Corporate Real Estate Strategy Research Articles

From sustainability to adaptation: Goldman Sachs’ corporate real estate strategy

This paper is premised on a conceptual framework that attempts to draw theoretical and practical connections between sustainability, resilience and adaptation. The framework is explored through a case study of the corporate real estate (property) strategies of Goldman Sachs (a multinational investment banking and investment management company) developed over the course of the consolidation and development of its corporate headquarters. This case seeks to identify the existence and nature of the relationships by and between sustainable corporate real estate strategies, resilient operations planning and the firm's adaptive capacity. A secondary proposition seeks to evaluate whether the capacity of the firm to adapt and be resilient to changing conditions has been positively advanced by the firm's sustainable corporate real estate strategies. The findings support the proposition that these connections do exist, as well as the proposition that sustainability was promoting adaptive capacity and operational resilience. However, it remains an open question to what extent these practices and capacities are deterministic of one another. This paper sets the stage for future research that seeks to measure and model organizational adaptive capacity and to understand the potential co-benefits that may serve the interests of firms who struggle to rationalize the costs of sustainability.

Aligning corporate real estate with the corporate strategies of higher education institutions

Purpose– The purpose of this paper is to explore how corporate real estate (CRE) managers of higher education institutions formulate their CRE strategies and CRE operating decisions to align CRE with the corporate strategies of these institutions.Design/methodology/approach– An analytical alignment framework has been developed, which was used to study the possible and actual connections between CRE management and corporate management at 13 large Dutch Universities of Applied Sciences. The data collection included a content analysis of the strategic plans of these universities and interviews with the CRE managers.Findings– The research findings show several layers of how CRE managers aim to align CRE with corporate goals to add value to the organization. It appears that the CRE strategies in-use are more clearly aligned with the corporate strategies than with the espoused CRE strategies.Practical implications– The paper emphasizes the relevance of involving CRE management in corporate decision-making to contribute to the attainment of the organizational objectives with an efficient and effective accommodation.Originality/value– Substantial changes in learning and teaching practices in higher education lead to evolving corporate strategies, which result in the need for aligned CRE strategies and CRE operating decisions. This paper makes practitioners and researchers aware of the differences between alignment-based espoused CRE strategies and alignment that results from CRE strategies in-use in the field of higher education. The findings and insights might be applicable in other sectors as well.

Emerging implications of online retailing for real estate

Purpose – This paper aims to initially explore the effects of online retailing on corporate real estate strategies today, examining current trends and the approaches of leading edge retailers in this evolving marketplace. The UK has the greatest proportion of online sales worldwide. Design/methodology/approach – Context is provided through existing literature, and the methodology considers specific case studies. Information from financial reports, websites and evidence directly from retailers is derived to examine selected sectoral responses (food shopping, fashion retailing and department stores) to online shopping. The research considers the interface between the virtual and physical retail landscapes. Findings – The Internet is undeniably driving change, and large retailers have responded by embracing multi-channel sales strategies in which the adapted physical store remains a central element. Research limitations/implications – The case studies are arguably limited in their market assessment by examining only large retailers, but it is these retailers who occupy much of the real estate space in shopping centres. Data on Internet sales and retail space of individual retailers are not publicly available. This paper offers a qualitative introduction into ongoing research on the evolution of Internet retailing today. Practical implications – For large retailers, a multi-channel corporate sales strategy is enhanced by physical stores that can act as showrooms and collection points and enhance consumer service. Multiple retailers have a competitive advantage in the form of store networks and a recognisable brand that they can exploit to capture the sales opportunities the Internet offers. Originality/value – The paper is the first to collate and analyse corporate real estate strategic responses to online retailing.

