Academic journal article The Journal of Real Estate Research

Corporate Real Estate Research within the Academy

Academic journal article The Journal of Real Estate Research

Corporate Real Estate Research within the Academy

Article excerpt

Abstract. This study discusses the uniqueness and importance of corporate real estate (CRE) asset management and distinguishes it from third party real estate investment management. A decline in CRE research within the academy from 1995 through 1998 is documented and contrasted with the increasing research activity and interest in this area since 1995 by both consultants and trade associations. Reasons to account for this mismatch are canvassed from within the academy and offered herein. Finally, important questions about the future direction of CRE research are posed.

Introduction

The senior management of some major companies have recently begun to appreciate the importance of facility site locations, building design and infrastructure, space layout and contractual obligations (and opportunities) to maximize cash flow (Bell, 1991; Manning, 1991; IDRC, 1992; Joroff, 1992; Arthur Andersen, 1993; Joroff, Louargand, Lambert and Becker, 1993; Apgar, 1995; Lambert, Poteete and Waltch, 1995; Roulac, 1995; Carn, Black and Rabianski, 1999; and Manning, Rodriguez and Ghosh, 1999). This increasing awareness of the importance of corporate real property assets dates back to 1983 to when Zeckhauser and Silverman (1983) first observed that a major portion of all corporate assets (approximately 25% to 41%) were invested in real property, and Veale (1989) noted that occupancy costs of corporate space represented some 10% to 20% of operating expenses, or 41% to 50% of corporate net operating income. Over the ensuing fifteen years, researchers (Veale, 1989; Nourse, 1990; Nourse and Roulac, 1993; and Rodriguez and Sirmans, 1996;) have discussed senior management's neglect of their company's real property commitments and investments. In the majority of cases during this period, corporate real property assets were not managed with the same attention and involvement as were applied to other corporate resources and decisions.

In 1989, Veale published results of a corporate real estate (CRE) executive survey conducted in 1987, updating an earlier 1981 CRE survey, confirming that despite the significant resources invested in corporate real property assets, they were not managed very efficiently. Veale's research reported that: (1) only 41% of firms in the United States evaluate the performance of their real estate on a regular basis; (2) only 20% of U.S. firms manage their real estate for a profit; (3) approximately two-thirds of the firms surveyed did not provide for continuing management and control of their real estate assets by a separate management information system; and (4) that one in four companies did not maintain an inventory record of their real property assets. Veale, and more recently a 1993 survey by Arthur Anderson, both note that the lack of adequate information on corporate real property assets makes appropriate decision making "difficult" (Veale, 1989; and Rodriguez and Sirmans, 1996) and "unappreciated" by senior management (Arthur Andersen, 1993).

Since 1992, the CRE management literature has begun to address important "external" strategic business considerations impacted by a company's location and facility design choices (Joroff, 1992; Nourse, 1992; Arthur Andersen, 1993; Duckworth, 1993; Nourse and Roulac, 1993; Joroff, Louargand, Lambert and Becker, 1993; Becker and Joroff, 1995; Lambert, Poteete and Waltch, 1995; Roulac, 1995; Manning and Roulac, 1996; Rodriguez and Sirmans, 1996; and Manning, Rodriguez and Ghosh, 1999). This growing orientation to external CRE considerations is in addition to increased research attention to such "internal" CRE issues as: How much CRE should be outsourced? (Kimbler and Rutherford, 1993; Bergsman, 1994; Becker and Joroff, 1995; Lambert, Poteete and Waltch, 1995; Manning and Roulac, 1996; Rodriguez and Sirmans, 1996; Manning, Rodriguez and Roulac, 1997; and Carn, Black and Rabianski, 1999) and How should the CRE function be structured to enhance shareholder wealth? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.