“Leadership,” says Warren Benis, “can’t be taught; it must be learned, grown through experiences.”
The industry’s experience grew a bit on Apr. 30, as Site Selection presented its Corporate Real Estate Leadership Awards to eight executives, chosen by SS’s editorial board from industry-wide nominations. (Two other winners were tapped as “Editors’ Picks.”)
Appropriately, the Leadership Awards were presented at the New York World Congress of the International Research Council (IDRC), the world’s preeminent corporate real estate association and an industry leader in coping with change.
And these eight winners clearly demonstrated that leadership becomes most visible during times of great change. Operating in change-riddled environments, each added abundant value that advanced key corporate strategic concerns.
And in that, corporate real estate leadership is much like sailing: High winds may create the most dangerous waters; but they also generate the greatest speed. Here’s a look at the eight Site Selection Corporate Real Estate Leadership Awards winners:
First Horizon Home Loan’s Ron Bastek
First Horizon faced myriad fast-growth challenges in 1999. Senior Vice President Ron Bastek was a leader in creating solutions.
Bastek’s team, for example, oversaw the completion of 53 new offices and 33 relocations. It made a vital service delivery improvement, cutting 60-plus days from the time between new branch construction startups and move-ins. And it instituted standard office finishes and layouts for a portfolio notably diversified by multiple mergers and acquisitions (M&As).
Bastek added major value in First Horizon’s new 300,000-sq.-ft. (27,000-sq.-m.) Dallas-area headquarters. His innovative financing cut occupancy costs 20 percent below conventional rates; and his leasing of HVAC and electrical services from headquarters-based third parties saved another $6.5 million.
Perhaps more importantly, the new open-space headquarters, which marks First Horizon’s launch of alternative officing, has boosted productivity by 12 percent and cut turnover by 10 percent. And its increased workplace interaction cut mortgage underwriting by more than a week.
Still more transactions, in fact, forced Bastek to cancel travel plans. Accepting was Senior Vice President Susan Gwin of Staubach Co., which nominated Bastek.
Prudential’s Michael Baumann
Rightsizing was 1999’s big challenge for Prudential Corporate Real Estate (CRE) Vice President Michael Baumann. “We really did a lot of work, and it really was a team effort,” he said.
It had to be. Despite rising market rates, CRE reduced occupancy costs in Prudential’s expansive 25 million-sq.-ft. (2.25 million-sq.-m.) portfolio from $25 per sq. ft. to $22 per sq. ft.
Huge sales/leasebacks were a major tool. For example, seven New Jersey sites were consolidated in a new 416,000-sq.-ft. (37,440-sq.-m.) Woodbridge, N.J., facility. A sale/leaseback then locked in lower occupancy costs, created a sizeable deferred capital gain and freed capital for core business needs.
CRE also created a value-adding space bank. Eager to cut operating costs, business managers banked more than 1 million sq. ft. (90,000 sq. m.) of excess space, which Baumann’s team disposed of.
In addition, CRE’s new benchmarking/monitoring model guides all major expansions and relocations. It’s already in use at large new Atlanta and Phoenix sites that will add efficiencies.
Finally, CRE added value through the synergy-savvy alliance it forged between Prudential Commercial Real Estate Services, Prudential Relocation Services, Moran Stahl Boyer and CB Richard Ellis, which nominated Baumann.
Travelers Insurance’s Andy Bessette
Not for nothing did Vice President of Corporate Real Estate Andy Bessette become IDRC’s new president.
Bessette led Travelers’ CRE through huge M&A challenges last year, including the completion of a three-year process that eliminated 3 million sq. ft. (270,000 sq. m.) of space, cutting occupancy costs by $45 million a year.
CRE’s innovative space usage also created quality space for lower costs. Renovating a Knoxville, Tenn., spinning mill, for example, saved $2 million a year; converting an Elmira, N.Y., mall saved $500,000 year.
In addition, the CRE team’s mapping system and employee involvement program facilitated a 95 percent retention rate in Travelers’ relocations.
Bessette’s leadership also included creating a manual standardizing leasing and facilities procedures, plus a proprietary ProCalc system linking CRE and alliance partners (including the Travelers Brokers Alliance Partners, which nominated Bessette).
Characteristically, the 1980 U.S. Olympic team member said, “Just as with IDRC, I accept this award not for myself but for the entire team and all our alliance partners. They know how to add value.”
Regus Business Centres’ Robert Gaudreau
Paraphrasing Victor Hugo, Regus U.S. headman Bob Gaudreau said, “There is nothing more powerful than an idea whose time has come.”
Regus certainly falls in real estate’s ahead-of-its-time ranks. Its first business center in Brussels in 1989 baffled quite a few firms still struggling with the notion that employees might work anywhere other than Their Space.
Times change, don’t they?
And Gaudreau has been a leader in a big change that’s increasingly blurred the line between corporate space and service provider space. Leading-edge real estate now comes from anywhere.
Last year, a lot of it came from Gaudreau, who personally trained the teams that opened 35 U.S. Regus centers. (Gaudreau’s official title is actually “Coach,” and his Purchase, N.Y., office includes a stadium-photo backdrop, scoreboard, popcorn machine and actual baseball diamond.)
Gaudreau has also been a leader in providing on-demand space — by the hour, day, week, month or year — that can be booked as simply as a hotel.
Gaudreau’s occupancy strategies are also simple, but savvy as well. Regus either leases its centers or partners with owners. Another smart idea.
Level 3’s Pat Lynch
Level 3 Communications has hyper-growth problems most firms would die for — and usually do if they get them.
