Creating Resilience

Corporate Real Estate Team Organizational Design

By: Su-Zette Sparks & Beth Forstneger

June 4, 2024 5 Minute Read

InstituteArticles_OrgDesign_Hero

CBRE Institute

CBRE Institute’s mission is to continue the advancement of the real estate and facilities profession through regional summits, thought leadership and client engagement.

Learn More

Creating a Purpose-built CRE Organization to Enable Transformative Business Outcomes

As CRE leaders are increasingly asked to balance cost with driving employee experience, operating models and capabilities can lag these new expectations. Shifting from a transactional to a strategic function influencing business outcomes requires an organizational model built for the company’s context and culture. With a foundation of aligned purpose and empowered teams, this new model ultimately will drive a cultural shift toward more resilient organizations.

This article explores trends and insights to enable CRE leaders to build high-performing teams that deliver on business strategy by understanding different operating models, improving organizational effectiveness and driving the case for change.

Redefining CRE’s Purpose: From Transactional Function to Strategic Partner

With 89% of Corporate Real Estate & Facilities (CRE&F) leaders listing enabler of the core business as the primary role of CRE, leaders must rethink their organizational design model. CBRE’s recent survey shows 66% of CRE&F leaders anticipate near-term organizational changes to better align with this mission. Increasing partnerships with functional groups like HR and IT further illustrate how CRE&F is helping to support talent recruitment and retention, decarbonization and risk mitigation. Despite this, cost management remains a priority, especially amid economic uncertainty. Because real estate is generally the second or third-largest expense for a corporation, CRE&F’s focus on financial stewardship will continue.

The number of CRE&F leaders who view their role as an enabler of business success has more than doubled during the last five years.

Figure 1: How would you describe the primary mission and priorities of your CRE&F organization? Please select your top 5 objectives.

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

Figure 2: Is the CRE&F organization anticipating any organizational changes during the next 12 months? Please select all that apply.

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

As CRE leaders redefine how their teams deliver on these imperatives, key considerations and themes are emerging:

Figure 3: What innovative/transformational initiatives are CRE&F pursuing or planning to pursue in the next 12 months? Please select all that apply.

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute 2023; CBRE Org Design & Transformation Voice of the Customer Survey, December 2023.

CRE Organizational Design Themes

  • Governance and Reorganizations: The migration of CRE leaders, efficiency and outsourcing area driving the optimization of CRE teams.
  • Value Proposition: Order-taker to strategic advisor. The growing dynamic between cost stewardship and employee experience dominates this conversation.
  • Level of Centralization: CRE continues to centralize for efficiency and scale, coupled with a decentralized delivery model for local execution.
  • Capabilities and Succession: Future of work is driving new capabilities in AI, change management, relationship management, agile space and business and financial acumen.

Key Principles of High-performing CRE Organizations: Purpose-built for Context and Culture

CRE organizational structures should align with and reflect the overall enterprise structure and operating model. High-performing CRE organizations exhibit the following principles:

Five Principles of High-Performing CRE Organizations

  1. Business alignment through CRM role and processes focused on business outcomes.
  2. Strategic partner aligned to the internal team, focused on integrated, business-centric execution.
  3. Efficient and effective delayered structure and processes; optimized supply chain through a strategic partner.
  4. Technology enabled, with business-centric analytics and insights.
  5. Internal team and service partner operate as one team with the same priorities.

Figure 4: Which of the following best describes CRE&F’s current and future approach to Business Unit Client Relationship Management (CRM) and Portfolio Planning?

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

Figure 5: How does CRE&F engage with partner functions (e.g., HR, IT, procurement, legal, finance, HSE, etc.)? Please select all that apply.

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

Figure 6: Which of the following is the dominant organizing principle for the CRE&F organization?

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

Traditional CRE Organizational Models

  • Function-Dominant: A functional approach works best with portfolios with homogeneous property types. Highly efficient, a functional model avoids management duplication and allows for a universal process to be scaled and repeated globally.
  • Geography-Dominant: The functional center of excellence (COE) plays a vital role, allowing for regional autonomy while ensuring global consistency in key areas. Many of the largest organizations are organized by geography.
  • Asset-Type-Dominant: Less common and less popular than other models, an asset-dominant model is frequently used by plant operators that desire universal outcomes for their portfolios.
  • Line-of-Business-Dominant: Less common and less efficient; this model is sometimes used by organizations with distinct departments or service lines that operate independently.
  • Hybrid Approach: Allows organizations to globalize and standardize their needs. It is Increasingly employed for major portfolio initiatives with one COE driving the initiative and delivering on the strategy.

The most frequently observed trend is a COE overlay to current operating models—both centralized and decentralized—and a desire to create a consistent experience for hybrid workers, design guidelines, project/change management and brand and culture.

Figure 7: Which of the following best reflects CRE&F’s management structure?

 
Source: Managing Corporate Real Estate: Leading and Emerging Practices, CBRE Institute, 2024.

Getting Started: Driving the Case for Change With a Clear Call to Action

Far too often, teams start their organizational design journey by adjusting an organizational chart. This approach rarely yields effective results. There should be a case for change—transforming your organizational design must begin with a purpose and drivers, which will determine capabilities, roles and how work gets done between teams. From here, the structure will naturally follow. CRE leaders embarking on an organizational design journey must recognize the areas they can influence and that moving just two or three of these levers can have a significant impact.

CRE Change Levers

  • Purpose and Value of CRE: Defining the why, for value to the business is now a priority.
  • Succession Strategy: Proactively build the next generation of leaders by upskilling current employees or hiring people from non-traditional CRE backgrounds, e.g., management consulting and technology.
  • Customer Relationship Management (CRM): Yesterday's CRM demands new competencies for future CRE functions.
  • Governance: Drive the conversation through strategic levers like data, process and decision rights.
  • Alignment and Performance: New ways to measure effectiveness with the business.
  • Capabilities: Teams must continually evolve and adapt to meet current and future needs, e.g., influence and change management.

Regardless of how well an organization is designed, leaders must secure buy-in from key stakeholders along the way to achieve their expected outcomes. Lasting transformational success requires aligning organizational behaviors with evolving strategic objectives along with a thoughtful, purposeful change management program tied to the drivers of organizational behavior.

Empowering people and organizations to deliver the best results for their customers is the endgame, and success can only happen with the right space to support it. CRE leaders are ideally positioned to align people, process and portfolio in a radically changed work model.

Contacts

Item 0 Item 1

Explore More Insights from CBRE Institute

Item 0 Item 0 Item 0 Item 0 Item 0 Item 0 Item 0 Item 0 Item 0 Item 0