Oftentimes, if a corporation is faced with
reducing expenses, especially in the
expensive arena of real estate, it should evaluate the technical and strategic benefits
available through outsourcing.
“Essentially, organizations whose core
business is not real estate should consider
outsourcing real estate functions in order to
achieve portfolio optimization and cost efficiency,” says John Ferguson, senior managing director at CB Richard Ellis in Atlanta.
Smart Business spoke with Ferguson
about corporate real estate outsourcing
options and how to determine if it’s the right
choice for your organization.
What are the trends in corporate real estate?
Emerging trends in corporate real estate
(CRE) that increase the value of outsourcing
include:
- Having the right labor pool available,
which will dictate where the company chooses to lease or own space - Increased openness to alternative strategies for a mobile work force
- The integration of CRE with HR, IT,
finance, accounting and the C-suite - The role of the CRE manager as a strategist and business unit relationship manager
— The workplace is now the intersection of
technology, HR, operations and real estate. - Real estate evaluated with a different lens
in the era of corporate strategy and intense
competition for customers, employees,
resources and transparency imperatives - Evaluation of global models for noncustomer-facing activities
What types of services are available?
Outsourcing can encompass a number of
different management and administrative
functions. Many businesses take advantage
of one or more of these services:
Facilities management: Corporate, institutional, not-for-profit and government entities can outsource facility management. This
allows them to draw on experts who can customize their knowledge, technology, procurement leverage and processes to create a
competitive advantage.
Portfolio management: Specialists ensure all the vital portfolio details — data, critical dates, rent payments, cost structures and other processes — are in place and operating
efficiently and effectively. Proactive portfolio
management lowers costs, improves space
utilization and provides a solid basis for creating a strategic real estate plan.
Global client strategies/consulting:
Consulting drives superior business performance by maximizing value from real estate
assets and management practices. Top-quality solutions integrate business intelligence
with portfolio optimization, location analysis
and organizational strategies.
Transaction management: Skilled transaction managers can harness local market
knowledge and work closely with organizations to develop and manage a consistent,
portfoliowide process for managing transactions on a global level.
Project management: Professional real
estate project managers can plan and execute a full menu of services for organizations
that occupy and invest in real estate.
Portfolio administration: These services
help you find, collect, manage and analyze
key portfolio and operational data to identify
portfolio trends, spot opportunities and
make sound real estate decisions.
Move management and transition manager: You can minimize your transitional
downtime and costs by outsourcing transitional management, coordination and implementation functions during relocations,
mergers, consolidations and renovations.
What are the advantages of this outsourcing?
Your company can experience cost savings
through access to high-caliber tools, staff and
strategies. Outsourcing also gives you the
flexibility to expand and contract your real
estate department in response to events like
corporate mergers or special projects.
How can corporations decide if this is the
right option for them?
You and your executive team should ask
yourselves the following questions:
- Are we currently evaluating alternative
workplace solutions to determine the impact
on our work force? - What is the financial impact of a reduction in our vacant/stranded space?
- How do our real estate expenses benchmark to similar corporations?
- How are our current service providers
held accountable for results? - What performance measures are used to
track real estate performance?
What first steps should businesses take if
they are interested in these services?
Executives should look for a company and
a representative that fits well with their company strategy and culture. Some other critical
success factors include:
Transition plan: A smooth transition is
critical to a successful outsourcing initiative
and communication is the most important
transition success factor.
Data transfer: Accurate and timely transfer of existing portfolio and vendor data from
the company to the service provider
Financial information: Existing baseline
operating and capital expenditures need to
be well defined by the business and understood clearly by the outsourcing company.
Executive and location manager buy-in:
Outsourcing success is ensured when all levels of management are in full support of the
outsourcing decision and the resulting service delivery.
JOHN FERGUSON is senior managing director with CB Richard Ellis in Atlanta. Reach him at (404) 504-7870 or
[email protected].
