Corporate Real Estate Asset Management: Strategy and Implementation PDF
Preview Corporate Real Estate Asset Management: Strategy and Implementation
Corporate Real Estate Asset Management The second edition of Corporate Real Estate Asset Management is fully up to date with the latest thought and practice on successful and efficient use of corporate office space. Written from an occupier’s perspective, the book presents a ten-point CREAM model that offers advice on issues such as sustainability, workplace productivity, real estate performance measurement, change management and customer focus. In addition, new case studies provide real-life examples of how corporations in the UK, USA, Hong Kong and Abu Dhabi actively manage their corporate real estate. The book is aimed at advanced undergraduate and graduate students on corporate real estate, facilities management and real estate courses and international MBA programmes. Barry P. Haynes is a chartered engineer and a chartered facilities management surveyor. He is Principal Lecturer at Sheffield Hallam University, UK, and has 20 years of teaching and learning experience. Prior to this he has experience of working in both the private and public sectors. His research interests include workplace productivity and corporate real estate management. Nick Nunnington is currently Visiting Professor of Corporate Real Estate at Nottingham Trent University, UK, a part-time lektor at the Hanzehogeschool Groningen University of Applied Sciences, the Netherlands, and a consultant in real estate curriculum design with more than 20 years of experience teaching and designing real estate curriculums internationally. He is co-author of Income Approach to Property Valuation, published by Routledge. Timothy Eccles is Course Leader in Real Estate at Nottingham Trent University, UK. With over 25 years of teaching experience, he has been involved in designing, managing and running construction and real estate courses from foundation degree through to doctoral level. He has most recently published benchmarks and best practice advice on commercial service charges and is co-author of a property economics textbook. Corporate Real Estate Asset Management Strategy and Implementation Second edition Barry P. Haynes, Nick Nunnington and Timothy Eccles Second edition published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 Barry P. Haynes, Nick Nunnington and Timothy Eccles The right of Barry P. Haynes, Nick Nunnington and Timothy Eccles to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. First edition published 2010 by Elsevier British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN: 978-1-138-91506-0 (hbk) ISBN: 978-1-138-91507-7 (pbk) ISBN: 978-1-315-69044-5 (ebk) Typeset in Goudy by Saxon Graphics Ltd, Derby Contents 1 The CREAM context 1 2 Position: understanding the business environment 17 3 Purpose: how company and corporate strategies can be aligned 50 4 Paradigm: how a company aligns its real estate with its culture, mission and values 77 5 Processes: how real estate can support business processes, activities and work styles 95 6 Procurement: selecting appropriate real estate options that support the strategic and financial requirements of the corporate occupier 118 7 Place: selecting appropriate locations, buildings and configurations 173 8 People: the importance of the interaction between people and real estate 204 9 Planet: how CREAM can integrate sustainability, responsibility and governance 221 10 Performance: how to measure and benchmark the performance of corporate real estate 259 11 Productivity: how CREAM can support improved business productivity 298 vi C ontents Case studies Case study 1 CREAM in the telecommunications, media and technology sector 328 TIMOTHY ECCLES Case study 2 Implementing activity-based working in the Netherlands: GasTerra 341 JAN GERARD HOENDERVANGER Case study 3 Practising what they preach: CBRE Tokyo office: transformational change and the introduction of ABW 353 NICK NUNNINGTON AND CHINATSU KANEDO Case study 4 Benchmarking key aspects of CREAM: the Middle East-based RICS/MECO study 370 NICK NUNNINGTON Case study 5 Planet: two examples of sustainable solutions: (1) Amazon Court, Prague, a win–win solution; (2) IRENA HQ, Abu Dhabi, sustainability in a challenging climate 383 NICK NUNNINGTON Case study 6 CREAM in the public sector: the strategic use of real estate in achieving efficient and quality public service, Nottinghamshire, UK 398 TIMOTHY ECCLES Case study 7 Co-working in action: JustCo Singapore 410 NICK NUNNINGTON, JONATHAN WRIGHT AND EUGENE TAN Case study 8 Workplace transformation: Nokia connecting people 424 BARRY P. HAYNES, JOHANNA IHALAINEN AND JAMES ETHERIDGE Case study 9 Headquarter reconfiguration: the Hong Kong Jockey Club 434 DANNY S.S. THEN Index 444 Chapter 1 The CREAM context Introduction Corporate Real Estate Asset Management (CREAM) is a relatively new discipline and has evolved from a number of professional areas that have converged and changed emphasis and jurisdiction over time. It is important, as an introduction to CREAM, to understand how the contemporary interpretations and models of CREAM, including our own, have come about. This chapter aims to set out the development of these interpretations and understand the definitions of other discipline areas that contribute to them. In this chapter we explore the history of CREAM, its origins and the twists and turns that have led to its current significance, discipline, focus and scope. We also set out definitive definitions of CREAM and the associated disciplines that support it; and examine the knowledge and education that underpin it, which are inherently embedded within its contemporary