Designing the Optimal Organization

• CRE has emerged as a strategic partner supporting business goals, prompting organizations to reevaluate the structure of their CRE functions in light of hybrid work, technology integration and workplace wellness.
• Organizational redesign can face pitfalls such as siloed decision-making, cultural resistance, overlooking new talent needs and underestimating the complexity of integrating with other enterprise functions.
• To fully capitalize on CRE’s potential, companies must possess specific capabilities that enhance strategic vision, data-driven decision-making and change management.

Once relegated to the background, Corporate Real Estate (CRE) is now a critical player in shaping organizational strategy and success. However, as CRE assumes a more prominent role, organizations must assess whether their structures are designed to fully leverage this asset. The traditional approach—where real estate, IT, HR and other functions operate in silos—is rapidly becoming obsolete. Today’s competitive landscape demands a more integrated, strategic approach—one that places CRE at the heart of organizational design.

Corporate real estate is no longer just about managing physical space; it’s about creating environments that drive broader business outcomes. A well-designed office, for example, can enhance talent acquisition, foster innovation and strengthen brand differentiation. Organizations that prioritize the employee experience through strategic real estate decisions often see improvements in productivity, engagement and retention.

Consider the example of a global tech giant struggling to attract top talent in a fiercely competitive market. Analysis of their portfolio showed that their office spaces—once seen merely as overhead—were actually pivotal in driving employee satisfaction and productivity. This realization, shared by many leading enterprises, is propelling CRE to the forefront of strategic discussions.

In practice, this means that CRE must be considered a strategic asset that influences broader business outcomes. When aligned with corporate objectives, real estate decisions can improve operational efficiency, employee satisfaction and effective collaboration across teams. This integration helps reduce overhead and strengthen internal cohesion and performance.

CRE’s influence now extends into several key areas:

1. Catalyst for Business Strategy: Real estate decisions are increasingly essential to achieving organizational objectives. Aligning real estate with strategic goals can drive growth, optimize locations and better position the business within competitive markets.
2. Enhancing Employee Experience: Modern workplaces are key drivers of employee engagement. By aligning with HR, CRE can create environments that attract and retain top talent, driving long-term success.
3. Digital Transformation Partner: The integration of smart technologies in buildings is creating new opportunities for CRE to collaborate with IT, enabling data-driven decisions that can improve operational and overall workplace efficiency.
4. Sustainability and Corporate Responsibility: As sustainability becomes a cornerstone of corporate priorities, CRE can play a central role in reducing carbon footprints and achieving green certifications, supporting broader corporate responsibility and environmental goals.

Several key trends necessitate a reevaluation of how organizations structure their CRE functions:

• Hybrid Work Models: The rise of hybrid work has shifted focus from traditional office arrangements to flexible, multipurpose spaces.
• Technology Integration: The adoption of IoT, AI, and smart building technologies is transforming CRE, offering new ways to optimize space and resources.
• Workplace Wellness: The focus on employee well-being is leading to the design of healthier, more engaging workplaces.

These trends underscore that CRE is indeed at a turning point. The traditional paradigms are being replaced by more holistic, integrated approaches that align real estate strategies with broader business objectives. Organizations that embrace this shift and leverage these trends will be better positioned to create spaces that not only support their current needs but also drive future growth and success.

Redesigning an organization to fully integrate CRE into the broader enterprise presents a unique set of challenges. While the goal of a more cohesive and strategically aligned CRE function can unpack significant value, several common pitfalls must be addressed to ensure a successful transformation.

1. Siloed Decision-Making: In many organizations, CRE operates independently from other key functions such as IT, HR and finance. This siloed approach can lead to fragmented strategies, misalignment and missed opportunities for synergy. For CRE to play its strategic role, decision-making must be integrated. This requires cross-functional collaboration, where CRE is positioned not just as a support function, but as a partner in shaping the organization’s future.

   Recommendation: Establish governance frameworks that encourage collaboration and joint decision-making. This can include cross-departmental committees or working groups that involve CRE in strategic conversations from the outset.

2. Cultural Resistance: Organizational change often encounters cultural barriers, particularly in departments like CRE that have traditionally been focused on operational tasks. Transitioning CRE to a more strategic role involves not just structural changes but also shifts in mindset and behavior. Employees may be resistant to new processes or reluctant to embrace broader responsibilities beyond their traditional roles.

   Recommendation: Implement comprehensive change management strategies that prioritize communication and employee engagement. CRE leaders must champion the new vision. Change agents within the team should be empowered to guide peers through the transition and introduce training programs to build new skills and foster adaptability.

3. Overlooking Talent Needs: One of the most critical mistakes in redesigning CRE is neglecting the importance of talent. As CRE becomes more integrated into the enterprise’s strategic fabric, the function requires professionals who bring new skills in areas like data analytics, workplace strategy and sustainability. Many CRE teams are not equipped with the breadth of expertise needed to meet these evolving demands.

