Look before you leap


Knowing precisely what to do and
when to do it ensures that companies
receive the maximum benefit from the tasks they perform. For businesses
located in the fast-paced, high-dollar
Orange County market, having a strong
real estate strategy is a crucial element of
keeping their businesses competitive.

“Behind payroll and benefits, real estate
is typically the third highest fixed cost for a
company,” says Wayne Lamb, a partner
with CRESA Partners Orange County.
“With this in mind, making a wrong move
can be very costly for a company.”

Smart Business talked to Lamb and Anne-marie Dalton, a vice president at CRESA,
about the essential role of strategy in effectively managing a company’s real estate
portfolio.

What is the difference between strategy and
negotiations?

Strategy matches organizations’ needs
with the most cost-effective plans. It carefully determines how much space a company needs, what type of space it needs,
and when and where it needs the space. A
good plan prepares a company for growth
and contraction, and is always designed to
create operational efficiencies regardless
of the type of business. The plan becomes
the blueprint for the best possible outcome
given any circumstance.

Negotiations, on the other hand, are the
result of implementing a strategic plan.
Skillful negotiation is designed to achieve
the lowest possible cost given all the factors in the strategic plan.

Why does strategy trump negotiations?

The two go hand in hand, but so much
more money and time can be saved with a
good strategy. A good plan, which goes
beyond bricks and mortar, can take into
consideration all the factors important to a
client, such as proximity to customers,
labor costs, logistics, recruiting and retaining top talent, relocation costs and government incentives, to name a few.

Skilled real estate consultants that work
closely with clients can create plans that take into consideration every aspect of
their past, present and future real estate
needs. This allows businesses to react
quickly to changes in their real estate
requirements, from decreasing manufacturing facilities to finishing new office
space. It also prepares companies to take
full advantage of opportunities that arise,
such as buying into new development or
relocating to a more cost-effective location.

What are the components of a good strategy?

The components of a good strategy are
pretty simple. Develop a real estate plan
that aligns with a client’s space needs at the
least possible cost, while building in the
flexibility for a company to guess wrong.
Thorough strategic planning consists of
analyzing the current situation, identifying
future requirements, modeling alternative
recommendations, and generating backup
information and analysis.

Businesses must look at their current situation from every angle to have a complete
understanding of their real estate status
and all related variables, such as their
financial strength, industry competition
and work force issues. Companies must
also anticipate future requirements created
by internal and external changes to their
business. This foresight will help businesses make quick decisions when faced with
opportunities and challenges. Once companies have gone through the analysis and projection phases, they should carefully
consider possible alternatives that are supported by research and analysis.

How can real estate consultants help companies develop a good strategy?

Real estate consultants should help with
every aspect of the strategic planning
process. Through their knowledge of real
estate and expertise in different industries,
they have a wealth of ideas, so they can
offer unique perspectives on everything
from in-depth situational analysis to
unconventional alternatives.

Real estate consultants should thoroughly understand a client’s most important initiatives and help remove obstacles to
achieving those initiatives. Outside advisers can also help businesses think about
challenges and opportunities that they may
not have considered.

Different industries have unique needs
and the consultant works to satisfy these
needs. For a call center, the cost of labor
may be the most important factor. For a
law firm, high-image real estate might be
used as part of a recruiting strategy to
attract top talent. For an international manufacturing firm, the need for efficiently
shipping goods might be the primary driver. The consultant should be able to provide answers to any of these issues.

How do real estate consultants create more
value?

They can no longer afford to merely facilitate transactions and businesses can no
longer afford to work with professionals
that don’t contribute expert knowledge
and strategic planning capabilities. Real
estate consultants need to create value by
carefully gathering data, developing a plan,
implementing the plan and then following
up to ensure that the strategy continues to
enable a client to succeed.

WAYNE LAMB is a partner and ANNEMARIE DALTON is a vice
president at CRESA Partners Orange County. Reach them at
[email protected] and [email protected] or
(949) 706-6600.

Annemarie Dalton
Vice president, CRESA Partners Orange County