An investigation into how corporate real estate in the financial services industry can add value through alignment and methods of performance measurement

Purpose– The purpose of this study is to evaluate corporate real estate (CRE) performance measurement and how value can be added to the core business.Design/methodology/approach– An analysis is made of the appropriate literature and primary research conducted via interviews with 11 senior professionals from three globally renowned companies, one global financial organisation and two corporate advisory firms.Findings– The findings from this research provide evidence that CRE can be used to add value to the core business, both in the physical and behavioural environment. By aligning aims and objectives with the business, continually conducting portfolio analytics, encompassing size, cost, space, retention and productivity, value can be added, maximising shareholder worth.Research limitations/implications– The main conclusions drawn from this study are that CRE can add value to the business. The role of corporate real estate asset managers (CREAMs) needs to change from the physical environment to the behavioural environment, working to increase productivity, which can have greatest impact on shareholder value.Originality/value– This paper provides evidence to suggest that CRE ’s role is not only to manage property but should be broadened to add value to the organisation by aligning CRE strategy with the corporate strategy. Closer interactions with human resource and information technology are required to enhance productivity, via relationship management, perhaps outsourcing to provide best in industry expertise. CREAMs can shape the future of office space, by demanding carbon neutral properties. This paper recommends that further research should be conducted on the measurement of intangibles, like productivity and corporate social responsibility, and how they can be used to add value and sustainable saves.

An overview of steps and tools for the corporate real estate strategy alignment process

Strategic thinking is a continuous process, alternating between thinking, planning and evaluating. Corporate real estate management (CREM) practitioners need to align their strategy and activities with corporate strategy during the entire process that the organisation goes through. Along the way, many different issues need to be considered, and the right tools used to make the right decisions. This paper aims to provide an overview of the strategic thinking process, and to identify important steps to take, and possible tools to use when taking them. First, strategic thinking is discussed and where CREM should start alignment. Then, CREM literature on the activities of CRE managers and possible tools is assigned to the different steps of the alignment process. Finally, an overview is created for CREM in practice to improve strategic thinking and alignment. CREM research has identified and created many tools for CREM practitioners to use to work towards alignment. However, an overview of how to proceed with alignment during the entire strategic thinking process was lacking. This paper contains a first attempt at such an overview. This overview of steps and tools to reach alignment could be used by CREM practitioners to discuss alignment with general management. Hopefully, this will help with receiving more strategic attention and the promotion of CREM departments as strategists in CREM's evolution. Studies on alignment of CREM with corporate strategy tend to focus on one phase of the alignment (either initial alignment or performance management). This paper extends the alignment strategy from initial alignment towards implementation and evaluation, covering the whole process while also providing an overview of existing tools and methods to use.

Managing the workplace in a globalized world

Purpose – The purpose of this study is to provide a better insight into the role of national cultures on the management and design of workplaces of multinationals in different countries. Design/methodology/approach – This explorative study is based on an extensive literature review of dimensions of a national culture in connection to corporate real estate management, interviews with ten representatives of multinationals on corporate real estate strategies and workplace characteristics and a multiple case study of two multinational firms with site visits and observations at offices in The Netherlands, Germany and Great Britain. Findings – Whereas all interviewed companies had their real estate portfolio to some extent aligned to the local national culture, none had a strict central policy about this issue. Differences in workplace characteristics were mainly caused by the involvement of local people in workplace design. Using Hofstede’s cultural dimensions, the case studies showed relationships between masculinity of a culture and the expression of status and between uncertainty avoidance and openness to innovation; however, no relationships were found related to differences in power distance and short-/long-term orientation. Research limitations/implications – The case studies were conducted in three European Union countries. Due to practical reasons, most interviewees were Dutch. Additional empirical research including more different national cultures is needed to advance more unequivocal conclusions and to develop a clear set of guidelines for decision-making. Practical implications – The findings stress the importance of finding a balance between aligning facilities to business purposes and meeting the needs of different (groups of) employees in multinational environments. Originality/value – Although much has been written about national culture, not much research is yet available in connection to facilities management and corporate real estate management.

Lease accounting trouble looms for corporate real estate management

Purpose– The purpose of this paper is to investigate what impact International Financial Reporting Standards (IFRS) lease accounting changes might have on corporate real estate (CRE) strategies, and what the consequences for future corporate real estate portfolio decisions might be.Design/methodology/approach– A macro-analysis based on the constructive capitalization method of Imhoffet al.(1991) is used to determine the potential impact of IFRS lease accounting changes on Amsterdam Exchange Index (AEX) listed corporations. In addition, a series of interviews were held with CRE executives to discuss this impact and with CRE and IFRS experts for general insight.Findings– The impact of IFRS lease accounting seems less severe than expected. Notwithstanding, it could form a serious bottleneck for CRE departments that do not operate on a strategic level. Therefore, IFRS lease accounting changes might act as a catalyst for the professionalization of corporate real estate management departments.Practical implications– The paper provides CRE managers with a manageable insight to alter CRE decision-making processes in relation to IFRS lease accounting. The sample size was too small to make a distinction between different industries.Originality/value– Past research showed that accounting is a potential variable in CRE decision-making, but did not yet clarify the possible impact of IFRS lease accounting on CRE strategies and the relating CRE operating decisions. Besides that, this paper also provides insight for options to cope with the (possibly severe) implications.

