SR Inc. to Convene Corporate/Commercial Real Estate Executives and Drive an Industry Closer to Greater Sustainability

November 12, 2011

The Sustainability Roundtable, Inc. (SR Inc.), the for-profit, shared cost research and consulting firm will bring together corporate/commercial real estate executives and sustainability professionals who represent over 60 member-client organizations at SR Inc.’s Third Annual Summit entitled, “The Change Driving Sustainability” on November 30th and December 1st at the St. Regis Hotel in Washington D.C.

This invitation only two-day event will feature: sustainability excellence award winners; presentations and case studies of SR Inc.’s 2011 Research Program; panel discussions with Federal agency representatives; and, facilitated sessions to develop SR Inc.’s 2012 Research Program.

Management Best Practice Sessions will include:

Portfolio-wide Sustainability Strategies: What strategies do Real Estate Executives use to resource and create sustainable value. (Includes Innovative Finance for Energy Efficiency)

Benchmarking Sustainability: What sustainability KPIs should Leaders adopt and what are the relevant performance benchmarks.

Sustainable Leased Space: How Leaders move to more sustainable leased space? How Tenants and Landlords systematically implement green leases and what provisions in RFPs, LOIs and Leases are used.

Alternative Workplace Strategies: What AWS strategies are successfully adopted to increase productivity and how can landlord’s best respond.

Working with the Federal Government: What are the best sustainability resources available within the Federal Government and how can Real Estate Executives partner with them.

The collaboration of SR Inc.’s member-clients supported by SR Inc.’s analysts, researchers, consultants and advisors is rapidly driving the real estate industry toward greater sustainability with breakthrough management best practices about ‘what works’ to apply the principles of sustainable real estate strategies across a portfolio that reduce operating expenses/occupancy costs; enhance enterprise/asset value; and align with organizations’ commitment to the environment.

If you would like to learn more about SR Inc.’s Annual Summit III or how SR Inc.’s resources and implementation guidance could help you drive your organization closer to sustainability, contact SR Inc.’s Larry Simpson, Executive Vice President – Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Advisory Services, Sustainability Roundtable, Inc. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/aboutst/blog/)

 


It’s not Rocket Science or Brain Surgery, its Corporate Real Estate Budgeting for Greater Sustainable Outcomes

August 22, 2011

Summertime, right? Time for vacation with family and to regroup before the blur of activity in the post-Labor Day fourth quarter? Wrong.

For most of you, the month of August is about hungering down in a conference room converted, “war room” with co-workers crunching numbers to prepare your real estate budget for departmental and corporate approval.

As you know, the budgeting season can be a tedious process to track down information, project internal charge-back costs to offset expenses, calculate macro interest rates, collect data from various systems and sources, and project/reconcile budget-to-actuals.

But, you don’t have to go visit a rocket scientist or ask a brain surgeon to know we are still amidst difficult financial times for most companies and budgeting is getting more and more difficult. The challenges you face are how to reduce operating expenses and enhance asset/enterprise value. But, now you’re being asked more and more to align the real estate portfolio with corporate environmental goals while achieving an acceptable rate of return.

How are you going to do find monies in your budget to create a sustainability strategy with so much less? The Sustainability Roundtable, Inc. (SR Inc.) and their most recent research just might have some of the answers.

SR Inc., in their report, “Allocating Resources for Sustainable Outcomes” found that:

  • Sustainability upgrades can have a substantial impact on the enterprise bottom-line to reduce operating and maintenance costs, mitigate carbon impact, improve employee productivity and increase asset value.
  • Capital allocations to improve indoor environmental quality can be more cost-effective and create greater enterprise value than energy conservation and efficiency investments.
  • Determining the relevant metrics and qualifying some sustainability key performance indicators (KPI) is difficult but methods are emerging measure intangible benefits.
  • Base financial models such as simple payback and ROI are inadequate to assess the real costs and benefits of most sustainability projects.
  • Energy performance can be benchmarked, monitored and evaluated, and therefore energy efficiency upgrades are high-priority for innovative finance programs.

