The Leader - January/February 2009 - (Page 56)

industry tr a c k er by Richard Kadzis red-Hot Buttons for corporate real estate in 2009: For real estate, a case oF ‘now, More tHan ever’ Headlines using words like fear and mass layoffs relate the inevitable view of the current cycle’s bottom for the commercial real estate markets in 2009, as CoStar recently predicted. The “knock-on effects,” as termed by Bob Bach of Grubb & Ellis, of the sub-prime collapse and resulting credit and investment bank crises are hitting the corporate real estate (CRE) sector as much as any other part of the business or general economy. So the hot buttons for CRE will be red-hot in 2009. But for the senior executives overseeing global real estate and workplace portfolios on a global scale with the support of their outsourced strategic partners on the commercial real estate side of the industry, 2009 may very well turn out to be a case of “now, more than ever.” That’s because regardless of the economy, CRE’s twin charges never change. Cost cutting is a permanent state, like change itself. But so is the C-Suite and shareholder expectation that CRE delivers value, no matter if the global economy cycles up or down. In other words, competitive advantage, innovation, speed to market and financial performance trump even an unprecedented global malaise. Still, while the cost-cutting pressure is constant, it’s more pronounced than ever right now. So is risk management. That’s why these are among the leading hot buttons for CRE in 2009:  More intense focus on risk management and business continuity  Efficiency with effectiveness  Cost management with value output  Emphasis on better capital planning vs. tight credit markets  Growing C-Suite mandate for CRE to govern all real estate activity  Another occupier or demand-side market Short and long term, the ongoing CRE mandate will remain to deliver value to the corporate enterprise. Short and long term, the ongoing CRE mandate will remain to deliver value to the corporate enterprise. The dual shocks of the U.S. and now global market reactions have given way to downturn, so that the long-term view for CRE is very much tempered by day-to-day survival. People’s jobs are on the chopping block, and so is real estate. American Express, Whirlpool, Verizon and many others have announced huge layoffs with the expecta- tion that they’ll cut their total space holdings in tandem. As with other downturns, this comes as no surprise. Following the dot.com crash and 9/11, big companies like these were caught with way too much surplus space. And, the good news is, many of them were engaged in aggressive space consolidation well before the current economic issues hit full force. They were already cutting space as a continuation of the trend that began in 2001 and finally ended around 2005 with office and industrial vacancies returning to historical averages. The space-cutting push became more relentless after 2005, when companies began to mainstream flexible work practices like mobility and space utilization along with the more recent realization that all this reduces a company’s energy use and carbon footprint. Of course, before and now during the downturn, lower costs were a prime objective of major companies cutting space and their real estate holdings, but so were productivity, talent retention and long-term growth. Companies that were already consolidating space are now that much further ahead of the curve. When the real estate recession of the 1990’s jolted everyone, CRE reacted by creating higher-level value for itself and the enterprise. It was during this period that ‘bleedingedge’ adopters like Cisco Systems, Nortel 2 0 0 9 tH e le ade r 56 January / FeBruary

Table of Contents Feed for the Digital Edition of The Leader - January/February 2009

The Leader - January/February 2009 Contents Leadership Message from the CEO Real Estate in the News Mergers and Aquisitions Assessing Green Building Performance Measuring Space You Actually Use Global Trends in Sustainable Real Estate Whirlpool’s Lee Utke Northmarq’s Kevin Farrell Plastics: Hoping for Resiliency in Resins Regional Profile: Heartland Holding Strong Industry Profile: Ascendas Brings New Age Business Space to Asia-Pac Industry Tracker From the Applied Research Center Discovery Forum Findings Capital Corner Career Development Young Leader Economic Development in the News Learning Spotlight Connect With CoreNet Global Index of Advertisers A Look Ahead In our Next Issue Calendar of Seminars

The Leader - January/February 2009

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