Corporate real estate practice in Australia

Abstract

PurposeThe purpose of this paper is to investigate the corporate real estate (CRE) practices of 25 major corporations in Australia. It will study such areas as, what constitutes CRE, the performance measures used in CRE practice, CRE management units, planning horizons in CRE, owned and leased CRE, outsourcing policies for CRE, use of benchmarking measures to assess the performance of CRE, use of “gain share” practices in CRE operations, use of flexible CRE practices and the role of cost or profit centres in corporations.Design/methodology/approachA data base was established using 25 companies (corporations) taken from the top 200 listed in the Australian Financial Review. Contact was made with the companies and interviews were carried out to obtain the relevant data. As well as the annual reports for the companies were analysed over the last five years to extract the necessary financial and additional property data.FindingsThe conclusions indicate that there is a great disparity between corporations. This may indicate that certain classes/types of companies do not need the CRE assets that others do. It may also indicate, as previously supported by other research, that some companies fail to capitalize on the potential of their CRE assets to increase overall return and in the long run increase shareholder value. It also revealed that most companies are disposing of property in an attempt to enhance shareholder value. This is reflected in new and innovative ways of financing CRE and moving CRE off the balance sheet.Originality/valueThis study represents the first attempt to extract data direct from company balance sheets and then carry out interviews to assess the role of CRE in company policy.