![]() From Site Selection magazine, July 2001
CORPORATE REAL ESTATE LEADERSHIP AWARDS
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Maximizing
Real Estate's Value
Site Selection Honors Top Leaders in Corporate Real Estate
EATTLE -- Operating in the "post-New Economy" era of corporate downsizing and declining profits, real estate executives face a huge challenge -- maximizing real estate's value while contributing to next quarter's bottom line.
And, oh, by the way, their bosses declare by edict, do this while keeping space commitments at a minimum, locate facilities in the best labor markets, negotiate the best incentives deals, and simultaneously manage expansions and consolidations in different markets. Does this sound like your job? If so, then you're not alone. The past 12 months have been among the most challenging ever for corporate real estate professionals. Following the largest peacetime economic expansion in history, real estate leaders last year grappled with the fallout of the dot-com boom and bust, orders from on high to consolidate and downsize, and the downward momentum of Wall Street. Despite the economic slowdown, a number of companies still managed to announce record-breaking expansion projects (as you will read in the examples to follow). At the helm of the ship navigating these turbulent waters are the captains of real estate -- the corporate real estate executives who must satisfy the space needs of their companies while making wise investments. Site Selection honored the "best of the best" in the profession when the magazine presented the annual Corporate Real Estate Leadership Awards on May 13 at the Pacific Northwest World Congress of the International Development Research Council (IDRC), the world's preeminent corporate real estate association. The winners clearly demonstrated that the best leaders in the industry don't merely respond to change; they drive change throughout their organization. True leaders aren't content to maintain the status quo. Instead, they challenge conventional ways of thinking and create new business models that make their companies more competitive. Here are their stories: Gerald Behn and Barbara Moore The program was conceived and developed by Gerald Behn, vice president of corporate real estate for NCR, and his colleague Barbara Moore, global portfolio director. "This is the purest form of corporate real estate leadership that I can think of," says Scott B. Epling, director of dispositions for NCR Corporate Real Estate. "They (Behn and Moore) have put in literally hundreds and hundreds of hours in planning this global program. Their combined strategic thinking will drive literally millions of dollars of savings and shareholder value for many years to come." The overall program was designed by Behn and Moore to be a business unit-driven strategy rather than corporate real estate driven. "Gerry and Barbara's strategic planning has demonstrated to the senior NCR and business unit leaders that through an effective, global real estate strategy, they can be more competitive and profitable globally. This is a very thoroughly planned and forward-thinking form of 'right-sizing' and will contribute very visibly to the bottom line," adds Epling, who nominated Dayton, Ohio-based Behn and Moore for the award. The right-sizing strategy uses third-party experts in alternative officing. The program aims to improve profitability through increased worker satisfaction, reduce employee turnover and churn costs, showcase NCR's applied technology in the workplace and reduce real estate costs. David Jarman ![]() Not content to merely manage that inventory, Jarman last year issued a straightforward challenge to his team -- drive down the operational cost of real estate -- and he gave them a game plan to do it. He implemented key occupancy metrics for all domestic and international locations, including occupancy costs as a percentage of revenue and occupancy costs per seat. He established baseline guidelines for each country, and he created biannual meetings with property leaders to exchange information on processes and best practices. By developing more open and flexible use of space, changing the way space is allocated and encouraging partners to "reverse hotel," Jarman and his team reduced overall project costs by $500 per PwC employee in 2000. Jarman also oversaw the completion of 11 new global workplace projects totaling 1 million sq. ft. (93,000 sq. m.) last year in the United States. "David has a continual focus on best practices within the industry," noted Ann Duncan of CLW Real Estate Services Group in Tampa and Elaine Melanides of Jones Lang LaSalle in Chicago in their nomination of Jarman. "He spends considerable time and energy focusing on new ways to improve service delivery and is constantly pushing his team to the cutting edge." Richard Kriva Now, for the first time in the company's history, there is a precise accounting of every one of Motorola's 700 properties, totaling more than $1 billion in annual operating costs, around the world through global real estate reviews. After just one year, redundancy in the real estate work force at Motorola has been reduced by 20 percent, and a company-wide operation cost reduction program has delivered $50 million in real savings. By 2003, Motorola's Breakaway Workplace Strategy -- founded by Kriva -- is expected to save the company $300 million in annual real estate operating costs. "Through the emphasis on our Breakaway Workplace Strategy, Rick has reached out and is touching all of the 140,000 Motorolans by offering them the tools to work from wherever it is convenient," says Jason Larry, manager of the Breakaway program. "In his own team, Rick has made the workplace a well-oiled production machine by offering employees the opportunity to run their own business within his group and empower his employees to make their own decisions of how, where and when to work. Rick's team of professionals can turn around leases, negotiate real estate deals and deliver on