bluuebunny/crossref_metadata_2025 huggingface dataset:
Flexible space solutions: An opportunity for occupiers and investors
Authors: O’Roarty Brenna
Published: June 2007

The introduction of more flexible lease terms within the structure of commercial leases in the UK generates a number of challenging issues for investors, occupiers and their advisers. This emerging structural change requires a new approach to the management and pricing of commercial real estate. This paper examines the factors underpinning the desire for greater corporate agility, including business planning and risk management; globalisation; and existing and proposed changes to accountancy standards. In addition, the paper considers innovation in the supply of space and the substance of space contracts. It is the contention of this research that it is possible for all parties to derive equal utility from greater flexibility by matching occupier and investor requirements. However, any attempt to price the risk reallocation rationally must encapsulate the likelihood of experiencing greater income volatility as well as the probability of a break clause being exercised or, more specifically, the risk of experiencing costs associated with voids and re‐letting.
CRE portfolio management: Improving the process
Authors: van der Schaaf Pity , de Puy Lydia
Published: June 2007

Many corporate and public real estate managers are challenged to prove their added value to both the organisation and the individual business units or departments. Value can be added by product and by process. This paper elaborates on ways to improve the corporate real estate portfolio management process in order to align the real estate portfolio to the different needs of the organisation and thus add value to the organisation by delivering a better product. To manage the real estate portfolio as a group instead of individual properties, the long‐term portfolio strategy should be translated into short‐term guidelines and clear performance measures in order to analyse alternatives and the performance of the individual properties. These measures should be related to what the stakeholders consider to be the added value of corporate real estate. The examples in this paper will show how a corporate real estate manager can create a clear framework for making real estate decisions on a day‐to‐day basis.
Accounting for leasehold property in the UK: A triumph of substance over form?
Authors: Holt Andrew , Eccles Timothy
Published: June 2007

This paper is concerned with accounting for leasehold property. While property professionals are familiar with commercial and technical aspects of leases, recent proposals offer serious implications beyond the notional historical reporting of an entity’s financial position. Current proposals issued by the ASB will markedly impact upon the financial position reported by businesses holding leasehold properties, with consequent effects upon their reported profitability and their ability to raise finance. This paper examines the current position, whereby leases are regarded as either a finance or an operating lease. It then examines the conceptual framework in which accountants view the existing lease reporting provisions, examining the unease the current provisions cause. Finally, it discusses the most recent proposals and offers a commentary upon responses to them. It concludes with a warning to the owners and users of leasehold property to be ready for change ‐ or to make their voices known.
Internal rents and corporate property management
Authors: Cock Robert , French Nick
Published: June 2007

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from more efficient use of space. Good management of corporately owned property assets is of equal importance to the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. First, it requires the occupying department to ‘contribute’ an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as an individual profit centre, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint: by charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. rents by UK‐based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10 per cent of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition. This paper investigates the use of internal
Optimising real estate financing
Authors: Krzysko Greg , Marciniak Claudia
Published: June 2007

This paper discusses ways that corporate real estate managers can use creative financial structuring to optimise their real estate portfolios. The corporate real estate manager can most effectively arrive at an optimal decision by
considering three perspectives: the corporate real estate market, business unit needs, and investor preferences. After gathering the relevant information and evaluating the pros and cons of the full range of financial structures, the real estate manager can make a sound recommendation to the business unit and the finance department. The manager knows that the solution is acceptable to the marketplace, can provide flexibility in the event of a changed business model, and provides the space at the most reasonable cost.
Intuitive retail modelling: Does science have anything to offer?
Authors: Fenker Richard , Zoota Juli
Published: June 2007

In the world of corporate real estate, there are as many intuitive methods for decision‐making as there are real estate executives. Some executives may use comparisons of new sites to existing sites. Others have a checklist of characteristics that sites must have in order to be a ‘go’. Still others examine neighbourhoods around sites to determine if they will be successful. The current paper takes a look at the intuitive ways that real estate executives make decisions and demonstrates how scientific modelling mimics these decision strategies.
Corporate real estate: Its role in maximising shareholder value
Authors: Hill Matthew
Published: June 2007

