Site Selection magazine
twitter linkedIn facebook email email
TRANSLATE: 
IAMC INSIDER
From Site Selection magazine, September 2016
SHARE THIS ON SOCIAL MEDIA

I’m Looking to the Future - and I Like What I See

Samantha Turner
Samantha Turner
IAMC Chair

As my term as IAMC chair concludes at the Indianapolis Forum, I want you to know I’ve enjoyed this opportunity to serve you and to make a difference for this organization, which I love.

IAMC has notched some impressive accomplishments since I’ve been chair, such as the London Forum, steady membership growth, new strategic plans for education and marketing, and improved programming for Local events. I’m proud of these. However, I’d like to point out several less dramatic, but possibly more important, changes.

Most broadly, I see an advancing awareness among members that IAMC is a close-knit community of professionals with access to a rich repertoire of benefits and services provided through various platforms. Only five years ago, most members viewed IAMC as primarily the Professional Forums. The change toward a broader perspective is not yet complete, but we see it happening.

Back then, being Forum-centric was a good thing and served the needs of the times. The Forums were our primary product, revenue source and delivery vehicle for member services. But in 2016 and moving forward, our products, funding sources and delivery methods need to evolve as the member expectations and corporate cultures continue to shift. Further, the incoming generation of end-users want IAMC services via Web, iPad and smartphone in addition to the Forums. We’ll have to accommodate them.

In the future, IAMC will continue to be member-centric. The quality of the membership is high, and it’s going to get even better. The top selling point to potential members remains the composition, quality and breadth of experience. But we will supplement this by extending the geographic coverage of the membership and conducting Forums and Local events in Asia, Europe, Latin America and North America. Further, the membership will also be comprehensively served and knit together via online capabilities such as Webinars, podcasts, Web-delivered video education modules and social networks, among others.

I know this is a glossy image, and it may seem to be a long distance from where we are today. But online service delivery is how most professional associations are already planning to provide a proportion of their services. This capability will stand us in good stead, in particular with our younger incoming members. Rest assured, however, that we will steadfastly hold to one of our core values, which is that relationships come first.

I want to give a confident vote of support and thanks to those working quite effectively to lead us into the future. IAMC has a strong core of leaders, including the board, committee chairs and staff.

For my part, when my term as IAMC chair is up in October, I plan to stay fully engaged. I too am looking to the future, and I like what I see. Thank you for your support. It has been an honor and privilege to serve this great organization and its members.

Samantha Turner
IAMC Chair

Broker-Service Key Performance Indicators

IAMC Active Members discuss a program point.

This article is excerpted from a Mar. 13, 2016, IAMC New Orleans Professional Forum Distribution Industry Group program. This was moderated by Michael Landsburg, Vice President of Real Estate, NFI Industries. Prologis sponsored the session.

Overview

When it comes to broker relationships and key performance indicators (KPIs), one size doesn’t fit all. Some companies use a single brokerage firm nationwide, while others cultivate relationships with different brokers in different markets. In general, KPIs are developed and used to align corporate real estate’s (CRE’s) activities with the corporate strategy. However, some corporate real estate teams have abandoned formal metrics because their work is highly transactional or no one in the company cares about monitoring broker-service KPIs.

Although real estate market information is more accessible than ever before, many companies feel brokers add value through their deep knowledge of specific landlords, creative financing options, and additional services, such as software management and project construction management. Once organizations develop a strong relationship with a brokerage firm, they are often reluctant to even consider bids from competing brokers.

Aligning service provider efforts with corporate strategies can be challenging.

In many companies, the C-suite barely understands what corporate real estate people do. For example, senior managers may establish corporate objectives to drive rent down when the market simply won’t allow it. To provide broader context to company leaders, one attendee said the real estate and finance teams jointly developed a KPI, which is occupancy cost as a percentage of total sales. This illustrates whether the company is driving total occupancy costs down, and not just rents.

Some organizations view KPIs as outmoded or unnecessary.

One participant noted that he doesn’t use KPIs anymore because he was the only one in the organization who cared about them. It was a lot of work to fill out surveys about things like options, stepped-up holdover clauses, reduced operating expense language and more.

Another noted that KPIs and strategy aren’t what people thought they were five years ago. The speed of business makes corporate real estate teams act in reactionary ways, rather than responding to long-term strategies. One participant said his company is focused on the new president’s objectives for 2016. As a result, the CRE team’s activity is composed of transactional one-offs as they divest brick-and-mortar locations and replace smaller distribution centers with big-box facilities to support e-commerce and logistics.

Although market intelligence is now more accessible thanks to technology, brokers add value for companies in other ways.

