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May 18, 2017

How real estate managers take control of their real estate portfolios

In principle, every organization is made up of four production factors: the capital, the people who work there, technology, and information (data). The real estate manager’s role in the organization is becoming steadily more significant, partly because of the disruptive changes in Corporate Real Estate. One might even suggest that real estate can now be regarded as the fifth production factor. How does a real estate manager gain control over the biggest cost item: the real estate portfolio?

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Striking a balance

As a new and fifth production factor, real estate plays an important role in your organization. Did you know that Corporate Real Estate (CRE) represents approximately 20-25% on an average balance sheet? That 60% of organizations lack transparency in their real estate portfolios? And that no fewer than two out of every three real estate managers lack control over their real-estate-related processes? It’s up to the real estate manager to make a positive change in these statistics, and to tackle the challenges that lie ahead. What’s essential here is to strike the right balance between the organization’s varied real estate portfolio. This consists of premises that are owned by the organization, are rented, or are shared with third parties. Owned premises typically entail relatively lower costs over the long term, certainly when measured against those that are rented. On the other hand, you are a lot more flexible and have less liability when you rent your premises. Striking the right balance between ownership and renting is influenced to a significant degree by the organization’s long-term strategy and its chosen priority: cost control or flexibility.

The world is changing, and so must your real estate portfolio

Beginning January 1, 2019, exchange-listed companies are required to include in their balance sheets any rental contracts running for longer than a year. With the introduction of the new lease accounting standards, the debt position on your balance sheet could rise by up to 20%. These new regulations thus exercise a direct influence over your portfolio strategy. Accurate administration, reliable calculation, and compliant reports are an absolute necessity. The need to regain control over your real estate is made all the more urgent by the disruptive changes currently occurring in the world around us. Among these are the flexibilization of work, the “War for Talent,” and technical innovation. By embracing this development as an opportunity and translating it into work environments that match the dynamic needs of the user, a productivity increase of up to 15% can be achieved. New technologies including the Internet of Things (IoT) mean that 50% of the control functions performed by people will disappear in the next three to five years. Big Data & Analytics, predicting behavior, and new interactions are spearheading changes to operational management. This so-called “Digital Business” will have an enormous influence on the way we deal with our real estate.

One source of truth

An Integrated Workplace Management System (IWMS) contains structured data, consists of integrated processes, and offers seamless integration, but above all it offers trustworthy information for the right tactical and strategic decisions. An IWMS gives you transparency in your real estate portfolio, control over processes, and flexibility in operational management and portfolio strategy. This offers a huge savings potential of up to 15% on your accommodation, 10-20% on management and maintenance, and up to 80% on your data management. It’s time to act now and to take control of your biggest cost item: your real estate portfolio.

Jos Knops
Director Product Marketing