A significant proportion of corporate real estate tends to be owned by corporate occupiers for historic reasons. This may be as a result of financial planning, the use of property as a hedge against inflation or the chance of capital gains from property redevelopment. Very often, however, property has accumulated through pure inertia or lack of management focus. Consequently, for many companies, real estate is not adding shareholder value and it is perceived to be ‘an operational pain’. This paper focuses on how corporate occupiers can manage the contribution their operational properties make to shareholder value.
Energy procurement in a deregulating United States ‐ Part 1: The strategies
available to corporate occupiers
Authors: Hagy James , Flynn Chris
Published: June 2007

The advent of retail deregulation (liberalisation) in the United States electricity markets provides major energy users, for the first time, significant choice in energy procurement. With choice comes responsibility for sorting the wide range of potential services, associated risks, and variables in price. As deregulation has progressed, the emerging market has not yet reached maturity for retail consumers, resulting in significant price volatility and imbalances in supply in some regions. This paper, presented in two parts in this and the next issue of the Journal, explains the fundamentals of energy choice for commercial and industrial energy users and the criteria to be considered in making long‐term energy commitments.
The future role of the property director
Authors: McNamara Mike
Published: June 2007

This opinion piece speculates on the past, present and future roles of the senior property professional against a backdrop of the day’s economic imperatives and the proliferation of innovative property services within and without the large corporate occupier.
What’s working? Briefing and evaluating workplace performance improvement
Authors: Bradley Stephen J.
Published: June 2007

Organisations cannot effectively implement advanced workplace strategies and investment projects without clearly communicated vision, prioritised objectives and appropriate performance metrics. With any business strategy and investment project, the objectives and metrics selected will combine both quantitative and qualitative elements and aim to achieve both internal and external impact. This multidimensionality of objectives indicates the use of a balanced scorecard system of measurement. This paper argues that a coherent evaluation and feedback system should be an integral part of any workplace change programme, and that time and expenditure should be budgeted for learning from prototyping or piloting, review, adaptation and communication of feedback. Without such a learning loop, real estate professionals will fail to convince business leaders of how changes in corporate workplaces contribute to business success.
User participation and the role of information and communication technology
Authors: Dewulf Geert , van Meel Juriaan
Published: June 2007

Office workers are hardly ever involved in the design of their buildings. Buildings, therefore, do not match the needs of the users. Today, more and more designers and managers are involving users in the design process. This paper describes different approaches to user involvement and the way ICT can be useful for each level of involvement. ICT can be used as a tool to inform users, to facilitate the participation of users and to create commitment. The paper ends with a discussion on when and how user participation and ICT should be used.
Workplace mind shifts
Authors: Joroff Michael L.
Published: June 2007

Digital technologies allow people to change the workplace in a fundamental way. The connectivity enabled by these technologies has opened new opportunities for how, when, and where people work. Those opportunities, when exploited,
can help organisations be more effective in their use of human capital. Capturing these opportunities requires a mind shift whereby corporate real estate professionals perceive things differently‐and then act differently. That mind
shift should challenge established values and assumptions about where value gets created as well as where people work and how people connect with others. The mind shift should, in turn, lead workspace professionals to rethink their approaches to workplace design, and stimulate new organisational patterns for creating, justifying and continuously improving workplaces and enterprise‐wide workplace portfolios. Pioneering work by SunMicrosystems and Hewlett Packard is showing the way. Other workplace professionals can effectively follow if they harness the connective power of technology as an integral part of workplace design. That design should begin with the work that needs to be done; create the best package of physical and cyber space to do it; and evolve as work requirements change.
Survival strategies for corporate real estate in uncertain times
Authors: Cooke Howard
Published: June 2007

As major economies throughout the world gradually pick themselves up after 2001’s downturn, what are the prospects for the UK property industry? Is it safe to say that it has avoided the plunging values experienced in the
early 1990s recession and what can corporate occupiers be doing to ensure survival in uncertain economic conditions?
Assignment vs subletting: Do you care which you use? Why?
Authors: Skinner Philip G. , Schear Abe J. , Katz Seth S.
Published: June 2007

