A Seat at the Table

A Seat at the Table

          
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A Seat at the Table

Corporate Real Estate as a Value Center
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    During IBM’s much-vaunted turnaround in the 1990s, senior management focused on cutting the company’s bloated real-estate costs. By reducing its footprint, increasing space utilization, leveraging mobile technology, and shedding the resulting excess, IBM shaved more than $1 billion from its annual occupancy-cost base in just four years.

    IBM’s pioneering strategy has been widely emulated. Savvy organizations of all types have discovered that proactive management of corporate real estate (CRE) can unlock huge shareholder value while transforming the workplace and leveraging the customer base. Recent trends are heightening the opportunities for CRE departments to effect change in their companies’ philosophy and approach to real estate. Competitive pressures have put a premium on occupancy cost reduction. Increased M&A activity, organizational delayering, outsourcing, and offshoring have created redundant, often overlapping, real estate footprints. Technology opens up alternatives to traditional locations and building types by decoupling workers from their assigned work sites. And concerns about business continuity have prodded companies to reduce risks by revising their employee location and concentration policies.

    In response to these trends, CRE executives have become more agile in making siting, leasing, and design decisions; shrewder in negotiating with developers for flexible, efficient, user-friendly buildings; and more disciplined in managing the real estate life cycle to ensure an affordable occupancy-cost structure. In short, first-mover organizations are reshaping real estate portfolios that were designed for industrial economies to provide space that better suits twentyfirst- century requirements.

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