"To be successful, service providers must understand how the next generation of corporate real estate executive thinks. That means a new customer focus."

This quote from a client shows the need for service providers to help corporate real estate executives strengthen relationships with their end-user customer--not a shared-service relationship but an understanding of goals, commitments and results. The key is to help corporate real estate get a seat at the table as part of the business-unit support team. A model for success is an effective CRM program. Several companies are implementing this into their corporate real estate, and in 2006 you'll hear news of success stories as well as failed CRM initiatives.

The next generation of executive isn't necessarily made up of individuals with a background in real estate. We are finding that the real estate executives of tomorrow are coming from diverse backgrounds such as finance, planning and even procurement. That means service providers cannot expect the instant camaraderie they felt with clients in the past. A real estate manager with a procurement background is a whole different animal. What's necessary is akin to a course in cultural sensitivity training for service providers.

Obviously, performance measurement is going to mean different things to real estate executives with varying business backgrounds. Service providers are going to have to refine their key performance measures to reflect what is important to their client. With respect to CRM, it is important to measure internal client satisfaction and performance on other factors than transactional ones.

Performance criteria must change from activity metrics (such as the number of work orders processed) to savings/impact metrics such as cumulative occupancy-expense reduction or savings translated to increase in EPS. If you're going to build a relationship with the end user, you need to speak in terms they can understand and appreciate.

"The cost-cutting mentality around here has really put us in a box. But you can't cut real estate and try to grow the business."

Service providers need to change the mindset that delivery of real estate services is limited to delivery within budget and time constraints. Instead, the focus should be on viewing real estate as an investment in the success of business rather than an expense. From a purely consultative standpoint, this makes great sense because no company wants its real estate to be an impediment to growing business. The caveat, however, is real estate's historical reputation of a lack of financial control. That legacy continues to this day and many senior executives recall the days of palatial office space and high finishes. Sure they may miss them, but they're smarter now. Ask me sometime how a custom-made $10,000 stone inlay and marble conference table cost one executive his job.One area in which service providers can support the real estate group is by instilling an effective account management methodology that includes financial controls and a way to measure the true bang for the buck, i.e.: the balance between a blank check and smart approach to managing growth. That in itself is a good topic for next time.Vik Bangia (vik.bangia@cbre.com) is a managing director in CB Richard Ellis' global corporate services organization. Views expressed here are the author's solely.

Instant Insights /

The Next Generation of CRE

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