Controlling your destiny: Leveraging flexibility and cost certainty in CRE

The challenges and uncertainties of the global economic and political climate create a range of unique and ever-changing pressures and demands for corporations and their real estate portfolios and planning. Radical change in global business models and daily advancements in technology have altered the face of traditional corporate structures. Greater space efficiency is becoming more apparent, with many occupiers focusing on cost control and efficient use of space, rather than expansion. There are new global economic powerhouses — fast-growing, dynamic corporate entities as well as a seismic shift in gross domestic product from emerging economies. All of these evolving developments cause concern, challenges and opportunities for global corporations and, within the corporate real estate (CRE) function, pose the same dilemmas and possibilities. The pressure to align a flexible, adaptable and cost-effective real estate platform to match, or indeed predict, the corporation's next moves is now more critical in terms of its impact on the success or failure of the business. This paper will demonstrate the increasing demand for workspace planning that attempts to reduce the risk and exposure of the CRE function and provide more agility, flexibility and cost control, asking: ‘How can managed, flexible office solutions form part of a CRE strategy?’

Corporate real estate asset management: aligned vision

PurposeThe purpose of this paper is to evaluate the relationship between corporate strategy and corporate real estate (CRE) strategy.Design/methodology/approachThe paper will identify, and evaluate, a number of components that collectively form the CRE strategy. Linkages between the business environment, the aims and objectives of the organisation and the real estate solution will be explored.FindingsThe paper will illustrate the alignment of the CRE strategy to the corporate strategy through the development of a CRE alignment model. The model will demonstrate that only when optimum alignment is achieved can the CRE strategy deliver added value and enhanced organisational performance.Practical implicationsCRE managers can use the model to evaluate the alignment of their CRE strategy with their corporate strategy.Originality/valueThe paper fills a void by proposing a framework that seeks to identify the true impact of real estate to business by examining the benefits of optimal alignment between, planet, position, purpose, place, paradigm, processes and people to produce performance and productivity.

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

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.

Establishing strategic corporate real estate management

Despite being a Fortune 200 company with 117,000 employees in 800 offices in 125 countries, most people still might not know much about the A.P. Moller-Maersk Group (Maersk). But their television, computer or the shoes they are wearing right now are probably transported by one of Maersk Line's 3 million shipping containers, and their car might even be running on fuel produced by a Maersk Oil platform. Maersk is a global company with its headquarters in Copenhagen, Denmark. The group mainly operates in business-to-business (B2B) transactions, where it controls some 17 business units, mostly focusing on two core businesses: energy and shipping. Shipping has a lot of similarities with real estate. Both are very capital intensive and the lead time for supply is typically 2–3 years. Predicting future demand is uncertain and supply/demand thus difficult to balance correctly. With the sudden halt of the world economy in 2008–2009, while supply ordered during the heydays came on the market, shipping rates tumbled 30 per cent. The consequence was Maersk's first ever full-year loss in its over 100-year history and it was clear that leadership would not accept a repeat. Before 2009, Maersk's approach to real estate management was decentralised and there was no clearly defined corporate real estate (CRE) strategy. In light of the economic challenge, however, all sails had to be set to weather the storm. Among a number of strategic initiatives was the creation of a CRE department.