construction projects faster and more efficiently than any team I have ever seen." Raymond Meglio ![]() In addition, the $6 billion media, information and education empire acquired Harcourt Brace and Prometric in 2000, and Meglio's considerable experience in corporate real estate came to the forefront in both. Globally, Meglio's corporate real estate initiatives achieved more than $70 million in direct savings and cost avoidance in 2000. "Considering Thomson's dynamic and rapidly changing business environment, where corporate merger and acquisitions are so prevalent, it has provided corporate real estate the opportunity to demonstrate its highly technical and analytical disciplines," notes Jeff Garibaldi, president of The Garibaldi Group, in his nomination of Meglio. "Ray's CRE team has been involved in the evaluation phase of all merger and acquisition activities and analysis." Nominated by seven people in corporate and commercial real estate, Meglio received strong endorsements from service providers including Cushman & Wakefield, Ernst & Young and Royal LePage Commercial in Toronto. These service providers worked with Meglio as he handled all of the real estate issues created by some 40 corporate acquisitions totaling $4.9 billion. G. Trex Morris ![]() Based in Atlanta, Morris oversees leasing, project management, forecasting, financial reporting, benchmarking and strategic planning for all Ernst & Young properties. His team's innovations in 2000 included the development of a web-based invoice as a project management tool, a new lease audit process and an interactive notes-based project approval process. "Trex has achieved a proper balance of centralized control by working closely with the individual area practice leaders for strategy development, project approval and implementation," says Frank Mann, executive vice president of Jones Lang LaSalle in Atlanta. "As a result of this interactive process, corporate real estate's standing in the firm is one of the highest that Jones Lang LaSalle has identified in our client base." Mann notes that Morris "greatly influenced business unit involvement in developing area (regional) strategic plans." Under his leadership, the Ernst & Young real estate group provides periodic market reports that assess the current state of the real estate market, review key metrics for each office, review options that may be nearing (expansion, contraction or renewal), and identify both short-term and long-term activities. "This results in a consistent delivery of services, a marriage of external providers and internal real estate managers that work very well together," says Mann. Tom Quinn and Ken Philbrick ![]() Those proceeds reduced the debt load and funded roughly one-third of the corporation's overall capital budget of $600 million per year over the last three years. In addition, future dispositions of excess inventory are expected to produce another $800 million in revenues. "From near the edge of oblivion with a stock price of $16, the newly consolidated corporation has fought its way back," says Jeff Troan, director of real estate for Lockheed Martin's Orlando Central Park in Orlando, Fla. "We are now looking forward to a record year, with a stock price approaching $40 and steadily increasing liquidity." Without the infusion of cash generated by the corporation created by Quinn and Philbrick, Lockheed Martin would not be in the competitive position it's in today. "Investment in new markets and products would have been starved, and the resulting entity would have been much less a player in the new defense technology industry," notes Troan. P. Brooks Warren Consider Warren's Project LightSpeed, a landmark design/build initiative launched in the past six months. Leveraging the Internet to achieve a national technical facility rollout in record time and under budget, Project LightSpeed encompasses the simultaneous creation of 13 network information centers (NICs) for WorldCom. The NICs are state-of-the-art technical centers totaling 1.3 million sq. ft. (120,900 sq. m.) at 13 sites. Normally it would take 18 to 24 months to go from initial site evaluation to revenue-ready status. By delegating to partners who share his philosophy for quality, speed and efficiency, Warren reduced that cycle to only nine months in several locations. In addition to the 13 new NICs, Warren continues to oversee the following WorldCom expansions: 600,000 sq. ft. (55,800 sq. m.) in Northern Virginia; 372,000 sq. ft. (34,596 sq. m.) in St. Louis; 188,000 sq. ft. (17,484 sq. m.) in Richardson, Texas; and 240,000 sq. ft. (22,320 sq. m.) in Alpharetta, Ga. Warren also added value to WorldCom by engineering the purchase of a 540-acre (216-hectare) tract for a new corporate campus in Loudoun County, Va. Though some people questioned the wisdom of that purchase at the time, today the land is valued at almost four times what it was worth then. William L. Yontz ![]() In the three years Yontz has been at Capital One, the number of employees increased 233 percent to its current headcount of 20,000. Yontz manages a portfolio of more than 5 million sq. ft. (465,000 sq. m.), which increased 22 percent in 2000. He also spearheaded efforts to expand the company into new markets in France and Canada. While Yontz's contributions to Capital One are detailed in Site Selection's Cover Story in this (July 2001) issue, here's one key measure of his value: In 2000, Yontz set out to reduce his company's real estate operating budget by $8 million. He easily surpassed that goal. "CRE realized budget reductions of 6.5 percent ($12.3 million) by exploring smarter business practices, reviewing vendor relationships and improving the efficiency of everyday operations," notes Thorpe. Simple things. But simple things produce best practices -- and make Yontz one of the best of the best. ![]()
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![]() ©2001 Conway Data, Inc. All rights reserved. SiteNet data is from many sources and not warranted to be accurate or current. |