Well friends, we're finally out of the doldrums in the real estate market. Pardon me for stating that without the requisite "I think" or "it appears" preface or without hesitancy in my voice but I really sense that we've turned a corner. Even though I'm not part of the brokerage community and even though corporate real estate outsourcing business is generally steady through real estate cycles, I'm ready to say that real estate markets are again healthy based on feedback I've received from my internal colleagues.

Says Chris Ludeman, president of CBRE's US Brokerage: "While commercial real estate is inherently cyclical, I am upbeat for prospects in 2005. At CBRE, we are better able than most to mitigate the ebbs and flows because of our diverse business lines and broad geographic reach. As one geography or service is in decline another is countering the negative cycle. I think we are well-positioned to take advantage of the uptick."

John Davis, executive managing director of CBRE's outsourcing solutions group, echoes the sentiment: "The number of new corporate real estate outsourcing initiatives appear to be coming into the market at similar pace as in recent years. What's changed is the size, geographical spread and the scope of the services requested. More companies are looking to outsource multiple services and they are implementing outsourcing as a way to gain better intelligence about and control over the costs of their non-USA real estate locations."

Lest you think I'm only citing sources from within my firm, various contributors to last month's Real Estate Southern California issue portend the same thing: the prognosis for the real estate market is good. While the focus of the article is on Southern California, I think as California goes, so goes the country. For business in general, the economy grew at a healthy 3.8% in the 4th quarter of 2004--stronger than originally expected. In fact, the government indicated that GDP growth in 2004 was the strongest for any year since 1999. I'm not alone being optimistic. So, what does this mean for the corporate real estate professional considering whether or not to outsource?

First, as the real estate cycle turns, intelligent decision making will be a key component for corporate real estate executives to master. When conditions change rapidly on the ground in the markets in which you do business, it is imperative that you have a strong association with accurate and (more importantly) timely sources of data. Aside from obtaining access to comprehensive and insightful market data, corporate real estate executives must have the analytical tools necessary to evaluate portfolio risk and anticipate market opportunities.

Second, the velocity of transactions will require execution capabilities beyond those currently in-house with the majority of corporate real estate departments. Due to years of downsizing, many corporate real estate departments run extremely lean. In fact, of those real estate executives I informally questioned at last year's CoreNet Global Summit in San Antonio, almost all said they were stretched to the limit on workload with their current staffing. The improving economy will unlock some new hiring but I believe most corporate real estate departments will have a difficult time receiving the necessary funds to staff up to meet their resource needs.

Finally, cost control will require greater integration no matter the level your current real estate department uses outside help. Consolidating multiple services with one service provider offers you the best opportunity to increase operational efficiencies as well as overall quality. In fact, by increasing the level of integration, decisions you make in one area are consistent with another. Handoff will be simpler and the term "handoff" will seem less apropos since each service line will be intimately familiar with the overall strategy being carried out.

I realize I've made an overt pitch for outsourcing but it's not only because outsourcing is my business. From all accounts, it certainly looks as though it is poised to grow in a substantial and meaningful way. The firms that will be successful in dealing with their corporate real estate are those that address the outsourcing issue sooner rather than later. The economy and real estate market have turned a corner. Have you?

Based in Anaheim, CA, Vik Bangia (vik.bangia@cbre.com) is a managing director in CB Richard Ellis' global corporate services organization.

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