Level 3 hasn’t. Uncommonly, it realized early on that managing growth was a make-or-break factor in building the world’s first Internet Protocol telecom network. Pat Lynch, Level 3 real estate and facilities director, was an uncommonly early 100th hire. Explains COO Kevin O’Hara, “Growing so fast, our biggest risk is execution, doing what we intend when we intend.”
Said Lynch, an Editors’ Pick, “One of the primary reasons we’ve been recognized for this award is our unique facilities and real estate approach. Our management team empowers us to take an entrepreneurial workplace approach.”
That approach has created a high-tech buzz. In moderately priced Broomfield, Colo., CRE has created an egalitarian, amenity-rich campus that’s drawn so many resumes that Level 3 could quadruple its work force in a zero-unemployment sector.
And it might. In just over two years, Level 3 has gone from a handful of employees in Omaha, Neb., to almost 4,000 employees in almost 1 million sq. ft. (90,000 sq. m.) of space in the Rockies. And CRE delivered that space ahead of schedule and under budget, with a big boost from parent Peter Kiewit’s construction crew, almost all major Level 3 stockholders.
Lynch’s U.S. bailiwick expanded last year, taking in Level 3’s burgeoning tech space portfolio, already telecom’s largest. With its bustling business in client network co-location and maintenance, it’s yet another fast-growth sector.
U.S. GSA’s Robert Peck
There’s a real estate revolution afoot inside the U.S. government. The General Service Administration’s (GSA) real estate strategies have created “changes that are extraordinary in scope, and with extraordinary challenges to change,” noted savvy Fast Company magazine.
Robert Peck, commissioner of the GSA’s 7,300-employee Public Buildings Service, has been a leader in that revolution, driving a traditional lagging-indicator agency to the leading edge.
Peck, for example, spearheaded the creation of an Adaptable Workspace Lab that’s well beyond most of the private sector. By quantifying work space’s impact on performance, the lab has spurred substantial adoption of non-traditional workplace strategies.
Peck has also championed proactive asset management. He’s linked regional branches’ budget allocations to performance in areas like reducing vacancy rates and operating expenses, even giving top performers bonuses. And Peck was a driving force in setting up the GSA’s Asset Business Plan (ABP) Web site. A 1999 IDRC Best Practices Award in Decision Support, ABP provides online tools to measure and improve asset management performance.
Said Peck, “Though they could make much more outside, our dedicated employees believe in public service, and they’ve proved you can make the market work well inside government.”
Dell Computer’s Kip Thompson
“To make an extraordinary mark on the industry”: That was young MIT student Kip Thompson’s dream. “But when I started working in the development industry,” he said, “I realized that making significant strides wasn’t easy. Then I encountered Dell Computer.”
And then came the extraordinary mark. Thompson, Dell’s vice president of worldwide facilities management and corporate real estate, has pulled off the formidable feat of meshing real estate with a lightning-fast business model.
Last year, Thompson’s bureaucracy-busting “direct real estate” model built Dell’s 300,000-sq.-ft. (27,000-sq.-m.) manufacturing facility in Nashville in a blazing 62 days. Within a year, CRE will build 1 million sq. ft. (90,000 sq. m.) in Nashville. Clearly, not your father’s slowpoke, 16-to-24-month real estate.
CRE also fast-tracked major expansions in China, Ireland and Malaysia, three key locations in Dell’s globalization strategy.
“Set unrealistic expectations . . . and then exceed them,” has become a CRE mantra. You’d better, considering that Dell added 12,000 employees last year.
“I’m most grateful for what this means to a superb team,” said Thompson, another Editors’ Pick.
“You can’t put up buildings in 62 days without a very dedicated, focused and energetic team that really wants to make an extraordinary contribution.”
Washington Mutual Bank’s Kent Wiegel
A broken collarbone from a horse-riding spill kept Kent Wiegel home. It’s a wonder 1999’s real estate challenges didn’t break something for the Washington Mutual Bank (WMB) senior vice president of corporate property services (CPS).
Spanning asset management, design and construction, and CRE, Wiegel’s CPS team began ’99 with a 16 million-sq.-ft. (1.44 million-sq.-m.) portfolio — an eightfold increase in only two years. Five major acquisitions had to be incorporated into Seattle-based Washington Mutual, the No. 1 annuities seller among U.S. banks.
Wiegel’s greatest energies centered on H.F. Ahmanson’s 6 million-sq.-ft. (540,000-sq.-m.) portfolio, acquired in late 1998. Working with facility management alliance partner CB Richard Ellis (CBRE, which nominated Wiegel), CPS’s integration of Ahmanson’s 496 properties was so smooth WMB officials called it “our most successful ever.”
Portfolio analysis identified vacant and underutilized space, and CPS weighed whether new or existing space best met current needs. It also implemented space-use standards and streamlined service delivery by transferring repair and maintenance requests to CBRE’s Phoenix Facilities Service Center.
The detail work was massive. CPS, for example, transferred all Ahmanson’s accounting, invoicing and budgeting, and transfer property and abstract data for 600-plus relationships, to either WMB accounting, CBRE accounting or CBRE lease administration.
Such intricacies required intense collaboration with accounting, purchasing, security and retail. “Their work really cut to the essence of Washington Mutual,” said CBRE Director and President of Corporate Services Gary Beban, who accepted for Wiegel.
The 1967 Heisman Trophy winner drew a parallel to the Corporate Real Estate Leadership Award. Said Beban, “Like the Heisman, this says a lot about the team and the effort they made. And I can certainly appreciate the kind of injury Kent sustained.”
