The Leader - March/April 2009 - (Page 38) Su zan n Silverma n executives that have dedicated offices at every facility they visit. How about cost allocation methodologies that create no incentive to free up vacant space? What about decision-making processes that consistently result in your company losing out on prime opportunities? Now is the time to go after them. groups like CoreNet Global, the industry and our profession have advanced. There are a lot more people now for whom it is a science, and therefore it is much more a cause and effect model. You can have a much more fact-based discussion with the C-Suite and get much more engaged. It’s grown more complex. LEADER/CPN: The harsh economic environment has clarified some things a company just wouldn’t do – now they are saying let’s talk about it… Noha: We are now operating at the strategic, process and the tactical levels in real estate, and that really makes a difference for the organization. We just put together a list of 135 ideas for cost savings organized in that way and there are opportunities at every level. We now have much better production systems in real estate which give us good data. And it is much easier to go to the businesses with data and more informed alternatives. Gorman: basically being a good steward to truly managing those assets, both leased and owned, so some of what we’ve seen is not new to us. I think in six months or so there will be some opportunity based trends in certain markets through which I can leverage my global portfolio strategy to find some advantages in the marketplace. In the 90s we took a 40 year old manufacturing plant, a million square feet, and we transformed it from the inside out and it was a city unto itself and it was our world headquarters. That same creativity we apply not just for ourselves, but when we are positioning vacant property out to the rest of the world. Just because a building is purposed one way that isn’t the only way it can be used. And that’s given us an advantage in the marketplace, which we will continue to exploit. LEADER/CPN: Are you saying that generally there is better data and faster response because of that? Ficke: We are better prepared as an industry than we were when the technology bubble burst in 2000. With that, the whole issue of cost reduction became a continuous process – not something done only at a particular time. Over the past six years of expansion, there has always been a focus on cost reduction and rationalization. Our clients don’t have the portfolio overhang issues they had in the 2000-2005 real estate recession. Ficke: Absolutely. Today, it’s always about cost. We won’t get to a point where cost is not on the list for goals for next year. Varcoe: The other thing that is different from the 1991-92 real estate downturn and the Dotcom bust is the fact that in those days, CRE leadership was much more of an art. The process was less defined. There was a lot of waste in the system. Thanks to help from Noha: Real estate is coming into its own. Senior executives are looking to real estate to drive some of the change needed in the business. Since CRE touches everyone in the organization every day, you can effect tremendous change through real estate. I think the C-suite is recognizing this. Noha: We’ve got clients still clamoring for cost reduction ideas, even those that have put in comprehensive portfolio optimization strategies that are aligned with the business. In this economy, the business keeps coming back for 10-20 percent more in cost savings. So CRE departments have to put into effect all the cost reduction, location and workplace strategies, but then be ready to tweak them to take another 10 percent out. It’s also a great opportunity to finally go after some of the sacred cows in the business, the ones that CRE has always known about, like service levels that are far higher than industry standards; like Varcoe: What we haven’t cracked in my view, is looking at the physical workplace and the digital workplace as two sides of the same coin. We’re talking about big productivity improvements that will mean a lot of money. It could create a big structural shift in terms of the benefits we can get. N d 2 0 0 9 THE LE ADE R E oh a Gorman: Inside CRE we have two courses that we have followed consistently. The first I describe as 38 MARCH / APRIL
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