Corporate Property Management: Aligning Real Estate With Business Strategy

253 Pages·2003·11.02 MB·English

by  Victoria Edwards

Corporate Property
Management
Aligning real estate with business strategy
Victoria Edwards and
Louise Ellison
Corporate Property Management:
aligning real estate with business strategy
Dedication
To allthe men inour lives:
Adam, Zary, RufusandBasilShaljean and Rick and Dylan Taylor
Corporate Property Management:
aligning real estate with business strategy
Victoria Edwards
Department of Property Resource Management
University of Portsmouth
and
Louise Ellison
School of Surveying
Kingston University
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n
Contents
Preface ix
Acknowledgements xi
Section I: Strategic Corporate Property Management –
an analytical framework 1
1 Introduction toStrategic Property Management 3
Introduction 3
The importance of strategic property management 4
Property as aninvestment asset 5
Corporateproperty 9
Conclusion 13
References 14
Further reading 14
2 Formulation of Strategy – Adopting an Analytical Approach 16
Introduction 16
Acommon framework ofanalysis 17
Use of theframework 27
References 28
3 PropertyPerformance Evaluation 30
Introduction 30
The role ofproperty within business 31
Performance evaluation: property held as an investment asset 31
Performance evaluation: property held as an operational asset 38
Benchmarking 45
Cost centre v.profitcentre 46
Conclusion 48
References 48
Further reading 50
v
vi Contents
4 Understanding PropertyCharacteristics –
Information Requirements 51
Introduction 51
Good record keeping 51
Physical appraisalof the property 53
Proprietary features 54
Financial appraisal 55
Evaluation 56
Conclusion 59
References 60
5 Understanding PropertyUsers’Characteristics 62
Introduction 62
Who do wemeanby ‘propertyusers’? 62
Society andstakeholder relationships 64
Managementrelationshipswithstakeholders 65
Managementrelationshipswiththewider user community 69
Conclusion 76
References 76
Further reading 77
6 OrganisationalObjectives in Relation to CorporateProperty 78
Introduction 78
Organisationalobjectives 79
Strategy 79
Porter’s theory of competitive advantage 80
Property as part ofcompetitive strategy 82
References 89
Further reading 90
7 Understanding PropertyMarkets –an Institutional Approach 91
Introduction 91
Institutions 92
Institutional arrangements 93
Markets 95
The operation of the market 97
Transactioncosts 99
Uncertaintyand institutional arrangements 99
The need for institutions to evolve and change 101
Analysing institutions when managing property 103
Conclusion 106
References 109
Contents vii
8 An Institutional Approach to Understanding Property Markets –
Legaland Financial Institutions 111
Legal institutions 111
Financialinstitutions 117
References 121
Further reading 121
9 An Institutional Approach to Understanding Property Markets –
AdministrativeInstitutions 122
Introduction 122
Constitutional level 122
Organisational level 125
Operational level 128
References 131
10 Formulating Strategies forProperty Management 132
Introduction 132
The application ofinstitutional analysis 132
The application ofmanagementstrategy 137
The role ofproperty within theorganisation 142
References 145
Further reading 146
Section II: Case Studies 149
Case Study1: Borders UK 151
Introduction 151
Background 151
Property user characteristics 152
Property characteristics 155
Organisational objectives inrelation to real estate 156
The institutional arrangement ofthe property market 157
The external world 158
Evaluation 159
Conclusions 161
References 162
Case Study2: Clifford Chance 163
Introduction 163
Property user characteristics 163
Property characteristics 167
Organisational objectives inrelation to real estate 168
Strategy selectionand implementation 169
The institutional arrangement ofthe property market 171
The external world 172
viii Contents
Evaluation 173
Conclusions 174
Reference 176
CaseStudy 3:The Youth Hostels Association ofEngland and Wales 177
Introduction 177
Background 177
Property user characteristics 179
Property characteristics 183
Organisationalobjectives in relation to real estate 187
The institutional arrangement of theproperty market 189
The external world 191
Evaluation 193
Conclusions 193
References 194
CaseStudy 4:Cancer Research UK 195
Introduction 195
Background 196
Property user characteristics 197
Property characteristics 200
Organisationalobjectives in relation to real estate 201
The institutional arrangement of theproperty market 204
The external world 205
Evaluation 206
Conclusions 207
References 208
CaseStudy 5:Ardtornish Estate, Morvern, Scotland 210
Introduction 210
Background 210
Property user characteristics 211
Property characteristics 213
Organisationalobjectives in relation to real estate 214
The institutional arrangement of theproperty market 220
The external world 222
Evaluation 223
Conclusions 225
References 227
Bibliography 228
Index 235
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Preface
In1989,webegantoteachadifferentapproachtopropertymanagementinour
own department at Portsmouth Polytechnic, now the University of Ports-
mouth. This assumed, among other things, that a property manager must
understand the users’ requirements for any property underher care.
Thisisaconceptthathasalwaysbeeninherentinthetrainingoflandagents
for the management of landed estates. Students of rural estate management
have traditionally studied agriculture and agricultural valuations, forestry,
recreational land management, and, more recently, other contemporary land
uses, from fish farming to theme park management. As such, they have been
equippedtomanagethediversenatureoftheirlandedestatesbyhavingafull
understandingofanestate’spotentialandbybeingabletobuildrelationships
withneighbours,tenantsandotheruserswhoarelikelytorealisethatpotential
for the estate.
Without a proper understanding of the businesses that the estate can sup-
port, the land owner cannot properly identify and exploit opportunities, cal-
culate and reduce the risks involved with any new ventures, and ensure that
the potential is fully achieved. He can only do this by maintaining good
working relationships, which are based on sound understanding of other
peoples’ businesses.
AtPortsmouthwebelievedthatasimilarapproachshouldbeadoptedinthe
urban environment. We viewed the property manager not as a technician or
clerk, but as a strategic partner. However, we recognised that partnerships
must be based on shared understanding. Thus, if our students aspired to
managing real estate within the breweries, they needed a grounding in the
brewingindustry,fromtoptobottom(somethingstudentshavebeenknownto
takeveryseriously).Similarly,iftheyweretomanagearetailestate,theymust
understandthewayinwhichtheretailworldoperatesand,specifically,whata
particularoccupier needs from its shoppremises.
Clearly, there is only so much one can squeeze into an estate management
course, but with the help of outside experts, we believe that we managed to
providesomeinsightintoanoccupier’srelationshipwithaproperty.Whether
students then went on to act as agents for investors, managing portfolios of
different types of property, or as managers for occupiers, such as large retail
chains, they understood the value of property to the occupier’s business in
ix