APRIL/MAY 1998 |
IDRC?s Best Practices Award: Australia Post — Leadership by Jack Lyne
When market-driven pressures transfigured Australia?s national mail system, its real estate arm took a decidedly proactive turn. In two short years, the group has forcefully made the case for cost-effective strategic space utilization. Australia Post Property Division?s designation as 1997?s winner of the International Research Development Council?s (IDRC) Best Practices Leadership Award signals a remarkable transformation. Australia Post?s (AP) real estate arm certainly merits the prestigious award from IDRC, the world?s preeminent association of corporate real estate professionals. In only two years, it upped return on AP?s real estate assets from 7.3 percent to 10.4 percent, cut costs by $13.3 million, and added $15 million in value through property redeployment and redevelopment. Not to mention prodding AP?s 39,000 employees toward cost-effective space utilization. Only a few years earlier, though, real estate and leadership were total strangers at Australia Post, the national mail system serving Australia?s 18 million residents. As in many major corporations, real estate management then played a distant second fiddle to business unit decisions. In that environment, AP?s real estate arm was about as proactive as a dead letter office.
says Peter Lavis, AP Property Division general manager. That scenario, however, left AP idly sitting on one of its most valuable assets: its 1,500-plus property portfolio, valued at US$626 million, making up more than 70 percent of the organization?s total assets; and real estate costs are AP?s second biggest cost, trailing only labor. Substantial real estate inefficiencies were another byproduct of the geographic management structure then in place at AP. Many real estate functions were duplicated within individual Australian states, and state real estate procedures lacked consistency. Real estate?s role was emphatically reactive.
Lavis says. The staff included few property professionals, further limiting the potential for real estate leadership. Change Gains Momentum In 1989, though, Australia Post got two very loud wakeup calls. First, the government ordered the national mail service to act as a
In 1989, major international players like UPS and Federal Express also entered the national market, ending AP?s monopoly status. Like some huge express mail package, market pressures had rudely arrived on AP?s doorstep. Those competitive prods set the wheels of change spinning. AP began the arduous task of remaking itself. Ultimately, that transformation remade AP?s real estate arm. That process began in 1995, when a management team was created to formulate a new real estate model. Key Strategic Elements Here are key strategic elements of Australia Post?s real estate model, described in greater detail in the April/May Site Selection:
Lavis says.
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