   Recommendation: Conduct a thorough skills assessment of the existing CRE team to identify gaps and future needs. Invest in both upskilling current employees and recruiting new talent with experience in strategic real estate management, data-driven decision-making and organizational transformation.

4. Underestimating the Complexity of Integration: Integrating CRE with other enterprise functions can be more complex than anticipated. CRE’s processes, systems and technologies may not align with those of other departments, leading to delays, inefficiencies and communication breakdowns.

   Recommendation: Approach the integration with a detailed project plan that accounts for interdependencies between departments. Phased integration, where teams test and adjust processes as they move forward, can reduce risk. Additionally, the use of common technology platforms and data sharing systems can help bridge the gap between CRE and other functions.

To avoid the common pitfalls of organizational redesign and to fully capitalize on the potential of CRE, companies must cultivate specific capabilities that enable the department to contribute strategically. These capabilities revolve around strategic vision, data-driven decision-making and change management—all essential to a successful transformation.

1. Strategic Vision: Traditionally, CRE has been viewed as a tactical function, responsible for managing assets, maintaining facilities and controlling costs. However, in today’s fast-evolving business environment, CRE must also play a role in shaping the organization’s strategic direction. This involves aligning real estate decisions with business goals, such as enhancing workplace productivity, attracting and retaining talent and supporting sustainability initiatives.

   Recommendation: Develop a strategic roadmap for CRE that aligns with the overall business strategy. CRE leaders should regularly engage with senior leadership to ensure real estate strategies support broader business objectives. This could include long-term planning around space utilization, workplace trends and technology investments.

2. Data-Driven Decision-Making: The ability to make informed, data-driven decisions is critical. Organizations must leverage technology and analytics to optimize real estate portfolios, improve workplace efficiency and drive cost savings. However, many CRE departments lack the tools and expertise to fully harness the power of data.

   Recommendation: Invest in analytics platforms that provide real-time insights into space utilization, energy consumption and operational efficiency. Data dashboards should be accessible to CRE leaders and integrated with other enterprise systems, allowing for more holistic decision-making. Additionally, consider building a team of data specialists within CRE who can interpret and act on data to drive strategy.

3. Change Management: Organizational change is a constant, and CRE must be agile enough to adapt to shifts in business strategy, employee expectations and market conditions. Effective change management is essential in adopting new technologies, hybrid work models or sustainability initiatives.

   Recommendation: Establish a formal change management framework within CRE, ensuring that all initiatives are guided by clear communication, leadership support and employee involvement. Collaboration with HR and other departments can also enhance the effectiveness of change programs, ensuring that they are aligned with broader organizational efforts.

As CRE becomes more strategic, the demand for professionals with different skillsets is growing. Adopting shared-services models can streamline operations, reduce costs and allow CRE teams to focus on higher-value activities.

• Building the Right Talent: The evolving role of CRE demands new skills not traditionally associated with the field. Expertise in data analytics, workplace strategy, sustainability and change management are increasingly important as CRE becomes more integrated with the broader enterprise.

  Recommendation: Develop a talent strategy that addresses both current and future needs. Partner with HR to ensure recruitment efforts target individuals with the skills required to support the department’s evolving role. Additionally, investing in continuous professional development for existing team members will be key to maintaining a high-performing CRE function.

• Shared-Services Model: Many organizations are turning to shared services to optimize CRE operations. By centralizing functions such as facilities management, technology support and procurement, organizations can achieve greater efficiency and cost savings while freeing CRE professionals to focus on more strategic initiatives.

  Recommendation: Evaluate the potential for a shared-services model within the organization’s CRE function. Start by identifying tasks that can be centralized, such as vendor management or compliance reporting. Implement shared services gradually, allowing time to adjust workflows and build cross-functional collaboration. This approach can help CRE become more agile while ensuring that critical operational tasks are still handled efficiently.

• Efficiency and Cost Savings: In the competitive CRE landscape, efficiency is a key driver of success. By streamlining operations and embracing a shared-services model, CRE departments can reduce operational costs and reinvest those savings in areas that drive greater business value.

  Recommendation: As part of a broader organizational transformation, conduct a cost-benefit analysis to identify areas where efficiencies can be gained through process improvement or automation. Consider outsourcing non-core tasks to third-party providers, allowing your internal CRE team to focus on strategic initiatives that enhance organizational performance.

Corporate Real Estate is no longer a back-office function; it’s a strategic asset that can drive significant business outcomes. However, redesigning an organization is complex and fraught with potential pitfalls. Success requires a clear strategy, the right capabilities and a focus on talent.

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As organizations navigate these challenges, a partner such as CBRE’s Organizational Change and Transformation (OCT) Consulting team can provide the expertise needed to design and implement optimal structures. The OCT team guides clients through this transformative period, helping them navigate the complexities of modern corporate real estate, with a focus on delivering exceptional value, fostering resilience and driving sustainable success.