< Previous8 NOVEMBER 2018 SI T E S E L E C T IO NEditor’s note: This article is excerpted from the May 6, 2018, Savannah Professional Forum Business Impacts Interest Group session. The program was presented by Greg Schementi, Cushman & Wakefield, and moderated by Lane Johnson, Whataburger.OverviewMost companies don’t have a long-term corporate real estate (CRE) strategy. Using various tools to aggregate, analyze, and display data can provide valuable information and insights, which can help develop and monitor a strategy. Service providers can be important partners in pulling together critical data, providing in-market intelligence, sharing insights and working with companies to execute the strategy.Key TakeawaysMost companies don’t have a long-term real estate strategy.Research has shown that only about 20 percent of companies have a long-term real estate strategy that is articulated, documented and well understood throughout the organization. An effective strategy is not just a list of projects; it is about how to identify portfolio and market opportunities to optimize efficiency and costs by 10 percent to 25 percent and drive competitive advantage. The existence of a real estate strategy and alignment of this strategy to the company’s overall business goals raises the visibility of the CRE team and makes real estate a driver of company success.While many aspects of a real estate portfolio strategy are often outsourced — in whole or in part — strategic planning is typically done in house, as it should be. In undertaking high-level strategic planning, organizations need to consider the following:Strategic Planning Focus Area Business Solutions Assess goals and challenges of CRE operations and organizational structure against data and research to improve real estate-related decision-making and add operational and financial value Location and Determine trade-offs and identify the Labor Analysis optimal location(s) to achieve business, workforce, distribution and/or customer reach-related goals Portfolio Strategy Define and communicate real estate portfolio cost-reduction opportunities based on market and operational opportunities Sustainability Identify opportunities for cost savings and brand differentiation through achievement of sustainability goals from energy reduction to employee wellness Workplace Strategy Create workplaces that appeal to talented workers, foster employee interaction and reinforce the brand to advance business successMultiple considerations exist in developing a real estate portfolio strategy.Key considerations in portfolio strategy are:• Understand the portfolio. Analytics and dashboards can provide greater understanding.• Identify the business goals. Not just near-term goals, but business goals that are one and three years out.• Develop the right organization. Look at how peers and competitors staff their internal real estate departments, and think of service providers as part of your team.• Create a governance model. This model will guide how to interact with service providers.• Leverage service providers. Service providers could often be asked and expected to do more than they are currently tasked to do.Key factors that help organizations take their Partnering with Service Providers on Portfolio Strategy, Planning and ImplementationSavannah Forum Business Impacts Interest Group attendees10 NOVEMBER 2018 SI T E S E L E C T IO Ngame to a higher level are quarterly business reviews (QBRs), key performance indicators (KPIs), and a stable account team.Processes and tools can help companies in developing, implementing, and tracking the portfolio strategy.For companies that realize they need a portfolio strategy, the question becomes, “How do we do this?” Here’s a recommended approach: 1) Conduct a business diagnostic workshop; 2) develop a portfolio intelligence platform; and 3) create an optimization matrix.Conduct a Business Diagnostic WorkshopWorkshop-based performance tools can guide clients to share insights on the company’s vision, goals, and priorities, and to understand what matters most to business stakeholders. The output of the workshop focuses on strategy, people, processes, and systems, with about 20 different topics to be addressed.Develop a Portfolio Intelligence PlatformIt is essential that organizations have a portfolio intelligence platform that aggregates the company’s underlying data. Once aggregated, the data can be analyzed and visualized using a tool like Tableau. Companies can either build their own analytic platform or purchase a solution. The components of such a framework are shown and discussed below.• Geographic Quotient. The Geographic Quotient analyzes a portfolio for clusters of complementary sites to make custom recommendations based on goals of the business. This quotient is better understood with mapping tools, use of drive-time information, and demographic data.• Lease Quotient. The Lease Quotient analyzes a client’s existing leases within a market to provide guidance on potential renewal terms that will maximize a client’s flexibility.• Cost Quotient. The Cost Quotient benchmarks a client’s portfolio against internal and industry averages to identify opportunities for increased efficiency. The company can look at with it is paying now and what the market is demanding for a similar space. Information is pulled from CoStar — which has some accurate and some inaccurate data — and from the company’s own proprietary data.• Utilization Quotient. Companies provide their own information about the utilization of their industrial assets.• Labor Quotient. The Labor Quotient compares each portfolio location’s skilled labor requirements to their current labor market.Turn Data into DashboardsUsing a tool such as Tableau, an organization can easily visualize key information. Experts recommend dashboards that provide simple visual summaries of information such as:• U.S. domestic and global portfolios. The global portfolio summary provides point-and-click access to custom key metrics about your global portfolio. The domestic portfolio summary expands the capability of the global summary with the ability to drill down to specific sub-geographies with a wider array of customizable metrics.• Leased vs. owned• Portfolio cost details. Analyze portfolio costs from a number of perspectives either by individual property or across a sub-segment of properties.• Portfolio lease expiration. Stay on top of your portfolio’s lease expiration schedule to identify which properties require immediate action.