But, you don’t own all of your facilities and have little control on the pass through expenses from your landlords in your current lease. SR Inc. has conducted some breakthrough research in a report entitled, “More Sustainable Leased Space,” where the adoption of ‘green lease’ language and other measures can help you achieve greater sustainability and reduce occupancy expenses. The research found:

  • To overcome conflicting priorities and the barriers that hinder the move to more sustainable leased space, leading companies develop a strong business case aligned with corporate goals, conduct total lifecycle accounting, adopt “green” leases, and gather data for sustainability KPIs to benchmark internally and externally.
  • Many corporate tenants pursue LEED-CI or BREEAM interiors to reinforce credibility, provide brand recognition and engage employees/clients. To avoid administrative burdens of formal certification but still obtain the benefits, some choose to ‘design to LEED-CI’ but not certify.
  • To achieve cost-effective sustainable leased space and certification, CRE leaders give preference to those buildings that are ENERGY STAR rated or whose landlord has demonstrated a commitment to sustainability.

SR Inc.’s Vice President of Research and Consulting, Irina Mladenova claims, “overestimating certification costs and setting unrealistically high hurdle rates based on a simple payback analysis are typically the biggest barriers in the move towards more sustainable leased space. When real estate executives hire consultants to lower the documentation and filing cost but do not overpay them and when a life-cycle cost analysis rather than a simple payback analysis is used to establish hurdle rates, the additional costs to achieving green building certification is in fact far less (0-2%) than many real estate professionals assume. And, there is an increasing recognition that green buildings result in significant, yet hard to quantify, health and productivity benefits.”

The challenge to find monies in your budget for sustainable real estate is no longer a cost benefit trade-off. The budgeting process may be arduous but, there is clear evidence that you can achieve a more sustainable real estate portfolio by allocating resources where they will have the greatest impact and implement initiatives that are more about changing behavior than being capital intensive. And, besides, budgeting for sustainable outcomes is a heck of lot easier than rocket science and brain surgery.

If you would like to learn more about how you can create a budget with greater sustainable outcomes you can download SR Inc.’s research: “More Sustainable Leased Space,” (http://sustainround.com/research/leasedSpace.php);  and for a copy of “Allocating Resources for Sustainable Outcomes” please contact Larry Simpson, EVP of Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.  who can be reached at larrysimpson@sustainround.com. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/forum/ )


Looking Back at the Top CRE3 Forum Posts in 2010

December 20, 2010

As 2010 draws to a close we want to provide a list of CRE3 Forum’s Top Posts of the year based on page views of our readers.

As you will see they fall into a few key themes of:

  • The impact corporate real estate has on company financial performance
  • Move to sustainability being integrated into CRE strategy
  • Role information systems play to support CRE department objectives

We hope you will take a look at the past posts and use some of the highlighted “best practices” as you prepare your department to support your organization in 2011 and beyond.

The Impact of Real Estate on Corporate Assets and Financial Performance

“The More Things Change in the CRE Industry…” Evolving Trends in the Coming Decade

“GREEN is the New BLACK”…Sustainability Comes to Corporate Real Estate

The Convergence in Corporate Real Estate

How Corporate Real Estate Can Boost Your Company’s Share Price

Solutions to Manage an International Corporate Real Estate Portfolio

Leased corporate real estate portfolios to be overhauled by new accounting standards

Tomorrow’s ‘Workplace of the future’ Impact on Today’s CRE Strategy

Budgeting Season Fodder – Preparing Your CRE Portfolio and Your Department for Performance Measurement in 2011

2010 Midterm Election Results Impact on the Economy and Corporate Real Estate

“You Don’t Pay For What You Don’t Use” — Strategies to address the efficiency, economics and environmental sustainability of your real estate portfolio

Corporate Real Estate Benchmarking White Paper NOW AVAILABLE

Are You Ready? The Role of Information Systems to Develop a CRE Strategy and Support Your Organization

“CRE Information System Tools are Cool but Data Integrity and Business Processes Rule”

Best wishes for a joyous holiday season and the hope for a personally and professionally prosperous New Year!!!


