NEW YORK CITY—Technology and data are changing commercial real estate, and corporate real estate is no exception. Sort of. While the Fortune-500 class is no stranger to the benefits of these new solutions, the adoption of those perks has been slow on the property side. Partially, says Scott Nelson, president of occupier services and corporate solutions in the Americas for Colliers International, because the real estate department “buys” the technology but doesn’t commit to the change.
We caught up with Nelson, who will be a speaker at the upcoming CCIM Thrive conference in Atlanta, and he told us what the global corporate real estate landscape looks like from his perspective.
GlobeSt.com: What do most corporate occupiers—even among the Fortune 500—fail to realize about their real estate portfolios?
Scott Nelson: I would point to three things, in no particular order. First, since it’s so challenging for their internal customers to predict space need, corporate real estate departments often don’t realize they can relatively easily, unsolicited, be proactive to provide their internal customers the tools, the scenario planning and the recommendations to move those decisions forward. Instead they have to wait for the answer from the internal customer, in a vacuum, and ultimately, it’s hard to plan the portfolio accordingly.
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Next would be the power of data and metrics to add value to their business. This is the ability to link real estate and business performance metrics without having to “boiling the ocean.” It’s a potential opportunity, but they often don’t make it a top priority and instead they buy it and then move on as opposed to making a real commitment to the change. But if they did, they would uncover paybacks multiple times over, and they would elevate both the conversation with their internal customers and the profile of the CRE department.
Finally, they often miss the untapped opportunity in shared spaces, such as Regus or WeWork, not just for the short-term needs of three or four employees, but also for much larger space requirements and even a longer term requirement. This is generally viewed as the “executive suite” solution from 15 years ago, but those solutions have reinvented themselves and it is worth a fresh, unbiased look—it provides them the ultimate flexibility at minimal capital and it can really be a huge advantage.
GlobeSt.com: Especially for the first two items you mentioned, it seems that real estate—by chance, not by choice—is a reactive function. Why is this and how can that change?
Nelson: This is probably because real estate never had a seat at the decision-makers’ table. Now, that has changed a lot because of all the continued work real estate is doing to elevate their profile and value-add within the business. But with some of the things we’ve talked about, they just have to wait on the business and are not in a position to make recommendations as an advisor to the business. That’s probably the biggest challenge we’ve seen.
GlobeSt.com: How do you respond to that?
Nelson: We see a huge opportunity here, especially as it concerns data and metrics. We believe there are some achievable steps that can be taken, either leveraging service providers or not, to collect the kind of data we discussed that would support a different conversation within the business.
GlobeSt.com: What are corporate users looking for now that they weren’t looking for five years ago?
Nelson: The best “looking” technology on the surface. But they aren’t necessarily committed to implementing it and embracing the change management associated with adopting the technology and getting the value. They just check the technology box. We’re also seeing a growing interest in the past five years in centralizing and outsourcing the global rent payment function, given the unique nature of these payments and the risk mitigation and savings that can be realized through this specific expertise.
Finally, there is what we would describe as looking for the perfect balance between outstanding local market knowledge, speed and service combined with a centralized strategy and analytics. Increasingly, clients are seeing the value they can get when they prioritize both of those needs, whether it is internal, external or mixed. There is a possibility of getting both but it is not that common.
GlobeSt.com: If the C-Suite is calling in outside experts such as Colliers, are they ready to hear what you have to say?
Nelson: Certainly. If they’re calling us in, yes, they’re ready to hear what we have to say, and yes, they’re interested. There is absolutely a way we believe to link real estate to business performance and success.