Now Is The Time for Stronger Corporate Real Estate Governance
October 26, 2023 3 Minute Read
Corporate real estate should no longer be viewed as just a physical space to conduct business. Today, it is a strategic asset that drives productivity, talent acquisition and retention, culture and brand image. Structuring corporate real estate for these goals requires thorough research of market trends, economic conditions, industry-specific requirements and even demographic shifts. Best-in-class organizations establish a real estate governance program that considers both immediate and future needs, viewing strategic real estate planning as more than simply a financial assessment.
Governance Organization Design
The strongest corporate real estate governance programs have a multi-team hierarchy with unique but integrated purposes.
Strategy Team: This group includes key enterprise-level members with insight into strategic plans, so they can align the real estate strategy with the firm’s strategy to best achieve enterprise performance goals. This higher-level planning is shared with mid-level leadership. They use it to guide their agendas and ensure other business or functional agendas do not conflict with the real estate strategies.
Regional and Business Work Teams: Larger organizations may need regional or business working teams to create an integrated, cross-functional approach. This group can approve, prioritize and resource specific initiatives that materially advance KPIs and priorities from the strategy team. These initiatives are identified and developed by evaluating business real estate requests and through analysis of portfolio performance–then either approved or denied based on fit with the overall real estate strategy. Any specific action or request outside this team’s authority is escalated to the strategy team for approval or planned for the next fiscal year’s budget.
Analytics Team: Data analysis is used to develop opportunity sets for each team contributing to the priorities and goals set by the strategy team. An analytics team achieves this by identifying, sourcing and managing a set of appropriate data tools that are fit for the purpose. They collect, maintain and analyze data using a model that is adaptable to the changing priorities of the larger organization. Standardizing the analysis helps the team build trust in the data through repeatable and reproducible processes and outputs.
Stronger Governance Empowers Your Organization
Organizations that operate with a well-defined approach for governing real estate strategy and tactical decision making are better positioned to leverage their real estate to achieve market advantages. A thoughtfully developed set of real estate goals that are well integrated with business strategies creates synergy and efficiency, allowing the entire real estate organization to elevate from order-takers to proactive managers of the real estate portfolio. The result is a virtuous cycle of organizational development that drives continuous improvement of the real estate portfolio’s efficiency and effectiveness.
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