Annual CREMRU-JCI survey of corporate estate management practices in Europe and North America: 1993-1997

This paper summarizes the results of the 1993, 1994, 1995, 1996 and 1997 surveys of chief real estate officers (CREO) from major organizations in Europe and North America. Since 1997 the annual survey is being undertaken jointly by the Corporate Real Estate Management Research Unit (CREMRU) and Johnson Controls Incorporate (JCI). The annual survey has been supported by the International Development Research Council (IDRC) and the International Association of Corporate Real Estate Executives (NACORE International), two leading professional associations concerned with this field of professional activity. The emphasis of this summary is on two aspects of the survey: the incidence of corporate real estate management (CREM) policies, functions and activities; and the assessment of knowledge or skills relevant to the CREM function in the future. Both are of paramount interest to the educational institutions concerned with CREM on both sides of the Atlantic. This includes the educational organs of international organizations concerned with corporate real estate, such as IDRC and NACORE, which play increasingly important roles in the education of their members. The CREMRUJCI annual survey will hopefully offer a useful tool in the international educational effort in this field

Risk management and the corporate real estate portfolio

In a global business economy, firms have a broad range of corporate real estate needs. During the past decade, multiple strategies and tactics have emerged in the corporate real estate community for meeting those needs. We propose here a framework for analysing and prioritising the various types of risk inherent in corporate real estate decisions. From a business strategy perspective, corporate real estate must serve needs beyond the simple one of shelter for the workforce and production process. Certain uses are strategic in that they allow access to externalities, embody the business strategy, or provide entrée to new markets. Other uses may be tactical, in that they arise from business activities of relatively short duration or provide an opportunity to pre-empt competitors. Still other corporate real estate uses can be considered “core” to the existence of the business enterprise. These might be special use properties or may be generic buildings that have become embodiments of the organisation’s culture. We argue that a multi-dimensional matrix approach organised around three broad themes and nine sub-categories allow the decision-maker to organise and evaluate choices with an acceptable degree of rigor and thoroughness. The three broad themes are Use (divided into Core, Cyclical or Casual) – Asset Type (which can be Strategic, Specialty or Generic) and Market Environment (which ranges from Mature Domestic to Emerging Economy). Proper understanding of each of these groupings brings critical variables to the fore and allows for efficient resource allocation and enhanced risk management.

Internal rents and corporate property management: a study into the use of internal rents in UK corporate organisations

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from an more efficient use of space. Good management of corporately owned property assets is of equal importance as the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. Firstly, it requires the occupying department to “contribute” an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as individual profit centres, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint. By charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. This paper investigates the use of internal rents by UK-based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10% of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition.

Corporate real estate management in the retail sector: a study of the relationship between the management of the corporate real estate and corporate performance

Retail organisations have often been cited as being at the forefront of corporate real estate management. This research found that the retail sector can be characterised by diversity both in terms of the degree to which organisations are vertically integrated and in terms of the range of modes of retailing they engage in. This in turn led to highly diverse real estate portfolios. Given this diversity it may be surprising that the over riding strategy which the vast majority of sample firms adopted was focused on supporting the core retail activity. However the way in which they implement this strategy, again reflected the diversity in the sector. In terms of the future, the senior real estate managers were focusing on the medium term particularly looking at the way change would impact their functional strategy. This study provides a snap-shot of current practice and contributes to the debate however it also recognised that there is a need to answer the more fundamental questions.

Championing the rhetoric: corporate social responsibility in the Ghanaian mining sector

This paper contributes to a growing body of literature that critically examines how mining companies are embracing community development challenges in developing countries, drawing on experiences from Ghana. Despite receiving considerable praise from the donor and industry communities, the actions being taken by Ghana's major mining companies to foster community development are facilitating few improvements in the rural regions where activities take place. Companies are generally implementing community development programmes that are incapable of alleviating rural hardship and are coordinating destructive displacement exercises. The analysis serves as a stark reminder that mining companies are not charities and engage with African countries strictly for commercial purposes.

Annual CREMRU-JCI survey of corporate real estate practices in Europe and North America: 1993-2002

The annual survey of corporate real estate practices has been conducted by CREMRU since 1993 and in collaboration with Johnsons Controls Inc. since 1997. This year the survey forms the first stage of a broader research project: International Survey of Corporate Real Estate Practices: longitudinal study 1993-2002, being undertaken for the Innovative Construction Research Centre at the University of Reading, funded by the Engineering and Physical Sciences Research Council. The survey has been endorsed by CoreNet, the leading professional association concerned with corporate real estate, which opened it to a wider audience. This summary of the ten annual surveys focuses on the incidence of corporate real estate management (CREM) policies, functions and activities, as well as the assessment of knowledge or skills relevant to the CREM function in the future. Both are of vital interest to educational institutions concerned with this field, as well as the personnel and training functions within organisations concerned with better management of their property.