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/)

 


What do home offices, airport terminals, cafes, and office touchdown areas all have in common? — they are all important spaces in today’s alternative workplace solutions.

July 14, 2011

As part of an overall sustainability strategy, leading companies are innovating beyond traditional workspace practices and are evaluating shifts in the location of work, hours of work and schedule of work hours.

At a recent Client-Only meeting of the Sustainability Roundtable, Inc. (SR Inc.), new research on “Integrated Alternative Workplace Strategies” (AWS) was presented that found:

  • Changing demographics, advances in technology, new business needs (24/7 service), globalization trends, and environmental considerations influence the move to greater mobility and accelerate the adoption of AWS.
  • Leading companies implement AWS to reduce real estate operating costs and carbon footprint; retain and recruit top talent; increase human capital outcomes; enhance real estate and operational agility; and enhance their brand.
  • Executives follow an iterative process to plan, implement, and evaluate AWS to maximize benefits.
  • Executives deploy AWS on company-wide level after making a compelling business case, aligned with business goals, ensure departmental integration (RE, HR, IT, EH&S), conduct initial assessment, and test pilots.
  • Executives integrate AWS into their company’s sustainability strategy; adopt options customized to meet their business goals and organizational culture to enhance sustainable value creation across the enterprise.

The organizational readiness of companies to adopt AWS differs and this impacts the level of employee mobility they are ready to embrace. SR Inc. classifies AWS into four types of solutions based on the level and mode of mobility:

Internal Mobility – working and moving within a dedicated office, group workstations, open office, and hoteling

External Mobility – working across multiple offices of the same company or home-based work, remote/satellite offices, and telework centers.

Virtual Office – full mobility and third places of cafes, libraries, airports, and client sites.

Fourth Generation Office – fully furnished flexible offices worldwide with outsourcing office and equipment provision to 3rd parties. I.e. Regus, Metro Office, Workspace Group

SR Inc.’s research included case studies from American Express, AT&T, Cisco, GSA, Nortel and Oracle that highlighted lessons learned of:

  • AWS aligns workplace and technology with the way employees already conduct work.
  • Proactive stakeholder engagement is critical. This includes a cross‐functional team with start-to-finish support from RE, HR, IT and the C-suite and engaging employees.
  • Building a legitimate business case, includes RE, HR, IT, and EH&S perspective as well as a real employee value proposition.
  • Technology is available, mature, and effective. It is expected to advance significantly in the next several years, and therefore, companies can design for maximum IT flexibility
  • Formal, comprehensive assessments of the program helps determine what works within the unique company’s context in order to make appropriate adjustments and maximize benefits.

As much as organizations are looking to AWS for the inherent benefits it is important to anticipate the needs to facilitate face-to-face interaction that can stimulate team building and knowledge exchange.

SR Inc.’s Senior Sustainability Analyst, Irina Mladenova, says, “companies across industry sectors find it necessary to revisit their workplace strategies to accommodate evolving working needs. Those who are unwilling will find it challenging to retain top talent, improve collaboration and innovativeness, and ensure low costs. One issue executives still struggle with is capturing space utilization accurately and attributing real estate and GHG footprint optimization or reduction specifically attributed to AWS. Another issue that companies still need to address more directly is how to adapt standard AWS practices company-wide level to local culture and practices.”

If you would like to learn more about how AWS could become part of your company’s sustainability strategy, feel free to download the Executive Summary of the “Integrated Alternative Workplace Strategies” at http://sustainround.com/research/AWS.php.

(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 »


The Impact of Real Estate on Corporate Assets and Financial Performance

November 19, 2010

Who says corporate real estate doesn’t deserve more care, attention and a strategic management approach?

For some time now you may have heard CRE consultants and service/technology providers refer to corporate real estate as the “2nd or 3rd largest asset on a company’s balance sheet” to justify the need for value-add advisory services, energy efficiency initiatives or investment in technology.

But, until now, have you ever really looked at the details? The facts will alarm you and quite likely challenge you to take a closer look at your own assets to see how they might be managed more effectively.

Below is a chart highlighting the real estate value of 11 companies in the “Fortune 500” (#1 – #10 and #500 as a comparison) listing them based on the percentage of net assets (less depreciation and operating expense) of their ‘Property Plant and Equipment’ (PP&E) on total assets. The source information was gathered through an informal review of the balance sheets of these company’s 10-K SEC filings for 2009.