“The More Things Change in the CRE Industry…” Evolving Trends in the Coming Decade

December 9, 2010

As the first decade in the 21st century draws to a close the “CRE3 Forum” offers some insight on trends and changes the corporate real estate industry might anticipate in the coming decade.

While it is likely many of the cited dynamics will occur, some may not and others will emerge but, the most important thing to consider for you as a CRE professional is that change in our industry will happen and it’s your job and responsibility to find out how it will affect your organization. It is more likely there will be a convergence of trends creating complex issues that will impact your role to deliver efficient facilities in the right place at the right time at the right cost.

The companies of which you are employed are counting on you to be the subject matter expert on corporate real estate ready to anticipate and act on the inevitable changes associated with occupancy costs, sustainability and technology among others that are coming in the next few years. Read the rest of this entry »


Budgeting Season Fodder – Preparing Your CRE Portfolio and Your Department for Performance Measurement in 2011

August 3, 2010

While most of the country is enduring record heat, the Brits are “on holiday” and many folks’ summers are beginning to wind down you and your CRE department will be cooped up in FY2011 budgeting work sessions.

Fun, right? Hard work? You bet but, the following are some factors about performance measurement you may want to consider for the upcoming year.

In a recent newsletter article published by UK-based IPD Occupiers, the developers of the International Cost Code, they cited some dynamics that may be utilized when applying performance measurement to your real estate portfolio. And, measuring the value the CRE department brings to your organization:

  • Performance measurement and benchmarking can drive improvement in the short term while these tools can act as sensors to identify the need over the longer term on how to do things different.
  • Effective portfolio management requires vigilance to insure occupancy costs are understood while resources and space is maximized. To achieve this will require an efficient process to capture real estate metrics according to industry definitions including cost, space, resource and environmental performance measurement.
  • There is a growing view that current metrics are not aligned strategy – what is required is clarity of purpose and not more data. At a recent IPD conference, University of Cambridge’s Andy Neely was asked about today’s CRE departments, “they’re drowning in data and thirsting for insight.” He continued, “I don’t think measurement should be used as a control system. It’s much better when it’s used as a learning system. What the data should provide is more insight into what is going on within the CRE organization – so we can see how to make things better.”
  • Information systems have sophisticated capabilities, but when CRE professionals begin to align measurement to strategy there are often gaps between strategy, measurement and reward demanding greater flexibility of performance measurement systems.
  • Performance measurement is now an integral part of organizational life, and part of the management toolkit. Very few CRE/FM professionals will not be involved in some part of the performance measurement process. But the key is what’s being measured not just what is easy to measure?
  • Managing information is about getting the right information to the right people at the right time in order to make the right decisions.

In order to analyze the content of performance measurement systems, IPD has developed the Property Performance Matrix grid which maps five zones of influence for the CRE team – cost, space, assets, the CRE team, and societal impact – against five differentiated performance goals – efficiency, effectiveness, flexibility, service delivery reliability, and sustainability.

It should be possible for all CRE performance indicators (KPIs) to be placed within this matrix. This provides a framework for listing performance measures based on the desired organization outcome and creates an integrated view of CRE performance.  It also provides guidelines for assessing existing scorecards or performance frameworks, and identifying the degree of alignment between strategy and measurement.

A few things are inevitable – the 2011 budgeting process will end at some point; there will be a growing motivation by senior management to demand that your portfolio will be measured for efficiency, regulatory compliance, occupancy cost reduction and environmental sustainability; and the CRE department’s performance will be measured by the value you bring to the overall organization.

Are you prepared to support your organization like never before? Are your systems collecting the right information in order effectively manage the portfolio and the people who manage it? Are you ready for the pending changes to the accounting standards? Can you answer senior management’s critical questions about occupancy cost reduction? Are you prepared to present information about your portfolio’s financial performance to management they didn’t ask for but, should have?

The answers to these questions may make some great whiteboard session fodder during the next few weeks of budgeting sessions. And, may challenge to take a new approach in the coming year.