Some Thoughts on Corporate Real Estate Strategy

            Much has been written about corporate real estate strategy. A Google search on the topic will yield hundreds of papers and presentations on the subject. Almost every real estate software vendor has posted articles on the subject and related the topic to their software and service offering. But from my experience very few corporate real estate organizations maintain a detailed real estate strategic plan, and worst very few fail to execute the plan that they’ve developed. Why is this the case?

            I suspect that the real estate organizations are caught up in the day to day priorities and flash points and thus have little time to devote to strategy. It requires rare leadership on the part of the corporate real estate executive and senior management to set a high priority on strategic planning and execution. But for those corporate real estate organizations that adopt a strategic focus, the payoff in higher value, cost reduction, and enhanced efficiencies is profound.

 

            So what are the major components of the corporate real estate strategic plan?

·      Financial: What are the profit goals and what role will the real estate portfolio play in contributing to these goals?

·      Customer support: How do the enterprise facilities support customer care? To what degree will the location and physical layout support the customer? (This is critical for retail facilities.)

·      Company Culture: To what degree will the facilities and interior design reinforce company culture? Is the space formal or informal? Will the facilities support collaboration and innovation? What is the level of privacy required?

·      Employee access: To what degree are the company facilities accessible to the employee base? Are the locations near public transportation? Is there adequate parking? Are the facilities safe, comfortable, and ADA compliant?

·      Security: To what degree do the facilities provide sufficient perimeter and internal security?

·      Information technology: To what degree are company locations adequately provisioned for advanced office technology infrastructure (WIFI, CATV, Broadband cabling, Laser Printing, Video Conferencing, Etc)

·      Flexibility: To what degree do the company leases provide options for expansion or termination? What is the capacity of the locations for space growth over the next five to ten years? What leases can be terminated without penalty?

·      Consolidations: What opportunities are there to consolidate locations for efficiency purposes? How much space and cost can be reduced through strategic consolidations? What investments are needed to implement these consolidations? What is the schedule for implementation?

·      Environmental Considerations: What is the status of the company buildings from an environmental standpoint? What upgrades are needed to make the buildings compliant with local and national standards regarding air quality and energy efficiency? Are there issues relating to hazardous conditions such as asbestos or chemical spills?

            In the next several Blog entries I’ll drill down into the strategic planning process. And discuss how the CRE executive can form a planning team and devise a process to step through a systematic strategic planning process. Future Blog entries will also explore how the real estate system can support the planning and implementation process.