Since the Internet makes information so transparent, brokers are no longer needed to gather real estate market intelligence. Companies now pay brokers for relationships with landlords and other value-added services.

One attendee said his department expects its brokers to educate them about landlords in the market, including the landlords’ capability to make improvements, who manages the properties, how expenses are managed, and what the landlords’ long-term objectives are. During the economic downturn, some of the good brokers came to the company to discuss blend-and-extend options. This was good input, and in some cases the company pursued this path.

Companies often fee-share with their service providers.

Among the attendees’ companies, most fee-share with service providers. One company’s brokerage firm pays 100 percent of legal fees related to real estate, and they handle all project construction management. Another attendee’s company fee-shares on a case-by-case basis on the international side. In this case, the service provider keeps a balance sheet, but money doesn’t move between countries. This eliminates tax issues that arise when funds come in from international locations. One participant’s company also does fee-sharing, but the percentage varies on the front end.

Several other participants also engage in fee-sharing. Two firms never take cash back, and instead use the proceeds to fund other services or consulting engagements for the brokerage company. Another participant noted that while they fee-share for many transactions, they don’t discount for dispositions because they want brokers to be incented.



Developing a Cohesive Corporate Real Estate Strategy Across Multiple Business Sectors

IAMC Chair Samantha Turner joins the discussion.

This article is excerpted from a Mar. 13, 2016, IAMC New Orleans Professional Forum Manufacturing Industry Group program. It was moderated by David Hocker, Global Director of Properties & Facilities, Cooper Standard Automotive Inc., and Raymond Ocasio, III, Director of Real Estate & Construction, Jet Aviation – A General Dynamics Company. Albuquerque Economic Development, Inc., sponsored the session.

Overview

To effectively serve internal customers, the corporate real estate (CRE) operating model must align with the overall business strategy and organizational structure. Many companies have had success with a functional, geographic or market organizational model. These structures support better governance, operational interfaces and functional integration. Embedding CRE business partners in the business units can also help with service delivery. Real estate teams should also evaluate how to balance strategic initiatives with transactional work. In many instances, outsourcing some work to service providers is a good solution.


Embedding CRE business partners in the business units can also help with service delivery.

Key Takeaways

Corporate real estate teams typically use a functional, geographic or market organizational model.

There are several different organizational structures that corporate real estate teams can adopt. The organizational model plays an important role in strategy execution, how real estate teams integrate M&A activities, and more. Following are the three most common organizational models:

  1. Functional structure. This model is common in organizations where activities are grouped by business function. The corporate real estate team, for example, might have a global design and construction group, global lease administration and global facilities management. The functional model can work well for growing organizations, and it offers economies of scale to large organizations. When everyone reports to the same global head of a function, it is easier to manage costs.
  2. Geographic structure. In this model, the business is broken up into different geographic markets. Each group has total P&L responsibility and handles all real estate functions in its market. Regional heads report into a corporate head of real estate and they have autonomy in how they operate. However, some strategic planning and governance happens at the corporate level. Regional heads are closely aligned with their geography’s business needs and they tend to have good working relationships with the country or regional heads. As a result, they can make decisions quickly. Disadvantages of this model include duplicate functions like design and construction across geographies, potential conflicts in service delivery, and variability between markets. It is more difficult to implement global standards.
  3. Market structure. This approach is less common than the others. It is often adopted by companies with diverse products or services. The real estate function is aligned with the different businesses. In this approach, when a business unit splits in two for organizational reasons, the real estate organization splits along the same lines. The advantages of this approach include focus and responsiveness to the market segments’ business cycles. One disadvantage is duplication of functions and higher resulting costs. It is also hard to implement global standards, processes, or governance.
David Hocker NOLA RR
Active member David Hocker (with mic) moderated the session.

In addition to these three models, it is also possible for organizations to adopt hybrid solutions. The CRE business partner role can be an important part of the organizational design. In the functional model, real estate business partners can be embedded in each business unit. They participate in all business strategy meetings and serve as the go-to persons for each of the business unit leads. When they have a real estate issue, they can go to the business partner to get it solved. CRE business partners can be funded by the real estate function or by the businesses they work with.



comments powered by Disqus

Site Selection online is a worldwide service of Conway, Inc. ©1983-2017, all rights reserved.
Data is from many sources and not warranted to be accurate or current.
For contact information visit our staff page or send general information queries to Cathie Wendt.
Send direct technical inquiries or comments to webmaster bounce@conway.com. View our Privacy Policy.
HOME | SITE SELECTION MAGAZINE ARCHIVES | SUBSCRIBE