Originally published in the November/December 2015 issue of THE LEADER—“More strategic.”It’s clear that a more strategic role for corporate real estate is needed for the future of business enterprise. But, what does it look like? How do we get there?
And, who will carry that torch? Will it be today’s leaders, ushering in the change on the weight of their long-term experience, or young corporate real estate (CRE) executives, having migrated from other business areas or industries, with broad – if not specifically relevant – training in new approaches?
And, in what new kind of environment will they be executing their roles?
Only one thing seems certain: Things are changing rapidly.
“When I entered the business, the real estate function operated in a silo,” said Trex Morris, who leads EY’s Global Real Estate Services team. “It’s clearly no longer a silo. Corporate real estate is getting a whole lot broader in scope and connected with the other functions that support the business.”
The CRE position, Morris said, is becoming more aligned and connected with IT, HR, treasury, procurement and communications. “Change-management capabilities are finding their way into CRE as part of workplace transformations.”
It widens, however, in unison with credibility.
“The real estate professionals being successful now are demonstrating true value,” Morris added. “We’re no longer talking about a seat at the table; it’s recognized.”
At EY, Morris said the emphasis on real estate as a contributing function is sizeable. “It has a huge impact on the productivity of our people, recruitment and retention, branding and future cost structure of the organization. Real estate has got to be strategic and, as the commitments and strategies implemented, have a long-term impact on the business longer.”
Ginny Gibson, a Henley Business School professor at the UK’s University of Reading a nd a leading CRE educator, agrees that it’s delivering on value – not just “solving property problems” – that defines the successful, new CRE professional. “If there is anything different in their skill set, these people in the more strategic roles,” she said, “it’s that they have demonstrated their real business understanding.”
Wanted: Metrics, Vision, Data
That real understanding of business will shape future CRE job descriptions, which already frame the CRE role in business terms that might not have been accurate in past decades.
Forward-looking companies want real estate metrics tied to key performance indicators (KPIs), for example. They want CRE managers to implement best practices around standard work in negotiating leases or dealing with legal issues. They see a more guide-lined, utilitarian approach to overseeing property and/or facilities management, ultimately carried out by service providers because corporate teams themselves are lean.
The more sophisticated CRE job descriptions increasingly hold that executives keep the real estate portfolio right-sized to meet business needs, disposing of excess holdings quickly to maximize efficiencies and reduce tax liabilities. Leading CRE executives of the future have excellent communication skills and have developed strong relationships, internally and externally. Underscoring their contribution in the value stream, they provide management with critical reports that are rich with data.
“There’s much better data-informed decision-making,” Gibson said. “We look at metrics, key drivers, KPIs, and ask, ‘Are they growing? Shrinking? How are they growing?’ When you get into the DNA of the organization, you think, ‘It’s not just another property deal; it’s, what’s the right deal for this organization at this time?’”
At EY, Morris said, most any CRE next step, such as workspace planning, typically starts with data. “We have access to more data than we’ve ever had,” he said. “Engagement data, utilization data, retention data, profitability data; we can measure things down to the location.”
Add some innovation
Morris and Gibson are both resigned to the fact that corporate real estate might not be considered the “sexiest” of the real estate disciplines. But there’s no reason it can’t be an area for exercising originality.
Peggy Withrow, senior director of workplace services for BRG, working onsite at Google, said she sees more client companies requesting innovative approaches to solving CRE problems, approaches that can allow practitioners to take some creative risks.
“Managing customer relationships effectively, developing a trusted partnership and mastering the ‘power of persuasion’ will continue to be important skills,” Withrow said, “but we need to look beyond our traditional methods to help companies realize the full value of their real estate assets.”
Withrow encourages more Google-like strategies.“Be brave to experiment with something new.
Be curious and creative; discover new ways to solve a problem,” she said. “Explore how new technologies such as data visualization and predictive analysis, robotics, biometrics, drones, Google Glass, iMotions® can help shape the services we provide and influence how we are valued within our organizations. If you are passionate about what you do, it will drive innovation and ensure continuous advancement of our profession.
“CRE will not be able to advance unless we push the boundaries of our current service models,” Withrow added. “‘Business as usual’ just doesn’t cut it anymore.”
Hiring presents challenges
One area of innovation is that of recruiting for CRE positions the kind of people who can lead the industry in new directions. Under increasing pressure to deliver more and in more strategic ways, the one doing the hiring is often forced to scout unchartered territories for new faces to the field.
Sometimes, that territory is on the outside.
“Working with and hiring talent outside the traditional disciplines provides us with different perspectives and learning opportunities,” Withrow said. “It’s important to support and engage others that offer diverse viewpoints, backgrounds and perspectives; variety stimulates our minds and allows us to do our best work.”
One reason for focusing externally, Morris said, is obvious – there simply aren’t enough good people in the CRE profession to go around.
“The depth of real estate isn’t where it needs to be,” he said, “not only on the corporate side but on the service-level side, as well. It’s because we‘ve got lots of markets that are still ramping up, that are truly emerging. In markets where things are good, they’re a wanted commodity.”
To attract and retain the best and the brightest CRE professionals at EY, Morris said, the company sends a strong message about being an employer of choice to people capable of providing sound real estate advice to key stakeholders around the globe.
“We typically look for experience that brings talents and skills to add to our existing team,” Morris said. “Our jobs are high-level, interacting with our senior executives around the globe. They’ve got to be able to listen to our stakeholder needs, develop strategies, provide options on execution and execute flawlessly.”
Nothing dictates, however, that diversity in the CRE workplace can’t be strengthened.
“We’re not as diverse as we need to be as an industry,” Morris said, adding that EY focuses on ensuring that with its global footprint its CRE employees represent their native ethnicity. “At EY, we value diverse views and inclusive leadership. We leverage our differences to achieve better business results because it is only by working with a global mindset that we’re able to achieve the goals we have set out for ourselves.”
One dimension of diversity that would play well in the CRE workplace, Gibson said, is that of hiring more women into CRE roles. That’s because compared to other functions of commercial real estate, corporate real estate plays to women’s strengths with regard to collaboration, business skills, and the politics of the environment. “It’s a much more consulting-based environment,” Gibson said,
Other Key Factors
In addition to the kind of work product CRE professionals will deliver and what the CRE team is likely to look like in the future, significant changes are expected with regard to the type of environment in which the CRE professional of the future will work.
Already, we witness technology, particularly the mobility it provides, having a significant impact on the work environment. Spaces are becoming more collaborative, and the CRE professional’s day-to-day job increasingly focuses on attracting and appeasing the younger and more mobile employee.
Imagine going even further to planning space according to the nature of employees, Gibson said. “The big challenge is,” she said, “how do you keep reinventing new types of spaces? The right kind of environments? Even, for example, to the point of introverts vs. extraverts? The workplace must think about that.”
Other factors are external and harder to control, such as geopolitical influences. In the European Union, for example, austerity agendas have a huge impact on corporate space planning.
“There’s a huge initiative at all levels of government to save money,” Gibson said. “One way we do that is to think very differently about the ways we work and also how we deliver services differently.”
Thus, it comes down to being more strategic.Said Gibson, “There’s a much more thoughtful approach to understanding what the accommodation requirements are than there used to be.”
Molly A. Badgett is a commercial writer and marketing-communications consultant with a professional background in journalism, public relations and corporate communications. She has a journalism degree from Brenau University and an MBA in marketing from Georgia State University, and currently is on staff at both alma maters as an adjunct professor of business communications.