From time to time, clients ask counsel and brokers about the pros and cons of using an assignment versus a sublease to effect a transfer of possession and a transfer of obligations with respect to leased premises. With about equal frequency, questions come up regarding the differences between assignments and subleases, and ‘whether those differences really make a difference’ after all is said and done. While assignments and subleases are both means to achieve substantially similar ends, they do yield different legal and business results. The purpose of this paper is to explain and discuss some of the similarities and some of the distinctions between assignments and subleases, both from a legal perspective and from business and practical perspectives, and to discuss some of the reasons that the different parties involved in such transactions may prefer, or wish to select one of these transaction forms over the other.
Bucking e‐commerce trends: A content analysis comparing commercial real estate brokerage and residential real estate brokerage websites
Authors: Henderson Kenneth V. , Cowart Lary B.
Published: June 2007

The real estate industry is an e‐commerce anomaly. Although the overall growth of ecommerce is driven by the business‐to‐business sector, the majority of real estate e‐commerce is derived from its retail‐oriented residential sector. This study examines the structure of residential and commercial real estate websites, with the goal of determining whether some patterns of content might increase the quality and quantity of information available to buyers and sellers thereby contributing to the disparity between residential and commercial real estate e‐commerce growth. The results of the research show residential real estate websites offer richer informational content than commercial real estate websites. No significant differences are found for the user friendliness and functionality (ie ancillary services) provided by residential and commercial real estate websites.
What makes for effective organisational architecture in corporate real estate? Going beyond reporting structure and sourcing decisions to considering strategic design issues
Authors: Miciunas Gary
Published: June 2007

What makes for effective corporate real estate and facilities management (CRE/FM) organisations?
Beyond reporting structure and sourcing decisions, the CRE/FM organisation must consider the relationship of four strategic design issues: (1) Relevance to the enterprise, (2) Process and measurement, (3) Knowledge and information, and (4) Credibility and accountability. This paper provides an overview of these key issues, which must be considered in designing organisations responsible for corporate real estate and facilities management.
Corporate real estate risk management and assessment
Authors: Huffman Forrest E.
Published: June 2007

This paper analyses the inherent risks associated with corporate real estate (CRE).
First, the author looks at corporate risk in general and at the context in which CRE decisions are made. Next, the types of risk generally inherent in CRE usage are examined, beginning with development risks and then grouping other risks into three categories: financial, physical and regulatory CRE risks. Possible risk management strategies are offered, to reduce the risks associated with CRE usage: due diligence, avoidance, insurance, hedging and diversification. Lastly, conclusions and recommendations for accounting for risk in corporate real estate management (CREM) are provided. The discussion of the risks inherent in CRE usage offers a starting point for future and more detailed discussions of the risk in CREM and provides a new perspective on the management of CRE assets.
Continuous quality improvement through post‐occupancy evaluation feedback
Authors: Preiser Wolfgang F. E.
Published: June 2007

Over the past 30 years, both the governmental and private sectors have made use of a feedback mechanism, which helps improve the quality of environments: post‐occupancy evaluation (POE) or similar systematic processes, which gauge the satisfaction with, and importance of, the designed and built environment. How does this process work, what kind of input does it require? What value, if any, does it add to the core business of an organisation? When should it be carried out, and how should the resulting data be used in enhancing the quality of existing and future buildings? Who should commission POEs and who should be in charge of developing databases, which can be used for benchmarking and the development of building performance criteria for future projects? What is the cost of these POEs in relationship to the benefits to be derived? All of these questions will be addressed in this paper.
The application of BREEAM in corporate real estate: A case study in the design of a city centre office development
Authors: Holmes John , Hudson Gordon
Published: June 2007

Buildings are a substantial contributor towards CO2 levels, and design methods to make buildings much more energy efficient are evolving. In the UK, the Building Research Establishment Environmental Assessment Method (BREEAM) has been in operation for over ten years. The scheme is intended to produce a label that distinguishes sustainable developments in the marketplace. This paper uses an in‐depth case study to examine the role of BREEAM in the design and marketing of a city centre office development. The influence of BREEAM in the design process and among the designers is seen as significant, but its influence in the property market is not explicit. The paper concludes that internal environmental conditions are increasingly important to occupiers, but evidence of sustainable development being led by the market is not observed in this case study.
Restructuring corporate real estate and facilities in mergers, acquisitions and consolidations
Authors: Kessler‐Park Rachel , Butler Scott D.
Published: June 2007

