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The Emergence of Corporate Real Estate Management

The past two decades have seen the global development of Corporate Real Estate Management (“CREM”) as a distinct discipline that is targeted at enhancing the value of real estate assets and facilities related services to the core business. For many corporations, real estate has evolved from a number of stand-alone transactions for individual physical space into a more coherent overall strategy, which is certainly a step in the right direction.

However, the focus of this “strategy” is generally short-term cost minimisation aimed at delivering immediate shareholder value, with CREM seldom elevating itself into the truly strategic sphere that adds long term value to the business. This is particularly evident where CREM is solely tasked with managing the existing portfolio of physical assets and the support services for these spaces, without taking into account many of the softer issues. As the business evolves or grows, CREM will typically just add “more of the same” space, missing an opportunity to take a quantum step forward.

The focus of a successful and highly functioning CREM team should be to understand the key strategic drivers of the organisation and to tailor the real estate portfolio to best support these aims and objectives. Typically, financial or cost optimisation is one element, but this should be weighed up alongside the impact that real estate can have on corporate culture and brand. The space that you occupy directly or indirectly impacts on your manufacturing efficiencies, employee wellbeing and productivity and how your customers, suppliers and other stakeholders perceive your business.

By aligning the real estate strategy to the over-arching corporate strategy, CREM will deliver far greater, sustainable value to the organisation than the more traditional building operating cost optimisation exercise.

For further guidance on how to align your corporate and real estate strategies, please contact: info@betapoint.co.za

Simon Lunt