In the years I’ve been in corporate real estate (CRE), I’ve seen significant gains in the use of digital technologies. But I can also tell you many in the field have not been enthusiastic about this. Real estate is largely viewed as a person-to-person business with a sense that technology sometimes adds little value. On the other hand, today every corporate function is squeezed for resources, CRE not the least. With that reality, it is imperative that CRE managers leverage resources and utilize better management and labor-saving technologies available in the marketplace. Today, I’d like to talk to you about the latter, CRE tech.
Offering some support for my observations on corporate real estate, David Mandell writes in REjournals.com about CRE’s first cousin commercial real estate, saying that while it “is an industry driven by out-of-the-box thinkers, it remains behind the technology curve.” To catch up, Mandell prescribes development of mobile apps, selected use of social networking, exploring big data and migrating tech applications to cloud computing. All of these should be viewed as opportunities for CRE to more effectively manage its business.
It seems to me that potentially applicable technologies are piling up at CRE’s doorstep. For example, aerial drones are already revolutionizing small-area geographic surveys, marketing of assets, and site assessments. (This topic was explored in Site Selection’s July 2015 cover story.) Further, “augmented reality and gamification help tenants by changing the remote property tour experience. Using virtual reality, drone video and other tools create more user-driven, realistic experiences,” says John Gates in the National Real Estate Investor. Further, it saves significant time and more effectively manages travel.
Consider also the Internet of Things (IoT), which enables machine-to-machine interaction, potentially eliminating the need for a facilities employee to be on site to read a dial and then make a physical adjustment. The Service Channel publication “7 Trends that Will Impact Facilities Management” says, “And as connected (to the Internet) devices, equipment will be able, in a sense, to submit their own work requests and get serviced — before problems occur and negatively impact the all-important customer experience.”
Here’s another major opportunity in my opinion: CRE needs to find its dark data; make it available for analysis; and open it to the rest of the company, as appropriate. Dark data consists, for example, of those really cool numbers we keep in Excel spreadsheets. Useful information is stuck there. About this, Gates writes, “a CRE department must be data-driven and use advanced data and analytics platforms that marry data governance, data management and business intelligence with technology and knowledge management.” Getting CRE’s buried data into play could be a gold mine for the department and beneficial to the broader company, as well.
Technology is a source for optimism that more and better CRE work can be done with existing resources. But to realize the savings, efficiencies and breakthroughs, you and I — all of us — need to get in the game, try out emerging technologies and put the promising ones to work.Samantha Turner
Editor’s Note: This article is based on a March 13, 2016, IAMC New Orleans Professional Forum Food Processing Industry Group program. Russell Burton of PepsiCo moderated the session, which featured panelists Jennifer Roth of Bimbo Bakeries USA, Karen Shchuka of Penske Truck Leasing Co. and Bill Pickens of PepsiCo. The Economic Development Partnership of North Carolina sponsored the program.
To increase productivity and reduce costs, corporate real estate teams often adopt outsourcing arrangements and technologies. Third parties are commonly used for transactions, project management, construction, legal, and site selection in new markets. Software solutions are also an integral part of corporate real estate operations, whether for automating rent payments, storing and sharing documents, or project management. Some believe greater access to information through new technology will change the nature of broker-tenant relationships and eliminate commission-based compensation models.
Many companies use automated processes to handle monthly lease and variable payments.
Creative approaches can pay off when dealing with final asset and idle-space disposition.
Many corporate real estate departments find that the standard brokers who handle tenant rep don’t do a good job on final asset dispositions. Some simply post idle assets on CoStar and hope they get a phone call. One CRE department has had some luck putting their own listings on LoopNet, which is like a Craigslist for real estate. Program attendee Christopher Chung from the Economic Development Partnership of North Carolina noted that local economic developers can help identify potential uses for idle space. Developers are an excellent resource, especially in small markets, since they call on the most likely candidates for overflow space.
Corporate real estate teams are exploring new software solutions.
The group shared information about their experiences with different technologies.
Editor’s Note: This article is based on the March 13, 2016, IAMC New Orleans Professional Forum Research Roundtable program. Greg Saylor of Kimberly-Clark and Ken Hagaman of Anixter moderated the session. The featured presenters were Erin Bojarzin, Senior Associate, Accounting Advisory Services, KPMG, and Simba Dutt-Mazumdar, Manager, KPMG. The North Dakota Department of Commerce and Enterprise Florida, Inc., sponsored the program.
Long-anticipated changes to lease accounting rules passed early this year make leases a balance sheet item. Preparing for these new standards will require that companies develop an approach for identifying all their leases, defining and gathering necessary data to feed to the finance department, and monitoring leases for changes. These new standards — which need to be well understood — could have technology and business impacts. As leases become a balance sheet item, ratios, covenants and working capital could all be affected.
KPMG’s Simba Dutt-Mazumdar and Erin Bojarzin highlighted key changes in the new FASB lease accounting standards, and discussed the implications for companies and corporate real estate professionals.
New lease accounting standards from the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) were issued in early 2016. Publicly traded companies must adopt the new standards by 2019, and others must adopt the FASB standards by 2020. But since there is a two-year look-back period, businesses will need to start collecting data in 2017. Companies may choose to adopt the new standards earlier.
The changes to lease accounting standards emphasize greater transparency.
In these new standards, FASB and IASB collaborated to define what a lease is. There are two key components:
The reasons for the changes in standards include:
Complying with these standards will likely be a significant organizational undertaking.
In order to comply, organizations will need to undertake several steps including:
The need to adopt these new accounting standards provides an opportunity for corporate real estate professionals.
In helping organizations plan and execute processes to deal with these new standards, CRE professionals have an opportunity to be proactive and strategic. The CRE department can take the lead in working with the finance department in defining the data to be collected and the process for collecting it, helping other departments that have leases, and being strategic about how these new rules will influence decisions such as buy vs. lease.