Corporate mergers, acquisitions and major divisional consolidations put high‐profile, fast track demands on corporate real estate and facilities groups to: (1) reformulate site and facilities portfolios to support new global business goals and objectives; (2) implement the programs and projects needed to restructure these portfolios; and (3) take a global approach to site and facilities utilisation and management for the new merged entity. This paper will set out a comprehensive framework and process for determining and evaluating merged or consolidated site and facility plans, deciding on optimal strategies, and scoping out the tasks needed to make it all happen.
Mitigating corporate real estate liabilities by managing both sides of the landlord and tenant equation: The Reluctant Landlord® scenario
Authors: Cooke Howard
Published: June 2007

As the property market falters, corporate occupiers are increasingly finding themselves in the uncomfortable role of ‘The Reluctant Landlord®’, with surplus property and subtenants. When you are facing both sides of the landlord‐tenant equation, what strategies can you use to limit the damage to cash flow and to avoid the costly legal pitfalls awaiting you if you get it wrong?
Challenges and opportunities in aligning real estate and the workplace with business strategy: A survey of
leading CEOs
Authors: Allard Lucy E. , Barber Christine
Published: June 2007

The following paper contains the results of a global benchmark survey conducted among more than 200 CEOs from some of the world’s ‘Most Admired’: leading Fortune 500 and Global 500 companies. The survey was
designed to identify, from the perspective of the CEO, practices that are essential for effective
execution of corporate strategy. In all, 34 practices were studied to determine which are most important to strategy execution. Relocation of a corporate headquarters, or other major facility, and redesign of the workplace were two
of the practices considered in the research. By including relocation and redesign within the larger context of strategy execution ‐ one that considers a broad spectrum of operational, market and organisational dynamics ‐ the
relationships between real estate, workplace and other essential practices could be uncovered. The results show that real estate and workplace design do synchronise with, and contribute to, the success of changes required in other areas
that are critical to execution, making it important for companies to examine closely the impact of real estate and the workplace on company strategy. The results also confirm CEO awareness of the strategic value of real estate and workplace
design, since all who reported relocating or redesigning the workplace did so in order to execute strategy. More significantly, however, the findings reveal that a high percentage of CEOs who reported carrying out a move or a
redesign did not perceive that these changes effectively contributed to strategy execution. While the explanation for this finding is beyond the scope of this study, it does suggest one of two things: either real estate and workplace professionals need to master a better understanding of how to align real estate strategy with business strategy in order to add value; or they need to be able to measure better the value and communicate it to the CEO.
Making environmentally challenged deals work: Tools to manage risk and unlock value in contaminated real estate assets
Authors: Mason Jerome E. , Pearlson Jonathan Z. , Puga Roberto R. , Houldin Scott C.
Published: June 2007

Corporate asset managers are increasingly confronted with the escalating costs, regulatory pressures and disclosure requirements associated with the ownership of contaminated real estate. Corporations historically have been reluctant to
sell, or even engage upon site investigation for, their contaminated or potentially contaminated real estate assets. Traditional efforts to address these concerns raise complex legal issues and fail to define or limit liability. Efforts to remediate these properties have often led to projects with ever increasing costs and, in the end, more lingering liability than many corporate directors had been willing to accept. New strategies and management tools are available to assist corporate real estate managers with identifying which environmentally affected real estate assets may be ripe for sale. Similarly, environmental insurance is being considered with increasing frequency as a tool to mitigate risk and facilitate the sale of contaminated and potentially contaminated property. This paper explores, with concepts and examples, how corporate real estate managers can effectively implement these tools to unlock value from underutilised real estate assets.
Considering corporate real estate and human resource factors in an integrated cost model
Authors: Becker Franklin , Pearce Arthur
Published: June 2007

As large organisations grow and evolve, they face the challenge of accommodating change in a manner that contains costs while strengthening the firm’s competitive position in the marketplace. Invariably, not only initial capital and long‐term operating costs, but the effect of the real estate decision on the firm’s ability to attract and retain staff, and their ability to work productively, must be considered. To compound an already complex decision, the factors influencing such decisions are often highly uncertain and there are limited data on the impact of such decisions on human resource factors. Yet such decisions must be and are made. This paper describes the Cornell Balanced Real Estate Assessment model (COBRA©), a prototype tool which addresses these issues.
The irony of investing in tenant improvements in leased space Freeing up capital from tenant improvements through Credit Tenant Note Financing
Authors: Dewey John , Yiu Joseph
Published: June 2007