remit. Finally, we examine our own definition and the ‘10P’ model of CREAM, which is a framework that underpins the whole structure of this book, including the chapter headings. An integrated approach: collapsing of boundaries To understand the processes and practices of CREAM, it is important to have clear definitions. Unfortunately, as the disciplines which form the constituent parts of CREAM have grown, the boundaries between them have become blurred. This section attempts to clarify these definitions and track the changing nature of CREAM, the context within which it operates, its growing significance and its evolution. To understand CREAM we first have to look at the definition of some of its components. Asset management In 2008, the Royal Institution of Chartered Surveyors (RICS) produced guidelines for asset management for the public sector. Included in these guidelines are two useful definitions relating to asset management. The first definition relates to what constitutes the asset base. The asset base is defined as: The entirety of the land and building assets owned or occupied by an organisation. (Jones and White, 2008, p. ix) 2 The CREAM context The second definition relates to asset management and is defined within the same RICS guide as: The activity that ensures that the land and buildings asset base of an organisation is optimally structured in the best corporate interest of the organisation concerned. It seeks to align the asset base with the organisation’s corporate goals and objectives. It requires business skills as well as property skills although only an overall knowledge of property matters is required. However, property input within the overall process is imperative. (Jones and White, 2008, p. ix) This definition of asset management clearly identifies the need to link the land and buildings of an organisation to its core business objectives. It also makes clear that professionals working in this area need to have both business skills and an overall knowledge of property matters. Our definition, set out later in this chapter, extends this to include the integration and coordination of other assets of an organisation, most significantly human capital. Property management Property management is a term that tends to be used in the UK and Europe, whereas real estate management is used in many other parts of the world. Property management is largely concerned with the day-to-day operational aspects of the organisation’s properties. It is sometimes referred to as ‘operational’ and it is the activity of undertaking the professional/technical work necessary to ensure that property is in the condition desired, in the form and layout and location desired and supplied with the services required, together with related activities such as the disposal of surplus property, the construction or acquisition of new property, the valuation of property, dealing with landlord and tenant and rating matters, all at an optimum and affordable cost. (Jones and White, 2008, p. ix) Facilities management Facilities management (FM) is the term used in the UK and Europe, whereas facility management is used in countries such as the USA and Australia. The British Institute of Facilities Management (BIFM) has formally adopted the definition of FM provided by the European Committee for Standardisation (CEN) and ratified by BSI British Standards: Facilities management is the integration of processes within an organisation to maintain and develop the agreed services, which support and improve the effectiveness of its primary activities. (BIFM, 2009). The CREAM context 3 This definition as it stands appears a little vague since the terms ‘processes’ and ‘agreed services’ are not expanded upon. However, the BIFM add the following: Facilities management encompasses multi-disciplinary activities within the built environment and the management of their impact upon people and the workplace. (BIFM, 2009) This additional definition of FM starts to establish that facilities managers are involved in a range of different professional disciplines. It also makes the linkage between the workplace and the impact it can have on its occupants. The International Facility Management Association (IFMA) define FM as: Facility management is a profession that encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, process and technology. (IFMA, 2016) This definition, like the BIFM, acknowledges the multidisciplinary nature of FM. It makes specific the role of the built environment and even includes technology. However, it lacks the connection to the core business strategy. The Facility Management Association of Australia (FMA) defines facilities as: Facilities can be generally defined as buildings, properties and major infrastructure, also referred to within the Facility Management industry as the ‘built environment’. (FMA, 2009) The FMA propose that: The primary function of Facility Management (FM) is to manage and maintain the efficient operation of this ‘built environment’. (FMA, 2009) While this definition acknowledges that the built environment needs to be maintained efficiently, it does not link the provision of FM to the needs of the organisation’s core business. All the definitions used for FM have their strengths and weaknesses. The essential ingredients of FM are: • it encompasses multidisciplinary activities; • it improves the effectiveness of the core business; and • it acknowledges the impact the workplace has on people’s productivity. Our definition has always been more strategic, based around FM having both an integrating and supporting function to help align the business strategy with its working environment.
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