• Portfolio mark-to-market comparison. Effortlessly compare current lease rents to market averages to better ensure awareness of cost increases or cost reduction opportunities across the portfolio.www.iamc.org Strategy People Process Systems • Workplace Strategy • Strategy Skills • Clarity & Standardization • Accuracy • Location Strategy • Real Estate Skils • Project Management • Availability • Cross-Functual Collaboration • Business Acumen • Financial • Integration • Brand • Communication Skills • Transactions • Automation • Strategic Financing • Knowledge of Business Strategy • Performance Metrics & Reporting • Sustainability • Change Management12 NOVEMBER 2018 SI T E S E L E C T IO NA PAPERED-OVER PARADISEHow a much-maligned country plans to push back against fake news and a slowing economy.P ANAMAYou may recall the scuttlebutt created recently when the ICIJ (International Consortium of Investigative Journalists) published the results of a years-long investigation as “The Panama Papers: Exposing the Rogue Offshore Finance Industry.”Countless heads of state, celebrities and business leaders were outed, their secret stashes of wealth exposed. Voters across the world seethed with anger over corruption. And a tiny Latin American nation full of so much promise had its reputation irretrievably bruised.Was this fake news?Yes, and no.While the facts detailed in the report were correct, and the politicians whose ill-gotten wealth was rightly exposed, it was wrong to suggest Panama was at the heart of this global scandal, or even disproportionately involved. What the investigation failed to adequately highlight was that this is a global problem, and even many Western nations serve as secretive tax havens for the wealthy and powerful.The Tax Justice Network (TJN) reported in September that four of the top 10 protectors of financial secrecy to the EU are members of the bloc themselves: the Netherlands (2nd), Luxembourg (3rd), Germany (6th) and France (8th). The U.S. was No. 1. (TJN’s separate Financial Secrecy Index ranks Switzerland No. 1.)“The new research deals another blow to the idea that financial secrecy is limited to a few remote, palm-fringed islands operating on the peripheries of the world economy,” TJN said. “Germany supplies more than twice as much financial secrecy services to the Netherlands as the infamous Panama does. Meanwhile, the Netherlands supplies more than three times as much financial secrecy services to Germany as does Panama.”Yet no one’s writing exposés on German banks being at the center of global money laundering.Naming what was otherwise a brilliant bit by ADAM JONE S -K ELLE Ye ditor @ site s ele c tion.c omPhoto: Getty Images S I T E S E L E C T I O N NOVEMBER 2018 17of investigative journalism “The Panama Papers” unduly impacted a nation not deserving of the reputation with which it’s now saddled, and damaged an economy still trying to recover. Site Selection sat down with the leading candidate in Panama’s presidential election to get his thoughts on this, and the other economic issues the next administration will have to tackle. Site Selection: Many believe the so-called Panama Papers unfairly singled out Panama for a practice employed to a far greater extent in other countries across the globe. Do you share that view?Laurentino Cortizo: The tax evasion problem is a global problem that involves many jurisdictions including European Union countries. Stigmatizing Panama and damaging its image is unfair and also far from reality. Only about 30 percent of these companies were registered in Panama.Panama, contrary to many low tax jurisdictions, has a real economy, with more than 250,000 people working in the agricultural and industrial sectors, and a Canal that is open to shipping of all nations.SS: To what do you attribute Panama’s recent drop in GDP, and how will it be turned around?LC: First, the slowdown can be attributed to the completion of many large infrastructure projects, such as the Canal expansion, which reduced employment. Secondly, Panama’s investment climate has suffered mostly from excessive red tape and bureacracy. The country has also been affected by the regional slowdown, since most of our service exports markets are in these countries.The way to turn it around will involve more efficient capital expenditures by the State and from FDI. The government must also modernize its judiciary and change many costly and obsolete regulations to make the country more competitive. SS: What are Panama’s greatest economic attributes?LC: Panama is a business paradise. Its geographical position immediately provides a large competitive advantage. A commitment has been made to develop a logistics hub that positively impacts the overall state of the economy with a number of key players working together: the Panama Canal, Tocumen Airport, Panama Canal Railway and all of our world-class container ports: The Atlantic-Pacific port system handled 6.9 million containers in 2017, more than the 6.7 million handled by New York.Further, the country has very low inflation and uses the dollar in an open economy where legal capital flows in a seamless manner. Panama has a flexible legal framework for regional headquarters (SEM) which was created in 2007. Also, Panama has low political risk; all major political parties favor maintaining our successful economic model without major changes. All of this is supported by a sophisticated financial sector.SS: In addition to logistics, which industries will drive Panama’s economic growth?LC: Proficiency in knowledge-based business services has made us leaders in the region. With the introduction of new technologies there is an opportunity to transform our financial center and compete with the larger markets. We can also become an international center of regional knowledge that can serve as a base for the development of new technologies and research.SS: What’s the greatest threat to both the global economy and Latin American economies?LC: Social inequality is the greatest threat to the political, social and economic stability of our continent, and the malicious exploitation of this inequality can lead us down dark paths that we do not want to undertake. It is a challenge that we hope to begin to overcome in the next five years.A full-blown trade war between China and the U.S. can have a negative impact on world GDP and on Panama’s Canal and the maritime sector.SS: What will Panama’s new diplomatic relationship with China mean for Panama?LC: Our new relationship with China represents a wide range of opportunities in investment, commercial, cultural and intellectual issues. China is the second largest user of the Panama Canal, with 18 percent of total cargo. It is also the world’s second largest economy, with the world’s largest population, and an important actor on the international stage, which clearly should not be ignored.Laurentino CortizoNext >