July 14, 2004—The emergence of the truly networked world—facilitated by the Internet, new relationships with service providers, and new sources of real time information—will have dramatic consequences for how large corporations conduct business and manage their real estate portfolios, according to research by the Gallup Organization and CoreNet Global, the international association of corporate real estate professionals. The study, conducted in November and December 2003, involved more than 315 top real estate executives.
Among the core findings are that by 2010, while there will continue to be strategic real estate functions to perform, they will be performed in the context of enhancing worker productivity and company competitiveness through a fully integrated infrastructure that will include human resources, information technology, real estate, and other support functions. Therefore, managing the entire portfolio of business enterprise resources will require skills of the corporate real estate executive beyond real estate.
Also, the competitiveness of corporations will require integrating real estate with all business processes. This will mean shifting additional functions—and the risks associated with them—to service providers. According to the Gallup Organization survey, more than 35% of responding companies said they would consider transferring their owned assets to a third party for day-to-day financial and operational management. In addition, more than 70% of respondents either “agreed” or “strongly agreed” that in transferring additional services to service providers, additional risk would be transferred as well.
Specific predictions for corporate real estate in 2010 are that:
- 90% of Fortune 500 companies will adopt “triple bottom line reporting,” which means that companies will be measured by social responsibility, environmental sustainability and profit.
- In the networked world of 2010, corporations will require less space to perform effectively. Currently, just 7% have workers spending 25-50% of their time in unassigned office space. By 2010, 21% of companies will have their employees working remotely up to half the time.
- The work environment will be defined more as connectivity—a network of places both geographic and virtual—so that commercial real estate executives will manage networks as much as occupancy in facilities.
- Worker productivity will be measured in real time, thus allowing for real estate decisions to be made more quickly and more effectively. Portfolios will have to be flexible in terms of the contract, financing, and the ability to substitute assets during the lease term.
The findings are part of Corporate Real Estate 2010: Enabling Work in a Networked World, available from CoreNet Global.