Case study: Implementing large-scale agile working transition in the banking sector

In 2005, as part of its corporate real estate strategy and driven by a desire to realise property cost efficiencies, RBS started the process of introducing Intelligent Working, its own flavour of Agile Working, into its operations in the UK and around the world. While Agile Working had gained significant traction in technology industries over a period of 25 years, where there were positive commercial drivers and few technology barriers, its implementation within financial services has been limited. In financial services traditionally there has been an array of complexities which made introducing Agile Working more challenging and most forerunners of RBS have had limited success beyond pathfinder projects. Regulatory constraints, complex technology and information security and privacy policies are just some of the added complexities that need addressing before Agile Working can be introduced successfully. Possibly the biggest reason for a lack of traction has been the perception by some leaders that there have been no good business reasons to change. From the initial implementation of Intelligent Working which was limited to ‘in-office’ mobile working, RBS's most recent incarnation is now being adopted as a wide-ranging cultural programme embracing all varieties of working, both in and out of the office, facilitated by a true fusion between technology, human resources and real estate, which has given a real business purpose. From a standing start in 2005, well over 12,800 colleagues have adopted some form of Intelligent Working. The challenge now is to make Intelligent Working part of the culture for all RBS's global team of more than 140,000 people, and become simply ‘the way we do things here’.

Globalisation and corporate real estate strategies

PurposeThe purpose of this paper is to examine the impact of globalisation on corporate real estate strategies. Specifically, it seeks to identify corporate real estate capabilities that are important in a hypercompetitive business climate.Design/methodology/approachThis paper utilises a qualitative approach to analyse secondary data in order to identify the corporate real estate capabilities for a hypercompetitive business environment.FindingsGlobalisation today is an undeniable phenomenon that is fundamentally changing the way business is conducted. In the light of global hypercompetition, corporate real estate needs to develop new capabilities to support global business strategies. These include flexibility, network organization and managerial learning capabilities.Research limitations/implicationsThis is a conceptual paper and future empirical research needs to be conducted to verify the propositions made in this paper.Practical implicationsGiven the new level of uncertainty in the business climate, that is, hypercompetition, businesses need to develop dynamic capabilities that are harder for competitors to imitate in order to maintain what is considered a “momentary” competitive advantage. The findings of this paper are useful to guide corporate real estate managers in this regard.Originality/valueThis paper is original in two ways. First, it applies the strategic management concept of capabilities to corporate real estate. Second, it links the key challenge that businesses face today, i.e. globalisation, to the concept of capabilities as a means to maintain competitive advantage.

Accommodating “accelerating” time: the use of timescapes in corporate real estate strategies

PurposeThe purpose of this paper is to introduce the concept of timescape and examine its impact on corporate real estate strategy, i.e. the people, process, space and technology elements of strategy.Design/methodology/approachThis paper utilises a qualitative approach to analyse secondary data in order to develop a conceptual framework of timescape for corporate real estate strategies.FindingsTime is an integral part of strategic corporate real estate management. There are seven key elements that make up the timescape for corporate real estate strategies.Research limitations/implicationsThis is a conceptual paper and future empirical research should be conducted to validate the propositions made in this paper.Practical implicationsThe paper clearly identified the need to incorporate timescape into corporate real strategy formulation. The discussion on the impact of timescape on corporate real estate is useful in providing the impetus for managers who operate in a hyper‐competitive global business landscape to review their existing strategies.Originality/valueThis paper is high in originality as it pioneers the concept of timescape for application within corporate real estate management.

Vertical phasing as a corporate real estate strategy and development option

PurposeThe purpose of this paper is to demonstrate the potential value of significant vertical phasing – that is, the addition of five or more stories to an existing building – as a valuable real option in real estate development, in particular for corporate real estate strategy.Design/methodology/approachThe demonstration is done through in‐depth case studies of four major projects in North America: the 24 story, 880,000 square feet expansion of the Health Care Service Corporation building in Chicago; the Court Square Citicorp Campus in New York City; the Bentall Five project in Vancouver; and the Tufts University School of Dental Medicine building in Boston.FindingsVertical expansion appears to have significant organizational and logistical advantages for corporate developers, such as the ability to keep staff in one building, and the elimination of the need to relocate with its resulting inconvenience and potential to lose employees. Further, the financial analysis indicates that the option to expand vertically is a reasonable way for corporate developers to access convenient expansion space, while limiting their downside risk. Commercial developers on the other hand may find that the ability to scale back designs in the case of market downturns is particularly valuable. The case studies also confirm by example that the vertical expansion of buildings is technically possible. Although the process of erecting a major new building on top of a fully occupied building is clearly complex, it is not extraordinary difficult so long as the possibility of vertical expansion is built into the original design.Originality/valueVertical expansion of buildings has not been appreciated as an attractive feasible option for flexible development of real estate in a risky environment. These case studies and analysis bring this possibility to the attention of the real estate industry and corporate real estate managers.

