The Leader - March/April 2009 - (Page 16) THE EVOLVING STATE OF PORTFOLIO PLANNING: A CRITICAL DISCIPLINE FOR UNCERTAIN TIMES FI G U R E 1 DO PLANNERS HAVE THE INFORMATION THEY NEED? RESPONDENTS STATE THEY HAVE “GOOD” INFO ON: WHAT DO CORPORATE REAL ESTATE PORTFOLIO MANAGERS DO? (AN AGGREGATE “PORTFOLIO MANAGEMENT CHARTER” REFLECTING THE PRIORITIES OF MULTIPLE CRE PORTFOLIO PLANNING ORGANIZATIONS) ° 61 percent - Serviceability & Condition – current condition, and investment needed to achieve optimal performance ° 61 percent - Capacity & Utilization – what business groups are where, doing what, at sub-asset level ° 78 percent - Supply Forecasts – when leases expire, potential space available, termination or contraction options ° 89 percent - Location & Functional Profiles – standard criteria and rating system ° 94 percent - Financial Structure – not just own/lease, but lease breaks, options, rent bumps, etc. ° 100 percent - Market Conditions – cost of similar space by submarket, likely short/medium term movement The Portfolio Management Research Consortium Today there are a number of CRE organizations with robust portfolio planning departments helping to navigate their firm’s real estate decisions through today’s turbulent environment – at a strategic level. This is in stark contrast to 10 years ago, when the CoreNet Global EDP Portfolio Management class was first introduced. We asked leaders from 16 CRE organizations, along with four additional service providers, to join forces and undertake research on portfolio planning (see Figure 2). Consortium members participated in conference calls, detailed interviews, and a two day summit. At the end of this three-month process, they succeeded in advancing our understanding of the discipline, its current state, and its future. porate real estate. We also found evidence of increasing sophistication of tools, practitioners, and metrics. Portfolio planning organizations typically share a common set of challenges across organizations (see Figure 3) – suggesting that the industry would benefit by developing a relatively This article is written to share our research findings and conclusions. We hope it will provide inspiration and support for corporate real estate leaders challenged by today’s environment. We believe most corporate real estate departments under-invest in portfolio planning, and that significant opportunities can be realized by applying greater focus on the discipline: reduce costs, generate working capital, improve productivity, enhance sustainability, and decrease risk. The material in Figure 1 defines the current state of CRE portfolio planning, outlines key trends and issues, and shares best practices for CRE portfolio management. Current State: Key Findings As expected, our research identified significant strides in the acceptance of portfolio planning as a required discipline for cor- There are a number of CRE organizations with robust portfolio planning departments helping to navigate real estate decisions through today’s turbulent environment – at a strategic level. 2 0 0 9 THE LE ADE R 16 MARCH / APRIL
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