< Previous6 JULY 2023 SITE SELECTION insider July 2023 Mark Your Calendar … FALL FORUM • 9-13 SEPTEMBER 2023 Boise, Idaho, USA www.iamc.org BOARD OF DIRECTORS Fall 2022 - Fall 2023 Chair Karen Shchuka Penske Transportation Solutions Vice Chair Betsy Power PepsiCo Secretary/Treasurer Cary Hutchings BNSF Railway Past Chair Scott Cameron Sonoco Products Matt Boehlke Xcel Energy Alan Darner Kellogg Company William DeBoer Kohler Co. Lindsay Friedman Prologis Jim Horigan Corning Inc. Patricia Horvatich Pittsburgh Regional Alliance Robert Kontur EnerSys Amy Madison Pflugerville Community Development Corp. AJ Magner CBRE Eric Zahniser Cresa IAMC President & CEO J. Tate Godfrey, CEcD Preparing the Business Case E very new corporate proposal needs a proof of concept. And there’s no stronger proof than a sound financial business case. Explaining how an initiative can generate revenue or improve pre-tax income is sure to grab the attention of the folks in the C-suite. Over the past few letters, we’ve explored how to strategize on new, out-of-the-box initiatives. We’ve identified opportunities and evaluated their applicability to our business. Now it’s time to measure costs and benefits. Two issues arise. First, not everything that benefits Corporate Real Estate is beneficial to the company. Our job is to support the business, its customers, its goals and its culture. So, the input of other departments will be key. Second is access to the C-suite. Decisions such as consolidating locations may save money, but how will they impact other business units, stakeholder perception, employee morale and retention, and, most importantly, your customers? In other words, there are more than financial costs involved. So, it’s key to ask a broad range of questions with an understanding of your business and culture beyond CRE. Let’s say the idea was floated — by someone in-house or a colleague at an IAMC meeting — that sale-leasebacks are a great initiative to improve cash flow. But how would that lease impact your flexibility to relocate if there are changes in market trends and labor availability? What will it cost the company in upfront commissions and taxes? What about downstream rent escalations? Conversely, someone might suggest that asset ownership provides longer-term locational certainty. What capital is currently available to make a purchase? Is the location in a seller’s market? Is it the right time to buy, given the current lending environment? Are these stand-alone decisions for CRE alone, or do you need the larger-picture perspective of, let’s say, Operations and Finance? The idea of corporate culture has come up a few times. Not all new initiatives need to be asset-specific. Some also assist with supporting CRE’s influence on diversity, equity and inclusion (DEI) initiatives and environmental, social and governance (ESG) protocols. On the first score, questions arise about how CRE can support the corporation’s DEI initiatives and take them to the next level. How do you mount an outreach campaign or analyze internal results? On the second score, what initiatives can be implemented and with what costs and returns? How will these initiatives satisfy the growing number of local carbon mandates? In both cases, what is the cultural impact and public perception of the firm? So, the mission to pin down costs and benefits starts with data gathering from those internal, affected business lines. It certainly demands a long conversation with Finance as well as Operations. Keep in mind also not every new initiative needs to carry a hefty price tag. Try to identify those projects that can be implemented with the resources you or another department might already have. Data gathering might also mean marshaling the input of outside sources, including brokers, consultants and other providers, such as your economic development advisors. Depending on the source, you could be looking at short-term charges to get the program, whatever it might be, up and running. Karen Shchuka8 JULY 2023 SITE SELECTION Long-term charges are likely to come in the form of additional staff and the salary, benefits and training they represent. Long term or short, the savings or additional profit you envision from your program will compensate for the expenses your program incurs. Once all cost data have been collected, it’s time to accurately assess the charges and changes they bring, be they financial, organizational or cultural. But your work isn’t over. Before you approach the C-suite to take in your proposed new avenues to business improvement, there’s one more step: Allow the many colleagues you’ve enlisted to review and critique your work. And therein lies the topic for our