Every day, landlords and tenants are confronted with the dilemma of financing tenant improvements. Both parties see financing tenant improvements as a necessity. The landlord sees his tenant improvement investment as a necessity to consummate leasing transactions, while the tenant sees its tenant improvement investment as a necessity to build out vacant space. But at the end of the day, the investment dilutes the balance sheet for both parties since tenant improvements are non‐earning depreciating assets with no residual value. This paper introduces a new financing methodology for tenant improvements that take both the landlord and tenant out of the business of financing these non‐earning assets.
The agile workplace
Authors: Joroff Michael L. , Porter William L. , Feinberg Barbara , Kukla Chuck
Published: June 2007

Workplace agility is emerging as the highest priority for the providers of workplace services and infrastructure. ‘Agility’ means continuously improving work and the infrastructure that enables it. An agile workplace is one that is constantly transforming, adjusting and responding to organisational learning. Agility requires a dynamic relationship between work and the workplace and the tools of work. In that relationship the workplace becomes an integral part of work itself ‐ enabling work, shaping it and being shaped by it. This paper focuses on defining workplace agility and discusses the triggers that prompt agile workplace making. Strategies for creating agile workplaces are discussed and the idea of ‘rehearsing’ change is introduced. This paper is excerpted from ‘The Agile Workplace’, which introduces the business and technology forces that drive and enable agile work. The report includes chapters about change management, organisational responsibilities and performance metrics.
Biotechnology leasing: Special issues in leasing laboratory space
Authors: Puleo Grant
Published: June 2007

No matter the size or scope of a biotech laboratory project, neither landlords nor tenants should rely on traditional ‘form’ documents to address the many complex leasing issues unique to this industry. When negotiating and
documenting a biotech lab lease, five clauses warrant particular attention. ‐ Construction of tenant improvements:
Build‐outs of lab space can be highly specialised and elaborate. Tenants will require detailed involvement in design
and construction of improvements while landlords may limit, to the extent possible, tenant improvements to those that are
financeable, resuable and ‘generic’. ‐ Security deposits: Greater security in the form of a deposit and letter of credit may be required to balance the potentially higher risks and longer terms of many biotech laboratory leases. ‐ Hazardous materials: Most biotech laboratories will work with hazardous materials. Specially tailored lease provisions can help limit liability and mitigate the potential costs of removal, remediation and litigation.
‐ Building services and utilities: Biotech users may require high levels of heating, ventilation and air conditioning (HVAC), plumbing, electrical and janitorial services. Lease provisions for services and utilities should be tailored to the unique intended use of biotech premises. ‐ Assignment of sublease: Given the rapidly
changing nature of the science, tenants may require added flexibility to sublease space or to assign the entire interest in the lease. Although these five clauses address only some of the many issues that landlords and tenants should consider in biotech lab leases, they have implications that echo throughout the lease.
The state of sale‐leasebacks: What corporations can and should expect today
Authors: Brant Bryan A.
Published: June 2007

Aimed at senior corporate real estate decision makers and members of the corporate finance teams responsible for real estate portfolio strategy, this paper helps these professionals to identify opportunities for different types of lease finance. Readers will go through a brief history of the sale‐leaseback market and learn the factors which determine sale‐leaseback pricing. In addition, they will ascertain how recent changes in the debt markets impact their rental
rates, as well as how changes in the equity markets have added a new supply of funds and lowered finance costs. Tenants will obtain a better understanding of the concerns, interests and motivations from a lessor’s perspective, as well as the factors they should consider when deciding whether to own or lease their real estate. This understanding of the lessor should
enhance the corporate professional’s negotiating skills. Overall, the contents of this paper should help improve communication between the corporate finance team and the corporate real estate team as each understands better the other’s concerns and perspective on real estate.
Taking it to the next level: Corporate real estate becomes a business process
Authors: Kops Deborah S.
Published: June 2007

The corporate real estate provider community is freely using the term business process outsourcing, or ‘BPO’ to differentiate its value propositions. Yet most buyers and sellers have yet to articulate clearly the concept as it pertains to corporate real estate ‐ the value proposition, economic structure, focus and impediments to adoption. This paper defines BPO as it relates to corporate real estate and suggests conditions that must be in place for its adoption.
Results using the balanced scorecard in the public sector
Authors: Wilson Chris , Hagarty David , Gauthier Julie
Published: June 2007

