You might recall that my last article highlighted what I believe is happening in the real estate market and the economy at large. I examined how improving economic factors are affecting the outsourcing business. The biggest change I see coming is change itself, and over the next few months, I'm tackling subjects that I feel will guide the corporate real estate professional in preparing for the change that I believe is already upon us.

This month, I want to discuss collaboration--something I call building strength through vision.

Most corporate real estate managers I know consider their organizations to be moderately to highly collaborative. When describing their CRE environment, they will typically discuss improvements they've made in their administrative processes or the application of rigorous financial analysis. They may even discuss documentation and controls and cite Sarbanes-Oxley. However, when pressed, it becomes readily apparent that collaboration, in their definition and use, is nothing more than better management of the handoffs between functions. To be sure, efficient handoffs are a vital component of a collaborative environment. My argument is that the real estate service providers, especially those offering multiple services in multiple geographies, are learning to be truly collaborative--seamless if you will, in the delivery of a suite of services.

Most large service providers have created "corporate services" organizations that place all the client's service needs under one delivery and management structure. These service providers are capitalizing on an old discovery, but a new approach: the realization that operational efficiencies inherent in a one-stop shop can lead to better, faster and more cost-effective response to client needs. Historically, each service line has always created its own internal collaboration techniques but what continues to set the service provider capabilities apart from those CRE departments attempting to self-perform is the increasing level of true collaboration.

With respect to facilities management, service providers are building strength by partnering with third party project managers and pre-qualifying and sourcing individual vendors. Many facilities and project management teams are working together to identify, use and mentor minority or women-owned enterprises that can be introduced across service lines and can perform in various geographies.

The new twist on collaboration for project management requires that project managers understand accounting issues and take responsibility for a project's budget as well as the effect on depreciation. To accomplish this, project managers must take greater responsibility and exhibit greater collaboration by partnering with transaction managers to benchmark the costs of tenant improvements prior to the beginning of a new project. Initially, it appears this will be easier for retail clients than for office clients but as more data is collected, I believe the benchmarking of costs will become increasingly accurate.

In the area of portfolio administration, collaboration has traditionally meant sharing lease data and intelligence in a timely manner. However, today's portfolio management allows for sharing this information across a wider range of constituents through a web-based portal and via an easily navigable dashboard. Overlays of lease specific data with market information allow for proactive portfolio management for instance, renegotiating a lease well ahead of any contractual option based on favorable market conditions. portfolio administration is becoming increasingly strategic--working across transaction management as well as other service lines via a superior ability to capture information.

Speaking of technology, nearly all service providers are focused on benchmarking as a way to drive innovation and measure performance. The industry wants a single, web-based solution that is non-proprietary, yet able to link legacy and enterprise systems for complete integration. Almost all major service providers are scrambling to provide a collaborative application that has functionality for everything from site acquisition, construction management, asset management, reporting, lease administration and space management. Few are succeeding. The stumbling block is the word 'complete'--the price of 'complete' is too high for most clients….and impossible for nearly all software providers.

For most service providers, to maximize the savings that can be passed on to a client through this type of collaboration require the entire real estate platform to be engaged. In other words, not just transaction management but facilities, project and lease management. Moreover, the savings are enhanced when the client consolidates all these services under a single provider. That way, decisions related to one aspect of the transaction such as length of lease are consistent with the business decision such as the where to site a particular location. This is true collaboration; this is achieving strength through vision. It remains to be seen whether corporate real estate departments can catch up. Service providers are already out of the gate.

Next month: Diversity--visible strength, transparent weakness.

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

Instant Insights /

True Collaboration is Between the Lines

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