next letter. Karen Shchuka Chair, IAMC Board of Directors T here’s good news and bad news when it comes to diversity, equity and inclusion (DEI). First, the bad news. The commercial real estate industry still has a long way to go. The good news is that years of progress have all but vanquished the Good Old Boys Network. “We’ve made great strides,” says Marcus Rose, senior real estate manager for NFI in Camden, New Jersey. “We can see efforts across all the disciplines, as well as in leadership. Of course, there’s always room for improvement.” Indeed. But real estate isn’t alone. Looking at the broader marketplace, JLL reported recently that 85% of Fortune 500 CEOs were men. In Asia, that number soars to 96%. It also underscores the difference between diversity and equity. For every $10 a man earns, a woman pulls in $8. Startlingly, “The time required to close the pay gap has risen to 132 years from 100 years since the pandemic started,” states the report, with full gender equality “a staggering 286 years away.” And keep in mind that those figures don’t include other underrepresented groups. Strides, of course, are being made, blows landed against bias. In a recent SIOR webinar, president- elect David Lockwood pointed to industry initiatives to augment commissions with a stipend to ease the burden of starting brokers, including women and people from lower-income backgrounds. Those strides are also being reflected in industry leadership. Cushman & Wakefield recently appointed its first female CEO, joining an impressive roster of previously underrepresented types in its Americas leadership roster. On the association side, both IAMC and SIOR can boast of females at the helm. “There’s a tremendous amount of work to be done,” says SIOR President Patricia Loveall. “But there’s been a diligent commitment and focused effort to make a meaningful DEI impact. We’re not just talking about it.” The numbers remain problematic, however. A late-2022 survey of global real estate firms — sponsored by seven industry associations — revealed the following: In descending order, the gender and ethnicity breakdown at firms went like this: 39.1% white male, 25.5% white female; 5.9% for both Asian men and women; 5.2% Hispanic/Latino men and 4.4% Hispanic/Latino women; 3.1% Black men and 3.7% Black women; 1.5% multiracial men and 1.1% multiracial women; with a 0.1% and 0.2% split among men and women identifying as Aboriginal/ Indigenous/Native American; and 0.1% Pacific Islander men and women. The survey represented more than 357,041 full-time employees from 192 global businesses. More than 56% of respondent firms have a formal DEI program — still low, but up from the prior year’s 49%. But why the change? And what more should we be doing to correct the shortfalls in representation Miles to Go on the Road to True Diversity, Equity and Inclusion By JOHN SALUSTRI “We have to improve the general awareness of commercial real estate as a career.” –Marcus Rose, NFI10 JULY 2023 SITE SELECTION and equity? “The companies we work with want us to look like them,” says Eric Zahniser, a managing principal of Cresa in Conshohocken, Pennsylvania. Add to this the added pressure of ratings agencies looking for companies to increase their scorecard in environmental, social and governance (ESG) protocols, and that being applied by potential job candidates who increasingly want to work for companies with a strong ethical mindset. “DEI is important not only for the well-being and cohesiveness of your workplace environment, but also because the growth of your company depends upon its ability to attract and retain new employees and customers,” says Rose. “DEI brings value because everyone has a different perspective. And at the end of the day, that brings value to your customers.” A Joint Effort So, what needs to be done to achieve true diversity, equity and inclusion? “It’s not enough to verbally commit,” says Loveall, who is also an EVP at CBRE in Seattle. “Actions have to back up words.” And those actions must start with a program of measurable metrics. “We need to define what success looks like.” Rose agrees: “You’ve got to define what diversity and inclusion means and why it’s valuable to your company. If you don’t understand those two pieces, there won’t be a foundation to build on.” That means a truly ingrained DEI protocol must start at the top. “Leadership should commit to diversity at all levels of the organization,” says Zahniser, and it has to filter everywhere, throughout the organization. Which can be tricky in decentralized operations, where culture can split off from the mainstream, leaving an open door for biases to creep in. Diligence at all levels, he