Hot Topics in Corporate Real Estate

by CoyDavidson on September 16, 2010

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What’s on your mind Mr./Ms. Corporate Real Estate Director?

Today as companies strive to endure the storm of a challenging economy, the C-Suite is looking to cut operational expenses. During any recessionary period there is going to be an increasing focus on cost control and efficiency and one of the first places companies look to reduce cost is to examine their real estate. So for the Corporate Real Estate Director minimizing occupancy costs and maximizing the performance of the corporate real estate portfolio is always is always the priority. So beyond overall corporate real estate performance, what are the pieces of the pieces of the puzzle CRE professionals are discussing these days.

Doing More with Less

Many companies, both large and small, are examining in much closer detail their office space utilization. Various studies indicate that employees work in their dedicated space in a range of 38-45% of the time. Technology and demographic shifts are changing how companies use their workspace. Employees increasingly work in other places than their dedicated office or cubicle. In today’s top performing companies, workers spend more time collaborating in team spaces, training rooms and informal conference areas. Today, many organizations are looking and finding new ways to do more with less, to not only save money but to also increase productivity.

Sustainability

The corporate space user is increasing their focus on sustainability as a means to reduce occupancy and operational costs as well as their commitment to be good stewards of the environment. Despite the fact the return on investment (ROI) for such practices is still fuzzy, more and more companies are looking to occupy green office space. In lease situations this means selecting LEED certified office buildings as well as building out and operating their office space with sustainability issues in mind. Sustainability initiatives have taken hold very rapidly, and even experienced corporate real estate managers, brokers, real estate attorneys and building owners are still learning the nuances of green leases.

What’s with these Lease Accounting Changes?

Leased corporate real estate is about to undergo a significant change that will fundamentally shift how real estate is viewed by the Chief Financial Officer and senior management. The proposed changes to Generally Accepted Accounting Principles (“GAAP”), when accounting for real estate (and equipment) lease commitments, will significantly change recognition for leases that are now classified as operating leases and will impact corporate real estate beyond just changes to financial accounting procedures. This significant change provides a new challenge to the Corporate Real Estate function to support their organization in new ways.

Lets Talk About It

The challenge of coming through a difficult economy have been significant. The commercial real estate landscape looks very different than it did 2-3 years ago. However, with change comes new opportunities.

So what’s on your mind Mr./Ms Corporate Real Estate Director, how about you Mr./Ms. Chief Financial Officer? I am confident our organization has the expertise and resources to help you fit the right pieces in the puzzle.

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