The Five Overarching Trends Affecting Global Corporate Real Estate
Corporate real estate executives are being asked to do more with less, but CRE leaders have an opportunity to drive productivity and affect corporate competitiveness like at no other time.
Area Development Research Desk (Q2 / Spring 2013)
“We believe with increased risk comes even greater reward,” say the authors of the latest annual report on global corporate real estate (CRE) trends from Jones Lang LaSalle titled “Risks Ahead.” It’s all about understanding the risks and making the right decisions, according to the report. “Those who effectively manage the risks will be rewarded with the opportunity to drive productivity enhancements and corporate competitiveness.”
The report identifies five overarching global trends impacting those who work in the area of corporate real estate: First of all, those in charge are really ramping up their expectations, and the more they expect, the more risk there is that those who manage CRE won’t be able to perform up to those expectations. CRE leaders need to make a step change, and that’s not easy because those in charge haven’t been investing much in their in-house CRE talent lately. Jones Lang LaSalle advises being clear about priorities. “Leverage and partner with your supply chain and create capacity so that you can focus on managing internal stakeholders.”
Secondly, the evolution of CRE outsourcing is happening at a faster pace, thanks to increased demand. The risk is that these external contributions might wind up being undervalued. The answer, according to the report, is to be proactive and partner with members of the procurement team, so they fully grasp CRE and its potential contribution to corporate strategy. “This will reduce the risk of undervaluing relationships with service partners or constraining their ability to deliver over the long term,” say report’s authors.
The third big trend is the potential that workplace transformation offers, when it comes to making a big difference in worker productivity. If there’s enough capital invested in workplace transformation, the impact on corporate strategy and finances can be big, and the CRE team can end up looking great. The risk is that there won’t be enough capital invested to have that kind of impact. The answer is to not be shy about selling the potential to the people who write the checks. “Embrace big data, analytics and performance tracking to demonstrate value. Be clear on what has and can be achieved.”
According to the fourth trend, “CRE must become a collaborative change agent.” There’s plenty of interest in workplace transformation, but the CRE team can’t make it happen alone. It’s critical to work with colleagues in information technology, human resources and finance, among others. The risk here is losing influence as a specialist, and the answer is take the lead and “use real estate and the workplace as the common ground for greater collaboration.”
That brings us to the fifth big trend identified in the new report from Jones Lang LaSalle. Delivering operational platforms in emerging markets can really help drive corporate competitiveness, and not coincidentally, leave the CRE team smelling like roses. But here’s the risk: Failing to deliver in emerging markets can really damage the reputation of the CRE function. The problem is that emerging markets tend to be rather challenging, so the risk of failure is higher than the CRE team might like. The answer is to make sure those in charge have realistic expectations. Don’t be forced to make excuses later; be sure the challenges are known from the beginning. “Educate the business about the challenges of delivering real-estate solutions in less transparent markets. Ensure this is clearly communicated early in the process.”