MANAGING REAL-ESTATE TO BUILD VALUE

Real estate escapes the thoughtful attention of most senior managers. It often falls within the realm of their responsibilities, but many do not appreciate its potential impact on company performance. So they delegate real estate to specialists, who operate on a deal-by-deal basis and consider their decisions as administrative and technical tasks. Recently, however, some companies - IBM, AT&T, Chemical Bank, Dun & Bradstreet, and Sun Microsystems, for example - have recognized that by managing real estate as a business function, they can cut costs significantly and, at the same time, increase productivity. Shifting an organization's approach to real estate, however, is not easy. What managers need is a process that they can use to diagnose whether real estate is a competitive problem in their companies, and a set of tools to facilitate their leadership role in real estate decisions. Based on his experience with Dun & Bradstreet and other like-minded companies, the author has developed a scorecard that managers can use to evaluate their current real estate situation, a framework within which to consider real estate decisions in a long-range companywide context, and models to help them visualize how facilities might affect their business strategies. Every real estate decision has long-term consequences. But managers can build flexibility into their real estate portfolios and into individual facilities' physical and financial engineering. Moreover, they can realign company holdings, no matter how large and complex, with market and competitive forces so that these facilities remain affordable and, at the same time, support corporate goals.