Sustainable workplaces: improving staff health and well‐being using plants

PurposeThe paper aims to identify and demonstrate the benefits of plants in offices in contributing to employee health and well‐being by applying the study to a working office.Design/methodology/approachVia comprehensive literature reviews, the paper identifies the importance of indoor plants in office environments, firstly through physically improving the air quality and removing pollutants and secondly in improving employee well‐being through psychological benefits.FindingsIt is argued that plants are important in removing indoor air pollutants and in increasing employee perceptions of well‐being. The paper identifies, through literature review, plants with the ability to remove common office pollutants. It shows that there is a general preference for plants in offices through a perception survey and that occupants of planted offices feel more comfortable, more productive, healthier and more creative and feel less pressure than occupants of non‐planted offices.Research limitations/implicationsThe empirical research presented was limited to one office building. Research is now continuing, with the survey currently being completed by occupants of various offices throughout the UK.Practical implicationsThe paper argues that indoor plants should become an integral part of corporate real estate strategies and that they have potential to alleviate sick building syndrome symptoms.Originality/valueThis paper provides an insight into how plants can be incorporated within corporate real estate strategies to improve employee health and well‐being and improve perceived productivity. It brings together two separate strands of research into the benefits in physically improving air quality and the psychological benefits of plants to humans.

Corporate Real Estate Strategies and Financial Performance of Companies

This study analyzes the relationship between Corporate Real Estate (CRE) strategy and the financial performance of major companies in the UK for two time periods, 1998 and 2003. The identification of specific CRE strategies is based on the seminal work of Nourse and Roulac (1993). The results indicate that more than 75% of the companies examined had a CRE strategy that could be mapped to the Nourse and Roulac framework and that certain CRE strategies made a contribution in enhancing the financial performance of companies. The relationship was stronger for companies in 2003 than for 1998. This was tested for both share price and profit margin as the dependent variable. This study concludes that CRE strategy can make a limited contribution to company financial performance.

Integrating human resources management and corporate real estate strategies

Integrating human resources management and corporate real estate strategies

Corporate Real Estate Strategy: The Malaysian Perspective

This study analyses the relationships between corporate real estate (CRE) strategy and financial performance of companies in Malaysia during 1998 and 2003. The identification of CRE strategies is based on the work of Nourse and Roulac (1993) and maps these strategies to the financial performance of companies through multivariate models. The results indicate that 80% of the companies had a dominant CRE strategy that matched the Nourse and Roulac framework in both periods. For the 1998 analysis, there was no apparent link between CRE strategy and share performance. Indeed those companies not having a strategy had better share performance. In contrast, there was evidence of a CRE strategy making a contribution to share price in 2003. In particular, the strategy to facilitate managerial process and knowledge framework is shown to enhance financial performance, compared to other CRE strategies or the no strategy alternative. This study concludes that CRE strategy can make a positive contribution to financial performance, but needs more attention from management in order to maximize its potential.

Corporate real estate and competitive strategy

PurposeThe purpose of this paper is to investigate how organisations use a corporate real estate strategy to support their competitive strategy. It provides a theoretical and empirical overview and analysis of effective combinations of firms' real estate and competitive strategies.Design/methodology/approachThe paper constructs a model that integrates three real estate strategies and three types of competitive strategies. Case studies in ten multinational firms in The Netherlands apply the model, and describe and analyse the combinations of the firms' real estate – and competitive strategies.FindingsA standardisation real estate strategy supports all three competitive strategies: lowest costs, differentiation, and focus. A value‐based real estate strategy supports a competitive strategy of differentiation and differentiation‐focus, and does not contribute to a competitive strategy of lowest costs, or lowest costs‐focus. Finally, an incremental real estate strategy is ambiguous, and does not support any of the three competitive strategies.Originality/valueThe paper constructs a literature‐based model that combines real estate strategy and competitive strategy. It applies the model in a study of ten cases. Practitioners can use the model to analyse and reconsider the combination of their organisation's real estate strategy and competitive strategy. Academics can use the qualitative research results to design further research that qualifies and quantifies the relationship between various elements of real estate – and competitive strategy.