FORTUNE 500 – Ranking Based on Percentage of Net Property Plant and Equipment Assets
Fortune 500 Ranking*   All Figures Stated in Millions+        
Rank* Company       Property, Plant and Equipment (PP&E)
Revenue+ Profit+ TL Assets+ % of Total Net PP&E+ MSF
3 Chevron $163,527 $10,483 $164,621 58.60% $96,468  
1 Wal-Mart Stores $408,214 $14,335 $170,706 58.31% $99,544 959.67
6 ConocoPhillips $139,515 $4,858 $152,588 57.48% $87,708  
2 Exxon Mobil $284,650 $19,280 $228,052 53.21% $121,346  
7 AT&T $123,018 $12,535 $268,752 37.24% $100,093  
500 Blockbuster $4,162 -$558 $1,538 16.19% $249 20.05
8 Ford Motor $118,308 $2,717 $197,890 12.43% $24,596  
10 Hewlett-Packard $114,552 $7,660 $114,799 9.81% $11,262 77.00
4 General Electric $156,779 $11,025 $781,818 8.85% $69,212  
5 Bank of America $150,450 $6,276 $2,223,299 0.70% $15,500 125.60
9 J.P. Morgan Chase $115,632 $11,728 $2,031,989 0.55% $11,118 80.60

While real estate does not formally appear in the financial statements as its own line item, it is included in the PP&E section which refers to fixed assets, also known as non-current assets (financial institutions refer to PP&E as Premises). These are items of value which the organization has bought and will use for an extended period of time. PP&E fixed assets normally include: land and buildings; motor vehicles; furniture; office equipment; computers; fixtures/fittings; and plant machinery and often receive favorable tax treatment (depreciation allowance) over short-term assets.

Our hypothesis is that a company can create a significant impact to its financial performance and enhance total assets when they:

  • Reduce operating expenses through lower occupancy cost initiatives;
  • Decrease the size of the CRE portfolio through collocation, space efficiency, use of alternative workplace strategies and dispose of non-core assets; and,
  • Gain greater energy efficiency of facilities through effective sustainability initiatives.

Read the rest of this entry »


Corporate Real Estate’s Role as an “Engine of Growth” in Community Development

November 5, 2010

In doing some research for a recently published post about the midterm election’s impact on the economy and corporate real estate, I came across some fascinating information about the evolving life needs and desires of today’s workforce.

Given the hopeful assumption the economy is showing signs of recovery (based on recent indicators of consecutive months of profitability, stock market gains and increases in consumer spending) it may mean that companies will begin hiring new employees.

In order to be competitive to retain and recruit top talent, companies would be wise to respond to the new dynamics employees are interested to find in the organizations in which they work. Office environments that incorporate highly productive work spaces located in close proximity to amenities that cater to the quality of life of the individual. Amenities such as healthy eating choices, recreational wellness centers/health clubs, residential developments, and convenient retail offerings all located within walk-able proximity vs. car-dependent locations.

In this way, corporate tenants in office parks and urban developments can take on the role as ‘anchor retailers in a mall’ where they could seed mixed use, ‘towne centre style’ developments. These collections of newly developed corporate office buildings or renovated urban settings could generate lifestyle-related development critical to attracting highly desirable employees. Expanding companies can offer communities the impetus to trigger growth and development while creating workplaces on trend with the “office of the future.”

This type of development would create the traditional ‘win-win-win’ scenarios of: a win for the company in creating employee-friendly environments to retain/attract top talent where productivity is fostered; a win for the employee who can satisfy their desire for live/work/play areas in close proximity with one another; and, wins for communities starving for the revenue that comes from stimulating new development or revitalizing existing areas.

The key to making this type of development and ‘engine of growth’ a success is the collaboration of all relevant stakeholders. The lack of investment capital to fund projects for a commercial developer that can bring together all of the components may not exist just yet but, through private/public collaboration of office developers, retailers, commercial developers, and public officials (to provide monies for the infrastructure and assistance to qualified companies) the private sector companies could play an pivotal role to trigger self sustaining economic and community growth.

Progressive CRE professionals could serve as their company’s representative in ‘towne centre’ development and leverage the amenities being created by other entities. One example might be a company who wants to develop a health club for their employees may reach out to existing providers who might be interested in locating a facility in near proximity to their location.

The axiom in economic development is that every private sector manufacturing, technology or services related job can create 4-5 additional jobs in the retail/restaurant industry. This would mean that collaborative developments could become the platform for meaningful growth and vitality in urban districts and communities.

