations should follow a corporate real estate strategy that is consistent with overall corporate strategy and coordinated with other functional areas. Yet, in the past, most real estate managers were not members of corporate strategy teams and many corporate real estate officers were not involved in decisions regarding the changing workplace.

The purpose of this study was to analyze the results of a 2000 survey of corporate real estate managers and service providers to determine whether the role of real estate in corporate strategic planning is changing and whether real estate managers are adjusting to changes in the business environment. Responses from Australia, Hong Kong, the United Kingdom and the United States are compared to analyze differences between corporate real estate management in different parts of the world. This study also explored the role of corporate real estate in the future and the knowledge and skills corporate real estate managers will need to be successful in the changing business environment.

Background

The traditional role of the corporate real estate officer was to find facilities based on specifications set by operations, negotiate the best price, manage the space, then dispose of it when operations did not want it any longer. Operations determined their goals, decided what real property they needed to support those goals, and only then contacted the real estate manager to locate the property and negotiate the lease or purchase. This exemplifies a transaction-based corporate real estate function, with the strategic decision-making handled by operations (Veale, 1989). Even among companies that employ a corporate real estate officer, few have placed the head of property issues at a major decision-making level in the organization (Avis, 1990). Therefore, in many organizations the corporate real estate manager is not involved in the company's strategic planning process. Rather, real estate decisions are made on a property-by-property basis with no overall guiding plan for real estate assets. In addition, these real estate choices are often made without consultation and coordination with other important business units such as marketing, information systems and human resources.

An International Development Research Council (IDRC) study (Joroff, Louargand, Lambert and Becker, 1993) identified five evolutionary stages of corporate real estate unit development: (1) taskmaster; (2) controller; (3) dealmaker; (4) intrapreneur; and (5) business strategist. This sequence recognizes the need for real estate executives to move from order taking and care taking to tackling company-wide competitiveness issues. The question is whether corporate real estate officers have evolved into the business strategist stage. …

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