Larry B. Kimbler and Ronald C. Rutherford One issue facing corporate real estate managers is how to effectively manage the real estate assets in the current market environment. As the need to cut costs and to emphasize the core business has increased due to current economic conditions, real estate outsourcing of services or the entire project has developed as a way to cut costs and possibly maintain or improve the level of expertise in the management of corporate real estate. This paper examines the issues and problems that may occur when a corporation outsources its corporate real estate function. There are many ways in which quality can be defined for real estate. First, it is clear that age is related to this definition of quality.
Buildings deteriorate and become obsolete as they age.
However, some depreciate more quickly than others. The depreciation rate is a function of age but also of building quality or qualities. By measuring building depreciation and developing a classification of building qualities, it was possible to relate qualities to depreciation in order to prove that a stronger and more meaningful relationship exists between quality and depreciation than that which exists between age and depreciation. It is also clear the obsolescence factors, especially configuration and internal specification, are more important in this respect than deterioration factors. This was established by means of intensive questioning of real estate professionals and backed up by a survey of occupiers.