says, is key. While DEI has to start at the C-suite, it finds its voice at the front door. “There’s too much emphasis on hiring people from the country club for some business benefit,” he says. Instead, he suggests spreading job opportunities to more diverse schools, including community colleges, and posting them in different socio-economic areas. Rose also advocates for spreading the word of careers in commercial real estate at an earlier age. “We have to improve the general awareness of commercial real estate as a career,” he says, which is achievable, at least in part, by promoting the field in public high schools, private and charter school environments. “I never knew commercial real estate was a career. Promoting it to earlier ages will expose a more diverse audience,” including people of color, women and the LGBTQ community and “grow your potential workforce.” But Loveall says that progress cannot be left to leadership alone. Individuals themselves need to find their voices. “It’s a risk issue on the part of the individual,” she says, “a resistance to taking on the risk, and that’s what stops them from getting noticed. If I were going for an opportunity against a man, I want people to know I’m remarkable so they’ll say, ‘I like the way Patricia thinks.’ It’s an opportunity for me as a woman to find those things that say, ‘This is why I’m different. These are the things you didn’t ask me but that you need to know.’ ” In short, she says, “people need to face the risks and trust their own voices. “We’re not aware of our biases,” she continues. But the presence of bias also creates “a great opportunity for any underrepresented group to distinguish themselves from their competitors.” Leadership has to embrace rather than run from those voices. “It’s on leadership to use workforce surveys to gauge if they’re really walking the walk,” says Zahniser. “A company website might proclaim that DEI is their number one priority. But an anonymous survey might reveal that people in the LGBTQ community are feeling marginalized.” The problems with such surveys are twofold: First, despite anonymity, people might fear for their jobs. Second, according to Gallup data, “only 8% of employees strongly agree that their organization takes action on surveys.” “Again,” says Zahniser, “it’s on leadership to use the survey process to see if what everyone is saying matches their public message. And if not, there needs to be corrective action.” Three truths abide: 1. DEI is a joint initiative. Everyone, including those in underrepresented groups, needs to advance the dialogue. 2. It has to filter through the ranks, but it starts with an aware and committed leadership. 3. DEI isn’t a destination. It’s a journey. “It’s impossible to argue that bias doesn’t exist,” says Loveall. “We all have to take a strong voice against bias and stereotyping, to lean in and be that champion. We need to be responsible for creating our future.” 14 JULY 2023 SITE SELECTION The ASEAN-6: A VIBRANT TECH PLAYGROUND A positive by-product of the pandemic in Southeast Asia was the rapid pace of digitalization — encouraging the tech sector and its stakeholders to continue on the path of innovation and growth. A diverse region with a wide range of market demands and more than million new internet users since , Southeast Asia presents ample opportunities across the board. More than $ billion in startup equity and debt funding occurred between and . Known as the ASEAN-, Singapore, Malaysia, Indonesia, ailand, Vietnam and the Philippines (the region’s largest economies) continue to develop their tech ecosystems for startups/companies. Singapore, with a population of only million but a % internet penetration rate, is on the advanced end of the spectrum in terms of adoption and use of digital platforms across various aspects of daily life, from payments (PayNow platform) and e-commerce (headquarters of Lazada, Grab and Shopee) to government services (SGGov) and healthcare. On another point of this spectrum is Indonesia, with million people and an internet penetration rate of %, which has displayed a growing preference for e-wallets and digital banking, the rise of unicorns and a plan to bring million SMEs as well as millions of unbanked individuals into the digital fold. Driving this digital transformation are a few important, predominantly government-led themes: National Digitalization Initiatives Singapore’s SmartNation Program is implementing truly transformative digital solutions across three key pillars: digital economy, digital government and a digital society. Other initiatives such as ailand ., Indonesia’s - Digital Roadmap, Malaysia Digital and Vietnam’s National Digital Transformation