The three legs of a corporate real estate strategy stool

To develop an effective corporate real estate strategy there are many approaches a company’s internal team and their consultant may consider. The following highlight two I believe offer the best chances for success.

The first one is for organizations to go through a process that starts with their current state (“where you are today”) and moves toward their desired future state (“where you want to be tomorrow”) by implementing critical success factors or strategic initiatives, monitoring the key performance indicators to know you’re making process and anticipate how you will overcome the barriers to success.

The current state/future state approach factors the people, process and technology. Critical to this or any approach is to inventory your portfolio, establish a benchmark of occupancy costs/square foot, percentage of space utilization and an environmental sustainability assessment. Using these as starting points will allow you to develop targets that will have positive impacts on portfolio performance that directly relate to earnings per share and bottom line benefits to the company.

I believe a more effective approach is articulating the “three legs of a corporate real estate strategy stool” of “THINK, BUILD, and OPERATE.” The THINKing is the initial step of “planning the possible.” The BUILD requires a little more finesse of working with you internal team and external consultant to develop the strategic initiatives unique to your organization. And, the OPERATE can be most the challenging as it’s the implementation phase. The keys are to identify the sources of reliable information across the enterprise of the true costs of occupancy, actual occupancy and a meaningful determination of environmental compliance.

Susan Kerr, President of Advancing Inspiration, LLC  believes, “THINK is important for the vision, the planning, the dream. Without it you go nowhere fast. BUILD is the piece that makes sure you have your talent, ops, finances, services, products—all of IT in order. OPERATE is every day. One is not more important than the other, rather they are each an important leg on the stool. Without one you fall (and fail).”

“An indispensable factor of any real estate portfolio strategy is feedback to roll the wheel while strengthening the structure” says Seung Jun Shin Asset Manager at Grand Supercenter Inc. who believes, “there isn’t any way to assume the importance of one component over another.”

“Without the governance or glue to hold those three legs together, the stool might still wobble. The conviction to make decisions and decide whether to “go/no go” between each stage is the key, and that skill set and how that process works will strenghten or weaken any of the three legs.” says Robert Newlin of Treborn LLC.

What do you think? Which of these approaches to developing a real estate strategy is the most effective? Are there others you might suggest?


2 Responses to The three legs of a corporate real estate strategy stool

  1. Aaron Weiner says:

    Very thoughtful, Larry. The deliberate Think, Build, Operate process makes a lot of sense. I do corporate real estate advisory for smaller firms that do not have real estate plan, per se and offer them much more than transactional resources in the form of an unpaid advisory board that includes legal, financial, and design professionals.

    I will follow your blog for more valuable insights. Let me know if there is anything I can do to help or enlighten you.

  2. […] reading at The Editors moderate this CRE blog and the Corporate Real Estate LinkedIn Group. CREeditors […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s