Chapter 10
Transforming Real Estate Delivery Models for a New Era
10 High-Impact Moves to Reduce Total Cost of Occupancy
5 Minute Read
Conduct a comprehensive organizational review to explore globalizing your model, consolidating providers, eliminating shadow positions and right-sizing organizations.
As companies around the world implement their return-to-office policies, Corporate Real Estate & Facilities (CRE&F) leaders are reflecting on their own organizational effectiveness and realizing they are not always fit for purpose. Many CRE&F teams are still organized based on their company’s pre-pandemic priorities and workplace initiatives, but expect to deliver post-pandemic outcomes.
For instance, CBRE Institute research1 reveals that today’s top priorities of corporate occupiers include major cost savings initiatives, carbon reduction, employee experience and portfolio reduction. These may require creating change-agent positions, such as Net-Zero PMOs, Workplace Consultants, Change Management Experts and Portfolio Strategists.
Tight corporate budgets make it difficult to hire additional senior leaders on the internal CRE team. Moreover, as they begin to execute post-pandemic transformation initiatives, CRE&F teams are being challenged by the fragmentation of their traditional service provider delivery models. CRE&F’s ability to achieve bold results is constrained by variations in delivery across geographies, incomplete data and reporting and inconsistent service functions (e.g., transaction management, facilities management, project management, communications).
Many CRE&F leaders believe no service provider can “do it all” everywhere in the world. On a global basis, this has led to delivery models comprised of a complex collection of service providers (and technologies) serving different geographies, functions and asset types. CRE&F teams have had to balance a need for heightened strategic focus with the management, governance and integration of multiple suppliers that operate with different technology systems. This leads to separate and siloed functional processes and data sets—resulting in an inability to view the portfolio in a holistic manner.
While appropriate at one time, the traditional, fragmented service delivery model is no longer viable. There are a handful of premier global, full service real estate firms like CBRE that are uniquely positioned to solve these challenges.
1 CBRE Institute & CoreNet Global: CRE Management Practices Emerging & Established Trends, Q1 2022.
CRE&F leaders who have integrated delivery models in place have a head-start on implementing post-pandemic initiatives—such as TCO reductions—without delays from fragmented delivery.
How to Begin?
CBRE Institute’s guidance is to step back and reflect on the following:
- Purpose: What is the mission of the CRE&F team?What are enterprise-level goals and how is CRE&F aligned to the business?
- People: What is the role of the internal CRE&F team? Is it strategic, tactical or both? Where does CRE&F draw the outsourcing line? Should CRE&F have a shadow organization for governance?
- Place: How is CRE&F organized globally? Is CRE&F organized by function, geography or LOB?
- Partnerships:What is the “extended enterprise” with CRE&F’s outsourcing supplier partner(s)?How does CRE&F view integrated delivery, including technology and reporting? Can the supply chain be consolidated for savings and diversity? Should CRE&F consider Scope 3 carbon emissions?
- Platform: What is the technology platform (e.g., applications, data, analytics)? Does CRE&F have access to holistic reporting that can be mined for insights? How is this filtered for LOBs?
- Complete a gap analysis inclusive of a “vision state,” referencing the above categories. For any challenging areas, refer back to the company’s purpose as the North Star.
Why Now?
CBRE Institute has never had so many requests for CRE organizational benchmarking. Many CBRE occupier clients are revamping their internal organizational structures to better tackle post- pandemic transformation initiatives.
Working with a global service provider to create real estate delivery models for a new era—with complementary roles and responsibilities, clear delegation of authority and end-to-end operational processes—will reduce bottlenecks while improving speed and compliance.
Further, CRE&F leaders who already have integrated delivery models in place (i.e., integrated team, services, analytics, processes) have a head start on implementing post-pandemic initiatives and are not held back by fragmented delivery models that hamper many of their peers.
High-Impact Examples:
- Global Financial Services Client: €200 million total cost of occupancy reduction after three years of integrated term
- Global Industrial Client: $124 million in run-rate savings achieved over the past two years
- Global Telcom Client: $40 million savings achieved in first 18 months
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