Program , are targeting specifi c industries in their respective countries deemed to be of national strategic value, for expedited transformation through faster digital adoption, attracting relevant investors, and inculcating a sense of innovation by encouraging local startups. Others, such as the Philippines’ National ICT Ecosystem Framework (NICTEF), prioritize development of a robust framework of ICT regulations/policies, upskilling talent and developing supporting infrastructure. Sandboxes Sandboxes are paving the way for true public- private partnerships in digital transformation BY UDAI PANICKER, SINGAPORE COUNTRY MANAGER, AND PEI WEN NG, SENIOR RESEARCH ANALYST, TRACTUS ASIA LTD. ASIA SITE SELECTION JULY 2023 15 across ASEAN. Government-mandated digital sandboxes are providing tech startups and companies a “safe space” to test their solutions without affecting real networks and stakeholders, while enjoying exemptions from specific regulatory obligations. Singapore, Malaysia, Indonesia, Thailand and the Philippines have started digital sandboxes for fintech, e-commerce, healthcare, govtech, regtech, cybersecurity and cleantech, among others. Vietnam is also joining this movement and released its fintech sandbox decree in 2022 for government approval. Accelerators By providing mentorship and access to investors, accelerators have sprung up across the ASEAN-6 to ride the tech startup wave (see map). Mirroring global models, the trend with the best accelerators in these markets involves having core knowledge partners, access to government support, providing physical infrastructure to startups as well as strong relationships with local and international investment firms. Singapore created StartupSG to support accelerators through a collaborative network of the National University of Singapore, media players and VC/PE firms. In response to a decline in the number of sector- agnostic accelerators since 2017 and specialized accelerators between 2020 and 2022, Techsauce launched its Thailand Accelerator — a great example of a community of seasoned tech sector leaders supporting local startups by providing them guidance and exposure to their network of strategic partners/investors. Access to Funding In terms of access to private-sector funding, according to a Cento Venture study, Southeast Asia has seen a steady rise with over $65 billion invested in technology startups between 2013 and 2022. As a global financial hub, Singapore is the undisputed top location for tech startups looking to engage investors. Indonesia comes second, offering tech companies opportunities as the largest market in the region, driven by the rise of e-commerce and fintech adoption over the last three years. According to a 2022 BCG report, there are over 330 fintech players in Indonesia, a six-fold increase since 2011 and in the limelight of investors. Vietnam, a sizeable market of 100 million people, saw its 3,000+ startups raise over $1 billion in 2021. Each country has its own unique set of complexities for tech companies looking to enter, invest and grow. Per Tractus’ experience and feedback from tech clients entering ASEAN, the main challenges new entrants might face include: Hiring the right talent : This can be a challenge depending on the type of tech talent you need to hire and the numbers as demand is high, but supply is short. Finding the right partners : If your business model relies on strategic partners, it is important to vet them face-to-face, if possible. Investing in relationships is a core cultural component of doing business in the region. Building your Southeast Asia story : Besides assessing product-market fit, thinking about how your company will add value to the country will go a long way in building a sustainable platform for growth. Unfortunately, many companies realize too late that a “one size fits all approach” might not get traction in terms of adoption, investments or incentives. In the end, depending on your appetite for risk and whether you want to start with one country or multiple simultaneously, the Southeast Asian market and its tech ecosystem are wide open. Just remember to do some homework before you head to the playground. Philipines 3%Other 2% Accelerators in ASEAN in 2022 Projects by Percent Singapore 62% Indonesia 24% Vietnam 5% Malaysia 4% Sources: Singapore Ministry of Trade and Industry, Innovation Club Thailand, Swiss Entrepreneurship Program, Tracxn, Tractus Asia research. *Note: This list does not include incubators. Udai Panicker is Singapore Country Manager and Pei Wen Ng is Senior Research Analyst at Tractus Asia Ltd., (www.tractus-asia.com), a leading Asia-based global site selection firm.Next >