Annual reports and operational data are key performance indicators for any business. However, performance measurement is critical in today’s real property domain and should become part of strategic planning and management processes for an organisation to be truly successful. In this paper the authors examine a number of case studies for the application of the Balanced Scorecard framework in establishing a balanced distribution of measures across four perspectives: financial; customer; internal business processes; and learning and growth. This balanced measurement of government organisations can help satisfy customers and shareholders ‐ in the public sector, often one and the same.
Flexibility at any price? Challenging a costly convention on leases
Authors: Woollam Charles
Published: June 2007

Some companies see property as a strategic resource that can add value to corporate performance;
others view it as a commodity that more often acts as a barrier to core business activities. In both instances, insufficient forward planning often prevents companies from making the most of their property portfolios and avoiding unnecessary costs. This paper looks at how operational property portfolios can be classified according to their strategic significance to the business and, specifically, how occupiers can more closely align property holdings with core business objectives by differentiating between ‘core’, ‘tactical’ and ‘(semi)surplus’ properties. The paper focuses specifically on the topical issue of flexibility, identifying potential costs and considering whether and to what extent short leases and break clauses are worth paying for. It also contains a large number of practical tips for managing real estate liabilities and making assets perform better.
Translating organisational strategy into real estate action: The strategy alignment model
Authors: Osgood Robert T.
Published: June 2007

An increasingly sophisticated body of theory and practice has emerged over the past 20 years about the impact that strategy plays in driving corporate business success, as well as the role that real estate plays in that strategy. In the context of three case studies, this paper will discuss the theory and application of the Strategy Alignment Model, which is a framework for directly linking real estate initiatives with core business strategy and for measuring results as organisational outcomes. Among a number of topics will be discussed the theoretical underpinnings of the model, as well as its application to such diverse yet interrelated issues as placing companies in locations that enhance recruitment and retention of the best people; building layouts that promote communication; communication; and workplace concepts, on and off site, that support new ways of working
Virtual centres of excellence: An integrated approach to managing corporate real estate globally
Authors: Harrington Paul C.
Published: June 2007

The emergence of new markets and new opportunities means that few businesses can afford to ignore the impact of emerging markets. Consequently, these new markets are putting more pressure on corporate real estate teams to operate
and plan globally. Competitive success is now seen as a function of speed to the market and this speed to market can only be met when the right facilities are made available in the right location with appropriate financial funding. This paper
seeks to offer a practical approach for corporate real estate managers in the development and operation of a global centre of excellence and covers organisation structure, operational guidelines and highlights examples of successfully engaging local line management, support staff and outsourced suppliers. The development and use of virtual teams on a global basis leverages the corporations’ functional expertise to reach optimum efficiency in delivering support services. Virtual teams also provide less intrusive local oversight among very diverse emerging economies, helping to promote local ownership yet delivering best practice cognisant of local culture and sensitivities.
Setting up and managing outsourcing contracts to deliver value and accommodate change
Authors: Davis Ron
Published: June 2007

The concept of outsourcing is a recognised business planning strategy; senior corporate management and facilities services have been progressively outsourced in the UK for many years. However, transforming an outsourcing business plan into an effective and balanced operating contract remains challenging. Getting your outsourcing project properly positioned in the business, procuring the right integrated facilities contractor and then subsequently mobilising and managing the contract can be a difficult journey to navigate. This paper describes how to approach the principles and practicalities of outsourcing noncore services and how to make sure that some of the principal pitfalls along the road of the outsourcing project are avoided. It finally offers some ideas on how to get the most out of a project in the long term.
Strategies of corporate real estate management: Strategic dimensions and participants
Authors: Stoy Christian , Kytzia Susanne
Published: June 2007

