In many organisations, Corporate Real Estate Management (CREM) has been purely transactions-based for too many years, primarily focusing on decreasing short-term unit costs. In reality, Corporate Real Estate Management is much more than that. Here are the 6 Corporate Real Estate Strategies that can add value to your business - if you just let them.
Traditionally, the focus within Corporate Real Estate Management has been cost minimisation and short-term results rather than a long-term business strategy. However, intensifying outward pressures and changing business environments are forcing companies to pay more attention to non-core operations.
Although, the return from a supporting activity might be lower than the return from the core business, there is no doubt that these supporting activities may provide other forms of value.
The following six strategies of adding business value through modern Corporate Real Estate Management can surely contribute to the transformation of real estate from being a mere “cost of doing business” to a true value generator.
1. Increasing the value of assets
This first strategy involves viewing properties as capital assets that can be managed and optimised to grow – adding a significant financial contribution to the overall organisation. The objective here revolves around either: maximising the value of a current property portfolio, selecting desirable locations or even redeveloping obsolete properties.
2. Promoting marketing and sales
Secondly, Corporate Real Estate can add value by selecting locations that attract customers, employees, investors and other stakeholders to the organization for either recruitment or business activities. Furthermore, the design of a building can help support the company’s branding and business values.
3. Providing room for innovation
Even though the emphasis on increasing innovation may be a less familiar real estate strategy, facilities that encourage and support innovative thinking are key. Here it is crucial that the space inhibitors take part in planning spaces and providing insights into which type, size and workspace design creates an inspiring working atmosphere. In turn, this will lead to increased financial returns.
4. Emphasizing employee satisfaction and productivity
The level to which employee satisfaction can be increased depends on decisions related to site selection, workplace design, facility amenities and environmental standards. Undoubtedly, organisations that make workplace decision based on increasing employee satisfaction can expect to increase financial returns through greater production, efficiency, innovation, lower rates of absenteeism and much more.
5. Growing flexibility
Flexibility can be viewed both in terms of the facility’s workspaces as well as location. More and more organisations are reforming their work teams, allowing for more flexible working hours, which creates a new set of requirements for the flexibility or adaptability of an office environment. On the other hand, if market conditions change, then there is a need for some companies to be ready to exit or vacate a market quickly.
In both cases, the shifting demands from a space can obligate an organisation to pay for a space that is not optimal for its operations.
If workplace and workspace flexibility is a key driver for a business, then a real estate strategy that focuses on providing flexible space that matches the duration of business needs will support the organisation’s core strategy and add value to the organisation.
6. Reducing costs
Reducing costs is probably the most familiar Corporate Real Estate strategy of all. Naturally, cost reduction in any area has the most direct and immediate impact on the financial performance of any organisation.
The most well-known real estate operating decisions in this context relate to the returns associated with outsourcing real estate services. Other methods that businesses can consider include: co-locating business units, occupying green buildings and choosing location based on governmental incentives.
Costs can always also be reduced by negotiating lower rates for real estate related services and utilities or increasing quality and timing of facilities maintenance to avoid costly repairs and capital expenditures.
While all of the strategies mentioned above can add value to any business, it is important that the decisions made around Corporate Real Estate Management are directly linked to the strategic objectives of the business across levels. At a minimum, the corporate real estate staff must possess knowledge of the core business and understand how to best communicate its contribution to the organisation in a language that the top decision makers can understand.
Would you like to know more about how corporate real estate can add value to your organisation? Download our vision 2020 White book: New Ways of Working – The workplace of the future.