CIOs at the Forefront in Real Estate Decision-Making

Lightning-speed advances in technology continue to bring great opportunities for business, from new options for product and service creation and delivery, to facility efficiencies, to incredible connectivity. At the same time, a shifting corporate topography - punctuated by the volatile economy, stepped-up mergers and acquisitions activity, and the continued globalization of business - is creating new core business drivers.

Within this context, chief information officers (CIOs) and their information technology departments have taken a front seat in the strategic decision-making process. As such, they now play a critical role in commercial real estate portfolio planning and optimization, working to ensure that their organizations' business strategies are aligned with the best overall real estate decisions.

Consider corporate contraction and expansion over the past five years. The economic downturn created an immediate and pressing need for companies to safely position themselves on all fronts. Everyone was in a freefall, and reducing operating costs became the most critical issue. From the real estate side, this included a requisite to clearly understand the bottom-line impact of the leased and owned space within their portfolios and, in many cases, to optimize utilization through consolidation and disposition of surplus, non-core space.

Now, as the economy improves, there exists a significant increase in mergers and acquisitions activity, as well as a renewed drive toward global expansion. This has again forced rapid changes in real estate needs. Certain sectors - including technology, pharmaceutical, and telecommunications - have exploded as frontrunners into the global marketplace, in many cases through aggressive acquisitions.

At one time, corporations and their real estate services providers would find a preferred location and then worry about fitting out the space. However, at today's pace, the need for comprehensive planning across disciplines and business units (IT/HR/CRE/security/network communications) at the outset is imperative.

When we as real estate services providers sit with the c-suite today, we are looking at a huge number of variables driving facility planning. Among them, technology is arguably the most critical. Which technologies are the companies using? How is technology involved in the production and marketing of goods? How would the availability of technology infrastructure impact operational expansion into new geographic locations? How can technology facilitate seamless integration of a global real estate portfolio?

Accelerated Globalization and Technology
As an example, Cushman & Wakefield currently is working with a number of clients in the telecommunications, electronics, and computer industries. In a still relatively uncertain economic environment, these companies must anticipate their industries' next moves and proactively plan for their success. Many are acquiring other companies and, more importantly, repositioning their core businesses. We are helping their real estate and IT professionals as they work to be nimble and proactive in optimizing their real estate portfolios.

In many cases, these companies' growing business units are driving them to places where they have never before done business or have had a relatively small presence. They are operating in relatively unknown frontiers, having to anticipate and ensure that labor availability and their physical spaces, infrastructure, supply chain, and business continuity plans (see "Critical Partnering of IT and RE in Business Continuity Planning ") complement core business drivers. In many cases, these drivers are still developing, and in almost every case this is all happening at warp speed.

We are seeing an especially high level of accelerated globalization in emerging markets like China and India. There, our clients are working to align their physical occupancy of leased or owned space with the ability of their businesses to thrive. And when it comes to infrastructure, communications capabilities and electrical grid strength and redundancy have become as important as water and sewer in today's high-tech world.

Real Estate Service Providers Respond
Just as corporate real estate executives and CIOs have taken on increasingly important and interrelated roles at the c-suite level, commercial real estate service providers have also evolved to accommodate today's technology-reliant business world. Real estate service providers such as Cushman & Wakefield, for example, are engaging high-level technology offerings to help clients address growth and complexity within their portfolios.

For instance, a global client company selected a handful of real estate services providers (including our firm) to represent their interests on a worldwide basis. As a result, the company successfully secured best-in-class representation and service delivery by region. However, it did not have the ability to link these providers to ensure seamless, consistent reporting and adherence to the organization's strategic corporate real estate objectives. A global technology platform within which all of the providers could operate was needed. Cushman & Wakefield subsequently employed a nonproprietary, web-based application to bridge the gap between this organization's providers, and wrapped the platform around its full scope of services.

The system employed integrates directly with the organization's enterprise technology. It houses leased and owned portfolio planning information and serves as a document repository, including everything imaginable - from scanned leases and abstracts, strategic plans, and aerial photos, to status reports and powerful dashboards for KPI (Key Performance Indicator) reporting, and much more. Information can be duplicated in the associated region's native language and English, depending on availability of documents. Most importantly, this tool is available on a 24/7 basis to all service providers globally for centralized, consistent global tracking and reporting. Advances in technology have enabled the company's corporate real estate group to operate more effectively, and therefore support its business objectives as a global evolving-market leader.

Ultimately, it is incredibly interesting - if not a bit overwhelming - to look at how the economic cycle, real estate, and technology are all interwoven. Through the past five years, we have seen the negative, the positive, and everything in between throwing companies into accelerated decision-making processes in a risky business environment.

Technology will continue to push forward at an unfathomable pace, creating opportunities that we cannot even begin to anticipate. However, we can say with certainty that the role of the CIO has become indelible on the Frontline when it comes to real estate strategy and implementation. It is also fostering a whole new level of partnership and deeper involvement for commercial real estate service providers.