Nowadays, the so‐called management by objectives (MBO) is used as a management instrument of corporate real estate management (CREM), using cost targets as the yardstick of CREM success. In Switzerland, CREM success is increasingly linked to cost reductions, with the cross‐company corporate strategy often requiring CREM to deliver a significant reduction in the level of cost. The cost concept used is material for the agreement or stipulation of cost targets. As the presented analysis shows, CREM has, for the most part, only very limited potential impact on costs. In particular, the use of the occupancy cost concept (sum of all imputed costs as well as costs recognised in the profit and loss account) poses a problem. This comprehensive cost type is determined by the following factors, which are in many cases outside the control of CREM: Book value as per balance sheet; Depreciation period of the basic shell structure; Main objective of the owner; Maintenance strategies; Degree of outsourcing of infrastructure management. Therefore, where the corporate strategy centres around cost reduction, CREM must be given the opportunity to control these drivers. This would require the inclusion of CREM in the development of the cross‐company corporate strategy, as otherwise the cost targets would have to be restricted to individual cost types (costs recognised in the profit and loss account). This is the only way to utilise a management instrument, such as MBO, within CREM.
A Sarbanes‐Oxley road map: Improving real estate data, dialogue and decision making in support of good corporate governance
Authors: Billing Michael , Evans Kristen
Published: June 2007

The pursuit of good corporate governance, as exemplified by compliance with Sarbanes‐Oxley
(SOX), requires corporate real estate (CRE) departments to gain a better understanding of
asset values and lease costs than most companies currently possess. As a result, CRE departments are motivated to centralise control over operations globally, to improve systems for ensuring consistent and accurate accounting worldwide and to scrutinise vendors more thoroughly. These changes will be difficult for many CRE departments, but, done properly, the focus on corporate governance will bring greater understanding of real estate’s impact on corporate financial performance, as well as enhancing relationships with the CFO, senior management and business unit leaders.
A real options model for valuing flexible space
Authors: Greden Lara , Glicksman Leon
Published: June 2007

The continuous need for change in corporate real estate spaces warrants consideration of flexibility
in new space design. To help decision makers invest more effectively in physical infrastructure and its ability to evolve, a formal method of identifying and valuing flexibility is developed. A model, based on real options techniques for valuing managerial flexibility, is constructed to answer the following question: how much is it worth to invest in a space that could be renovated to office space for a specified renovation cost in the future? Decision makers can use the option valuation results to determine whether the initial design and construction costs to achieve flexibility are justifiable. The transparent model is intended to be accessible to design teams in practice. It is an improvement on net present value and first‐cost based decision‐making techniques in that it explicitly accounts for uncertainty and for the ability of managers to make a rational future decision (between renting and renovating). The model considers three sources of uncertainty: the market price of rent for office space (as measured by volatility); date of space need; and amount of space need. Input values and/or probability distributions are needed for these variables. The model is constructed using a binomial lattice technique and Monte Carlo simulation. Results are given in a format that allows for comparison with cost estimates of physical architectural designs. For example, in a case study where current five‐year office‐space leases are estimated at US$98 per square foot and 0.39 annual volatility and the mean amount of space needed in the future is 50 per cent of the total, the real options valuation suggests that it is worth up to US$40 per square foot in initial investment expenses to achieve a space that could be renovated to office space for US$25 per square foot within the next eight years. The concept of addressing risk through ‘flexible design’ and analysing the value of flexibility is pertinent to judicious management of any new building project that is subject to uncertain future conditions.
Cracking the landlord and capital markets code
Authors: Houston Robert
Published: June 2007

This paper looks at three routes to maximising the value of a corporate real estate (CRE)
portfolio in the UK, although they apply also in other countries: ‐ Know what space you have and ensure its efficient use. Benchmarking is a useful discipline by which to monitor progress. ‐ Know your landlord. Up‐to‐date corporate intelligence is essential. Make the landlord your servant, not vice versa. ‐ Research capital markets and use them to your advantage. The paper also identifies major shortcomings in the way that corporates (at least in the UK) approach the management of their real estate.
Capturing hidden value for your shareholders
Authors: Trundle Martin B.
Published: June 2007

Until recently, occupiers have ignored the financial benefits real estate can add to the value of their firms. Corporate real estate (CRE) is now on the corporate agenda and CRE executives are being challenged by shareholders and senior management to employ best practice techniques to unlock the hidden value in the firm’s real estate portfolio. This paper offers a practical decision framework to allow this to happen and explores the potential for them and for real estate investors to capture this value. The paper is based on the author’s experience of advising occupiers and investors and his increasing knowledge of corporate finance principles.
Use of 501 c. 3 ‘conduit’ ownership and financing structures for tax‐exempt healthcare and higher education
Authors: Pereira Randy
Published: June 2007