But, it starts with a company who has the vision and desire to take its place in a community and be the ‘engine of growth.’

What are your thoughts about how corporate real estate’s role in stimulating economic growth?


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

September 1, 2010

What is your organization’s corporate real estate occupancy costs per employee? $1,000? $5,000?

According to discussions at a recent meeting of the Carolinas CoreNet Global Chapter the 300 participants cited their companies were spending $8,000 to $12,000 per employee.

Chances are it’s much higher than that when you include all of the 250+ categories that comprise the total cost of occupancy (TCO). Given the cost’s impact on your organization’s bottom line there are a number of evolving dynamics of the “workplace of the future” that will offer benefits of higher worker productivity and lower your TCO today.

Some of the steps you could incorporate into current CRE strategy that will anticipate the new “workplace of the future” include:

  • The standard 250 SF/employee cubicle may be no longer viable given the cost of new construction against a growing workforce
  • Replace the rows of individual cubicles with better lit yet smaller (110 SF) cubes with more open work areas for team members to interact with one another and feel more productive
  • Expand the use of WiFi networks throughout the office environment so workers can collaborate and share anywhere in your office
  • Design ‘Starbucks style’ spaces with pleasing colors and curved lines, soft music, multiple seating options (inside, outside, small table, large table, cushion chair, firm chair, sit down table, bar stool table, etc.) that create a heightened “sense” about the employee
  • Create meeting areas with raised tables without chairs which generally create a more engaged person and can dramatically reduce the length of a meeting and get people back to work faster by avoiding the conventional “one hour meeting” that shouldn’t take longer than 15 minutes
  • Build your brand through the design of spaces that incorporate your company’s logo, mission, quotes on walls to create ambassadors for the company – when employees embrace its core mission and values, employees from around the corner and across the globe engage more quickly
  • Relocate perimeter executive offices that typically block all the light and move them to the core of the building to open up larger windows to make better use of natural light
  • Enhance worker’s work-life balance by creating a workplace that extends employees’ time with amenities like a gym, rooms for nursing mothers, on-site cafes offering healthy foods – organizations that embrace amenities that give employees options to help them balance their lives will demonstrate that the health of their workers is a key contributor to employee retention and hiring
  • Move your entire portfolio of future workplaces toward sustainability by conserving energy – both of the employees within an office and for the physical building systems themselves.  Incorporate window shading technologies that manage heat gain and loss for an office building, as well as cutting glare on computer screens that can cause headaches and eyestrain for employees. Replace traditional HVAC systems with individual under floor air units that can be controlled by employees and give them flexibility over their own temperature and comfort, while also help lower an office’s overall power consumption.
  • Go “green” with paints, fabrics, carpeting and office furnishings and finishes designed to be biodegradable and made with low- or no-VOCs. In addition, technological advancements will allow workers to store paper files on-line, mitigating the need for extensive file storage.

In its Office of the Future: 2020 Survey and Report, staffing agency OfficeTeam identified several technologies that will alter the workplace of the future, including:

Sensory-recognition software – Computers in the future will increasingly be able to respond to voice, handwriting, fingerprint and optical input.

“Knowbots” – These future programs scan databases to filter and retrieve information for users. For example, the program could summarize key points of a report, and deliver an e-mail and voicemail to the device a user is working on.

Smart devices – Computers will use algorithm-based programs to learn the relationships between words and phrases, creating a smoother interface and enabling users to conduct more effective information searches.

Miniature wireless communication tools – These future devices will combine the personal computer, phone, fax, scanner, electronic organizer and camera all in one.

Wireless everywhere – Users can connect to the office in taxis, in buses, on planes, in parks, in building lobbies or even on beaches.

Interactive office spaces – By 2020, offices will be embedded with sensors that monitor and maintain the environment, including temperature, humidity and lighting. For example, a sensor in a desk chair could detect back tension and signal the chair to give a massage.

Virtual conferencing technology – Offices may be equipped with walk-in facilities outfitted with wall-sized screens that project 360-degree views of videoconference participants.

Automated business process management – Collaborative software will streamline the process by which teams work together on documents, eliminating the need for email as the means of document transmission and sharing.

By factoring in the many dynamics of the ‘workplace of the future’ as part of your current CRE strategy you and your department can create office environments that will enable greater worker productivity, enhance recruitment/retention of top talent, and, most importantly, reduce your total cost of occupancy through more energy efficient facilities.