Disposal strategies in corporate real estate portfolios

Abstract

Owners and managers of corporate real estate (CRE) are continuously facing the challenge of aligning their portfolio to rapidly changing organisational requirements. These changes pressure the decision-making process in order to reach the most efficient financial decisions. Times of innovation and change are associated with re-evaluation of the strategic fit of CRE to core business. This is followed by increased divestment of CRE through various disposal strategies. If parts of a corporation’s portfolio become obsolete, the necessity for interventions arises. There are different management interventions known for realigning corporate real estate with the core business that can add value to a firm. This paper aims to shed light on which interventions can be applied, and aims to answer the following research question: How can the decision-making in disposal strategies in corporate real estate (CRE) portfolios in the Dutch banking sector be improved?This study establishes a toolbox to guide and improve the decision-making in CRE disposal strategies through empirical evidence from the Dutch banking sector, which is characterised by a fast-changing context. This research uses a comparative case study approach to analyse, and compare the data obtained from desktop research and field studies. The desktop research comprises of a theoretical exploration of the concepts underlying the topic through literature review and document analysis. The fieldwork comprises 8 expert interviews with representatives of the selected organisations. The four case studies investigated in this paper represent a market share of approximately 90 per cent of the Dutch banking sector. Two expert interviews, one with CRE, acquisition and facilities managers, and the other with an executive board representative are conducted for each case.The preliminary results of this research indicate a strong relationship between the corporate organisation characteristics, legacy and strategy; the identified disposal drivers and the decision-making in CRE disposal strategies. The weighing of variables and order of steps within the execution of these strategies is largely dependent of the organisational goals and objectives, with the CRE strategy as the embodiment of these. The comparative case study also shows that limited size and the focus on a specific market segment can lead to the in-applicability of disposal strategies, decision-making processes, and theoretical CREM concepts.