A test of corporate real estate strategies and operating decisions in support of core business strategies

Abstract

If firms want corporate real estate resources to add value to the firm, they must align corporate real estate strategies and decisions with core business strategies. This research uses data from a survey of corporate real estate managers to test a theoretical model of how a strategic approach to corporate real estate management adds value to the firm. The relative importance of alternative strategies among firms of difference sizes operating in different industries during an economic recession is also examined. Correlation analysis indicates good fit; that is, most firms are following a consistent set of real estate strategies to support either Revenue Growth or Profitability Growth, which lends support to the theoretical model. In addition, most firms are making office space decisions consistent with a strategic corporate real estate management approach rather than resorting to ad hoc real estate decisions during the recession. A majority of the firms are pursuing profitability through cost reduction, productivity and flexibility, rather than revenue generation, focusing on survival during the economic downturn. Kruskal–Wallis H tests of significant differences among the rankings of the strategies and follow-up Mann–Whitney U tests indicate that larger firms are more likely to be reducing costs during the recession.