The use of 501 c. 3 ‘conduit’ ownership and financing vehicles has emerged as an effective
financing tool for the real estate needs of many tax‐exempt healthcare and higher education institutions. ‘conduit’ vehicles offer low‐cost, third‐party ownership and financing solutions to other not‐for‐profit 501 c. 3 healthcare and higher education institutions that do not wish to use their own debt to finance real estate assets or that wish to preserve working capital and bond debt capacity for activities that more directly support their core mission. When applied to specific types of property assets and properly structured and documented, these transactions can achieve both off‐balance sheet outcome under all applicable FASB accounting rules and ‘off‐credit treatment’ from the rating agencies reviewing these transactions. However, these balance sheet and rating agency outcomes are highly dependent on a number of considerations tied to the facts and circumstances of each specific transaction. The purpose of this summary is to describe the features and benefits of conduit transactions, along with their unique accompanying financial, accounting and rating agency issues.
Integrating corporate real estate financial reporting into a single systems solution
Authors: Biddison Peggy
Published: June 2007

To identify and prioritise real estate management requirements, Accruent recently surveyed 100 real estate executives, more than half at companies with revenues exceeding US$1bn. The results indicate that the vast majority are looking for better ways to manage their real estate portfolios. Pressured by fast growth and stringent new regulatory reporting requirements, real estate professionals are turning in increasing numbers to centralised systems of record that can track and manage all financial transactions. Until recently, these systems were difficult to justify. Manual processes and spreadsheets were considered sufficient and a ‘just pay it’ mentality prevailed, largely because real estate was considered a fixed cost. While the concept of a centralised enterprise‐wide data repository has long been a topic of discussion among visionaries, new technologies are making the vision a practical reality. It is now possible to implement viable systems of record in cost‐effective stages, beginning with lease administration and extending into other business management systems. Though the effort of implementing systems of record can be considerable, many consider it well worth while because it provides companies with the opportunity to improve existing operational processes significantly.
The effects of organisational workplace dynamics and building infrastructure flexibility on environmental and technical
quality in offices
Authors: Tu Kung‐Jen , Loftness Vivian
Published: June 2007

Despite discussions about the universal work station, there is increasing workplace dynamics in US organisations. These dynamics include space configuration changes, space enclosure changes, changes in occupant density and increasing equipment density. At the same time, building infrastructures have not evolved to meet these demands, with little flexibility in the heating, ventilation and air‐conditioning (HVAC), lighting, or electrical/telecommunication systems of new or existing office buildings. This paper examines the effects of organisational workplace dynamics and building infrastructure flexibility on the environmental and technical quality of offices. Resulting from extensive field studies in US buildings, the authors contend that there are numerous statistically significant issues for the design and management of buildings for the dynamic organisation. The study identified numerous factors that affect thermal, air, lighting and technical quality in offices. In relation to infrastructure, for example, occupants who work in office areas provided with greater cooling capacity and more supply air volume, and combined with smaller HVAC zones, appeared to have higher levels of thermal satisfaction. Those who work in areas with higher outlet densities gave higher technical quality ratings; and those provided with relocatable outlets (raised floor and furniture based) gave significantly higher technical satisfaction ratings than those provided with least‐first‐cost ‘tombstones’. In relation to organisational dynamics, increasing occupant densities in existing buildings are related to more thermal and air quality complaints, more complaints about outlet accessibility, as well as more complaints about inadequate light levels on work surfaces. This paper will outline the major findings of a study linking organisational dynamics with building infrastructure, moving towards the definition of innovations in facility design that will more effectively support dynamic organisations.
Workplace making ‐ A strategic activity
Authors: Granath Jan Å.
Published: June 2007

Making a workplace entails two essential factors: the physical action of designing, and the design of the work space itself. This paper illustrates how building stock can be used as a vehicle to create new, small and medum‐sized enterprises in which a participatory and learning process gives users control of their costs and stimulates creative channels between tenants. Workplace making can be the source of new understanding and communication between disciplines that do not usually cooperate in innovative situations ‐ demonstrated by the Volvo case study, which resulted in a totally new production system for the final assembly plants. In conclusion, it is paramount that the company itself leads the design process. To outsource workplace making is to outsource the knowledge and ability to use space as a long‐term production resource, which can restrict space productivity. To ensure the best use of future production space it is vital that a company listens not only to the architects but to its own employees.