Posted by: Lee Elliott
Jones Lang LaSalle EMEA Research
Its 8pm on a barmy (as opposed to balmy) July evening in London. As the rain hits the office window at a near 90 degree angle, I exit the first in a series of webinars being hosted by CoreNet Global to promote the findings of their CRE 2020 project. The project, which Jones Lang LaSalle sponsors, aims to provide insight into the future direction of the Corporate Real Estate function and follows on from a similar study undertaken a decade or so ago. It’s an impressive and substantial piece of work, covering a broad range of themes, each with its own detailed report of findings. You can find out more here.
Today’s first webinar instalment focused on the inter-relationship between corporate real estate and other business support services, such as HR, IT and finance. The notion of greater collaboration between these functions has been a theme in the industry for a while now – indeed it was part of the findings from the previous study. Such collaboration has become a reality for many particularly given the intense focus on workplace transformation and the obvious intersections with IT and HR teams this generates. Yet till now most corporations have stopped short of a formal, merged organisation in which corporate real estate becomes but one essential component.
The key statement from today’s webinar is that this will change irreversibly over the next decade. There will be the formation of a new super-nucleus of support functions serving corporations’ operational needs in a coherent and seamless fashion. Let’s be clear. This is not some fantasy drawn up by authors seeking to provoke. 60% of the corporations used to stress test the bold statements saw this structural change as inevitable by 2020. A new storm will blow through the corporate real estate world bringing an entirely new operational setting for the function. And it is a storm that will have far-reaching implications in terms of the leadership; objectives and performance measurement; and service delivery mechanisms ultimately adopted by super-nuclei.
If one takes a glass half empty stance (as I am sometimes inclined to in such dreadful weather) then some real challenges emerge for corporate real estate professionals. As I wrap up at the end of a long day, I can think of two straight off the bat. First, is the challenge of leadership. Can CRE leaders take a broader leadership role in the super-nucleus model? With human resources representing 70% + of operating costs and the critical factor of production for knowledge based industries, one might assume that HR leaders are in pole position for leading the super-nucleus. Second, what does this mean for corporate real estate outsourcing? The experiences of other functions in driving outsourced service delivery might bring a new road-map for CRE outsourcing. If one thinks about the trajectory of IT outsourcing for example, this may have substantial implications for the buying behaviours of corporates going forward. This is particularly so if the idiosyncrasies of real estate are somehow lost in the broader structure.
For as long as I can remember, corporate real estate professionals have been focused (perhaps even concerned) about elevating their position or engagement with senior business leadership. Over the next ten years, their attention will need to turn towards the wider support services community if professional influence and progression is to be maintained and the role of real estate in driving corporate productivity is to be fully realised.