Dramatic Changes Predicted for the Corporate Real Estate Function in 2010

Dramatic Changes Predicted for the Corporate Real Estate Function in 2010

Press Release
May 5, 2004

Research by CoreNet Global and the Gallup Organization demonstrate effects of networked world on how corporate portfolios are managed; study is called
Corporate Real Estate 2010: Enabling Work in a Networked World

ATLANTA - March 5, 2004 - The emergence of the truly networked world - facilitated by the Internet, new relationships with service providers, and new sources of real time information - will have dramatic consequences for how large corporations conduct business and manage their real estate portfolios. The findings are being released by CoreNet Global through its industry research and leadership initiative known as Corporate Real Estate 2010.

The initiative centers on eight project teams working with CoreNet Global as partners in Corporate Real Estate 2010. The teams include corporate real estate leaders at 125 leading multinational corporations, including ABN AMRO, BP International, Cisco Systems, Disney, Ernst & Young, Ford, GlaxoSmithKline, JP Morgan Chase, Microsoft, Nokia, Proctor and Gamble, Sun Microsystems and Whirlpool. Findings are also being derived through a companion survey conducted separately with the Gallup Organization.

"It is apparent that the networked business model is changing how businesses operate globally, and as a result, affecting the role of corporate real estate and the corporate infrastructure," said Sean McCourt, Chairman of CoreNet Global and Chairman of Ford Land, the real estate and development arm of Ford Motor Co. "Specifically, the networked world is transforming work processes, interaction with business partners and service providers, and the roles of workers."

Among the core findings are that by 2010, while there will continue to be strategic real estate functions to perform, they will be performed in the context of enhancing worker productivity and company competitiveness through a fully integrated infrastructure that will include human resources, information technology, real estate and other support functions. Therefore, managing the entire portfolio of business enterprise resources will require skills of the corporate real estate executive beyond real estate.

Also, the competitiveness of corporations will require integrating real estate with all business processes. This will mean shifting additional functions - and the risks associated with them - to service providers. According to the Gallup Organization survey, more than 35 percent of responding companies said they would consider transferring their owned assets to a third party for day-to-day financial and operational management. In addition, more than 70 percent of respondents either "agreed" or "strongly agreed" that in transferring additional services to service providers, additional risk would be transferred as well.

Specific predictions for corporate real estate in 2010 are that:

  • Ninety percent of the Fortune 500 companies will adopt "triple bottom line reporting," which means that companies will be measured by social responsibility, environmental sustainability and profit.
  • In the networked world of 2010, corporations will require less space to perform effectively. According to the Gallup Organization survey, right now just seven percent have workers spending 25-50 percent of their time in unassigned office space. By 2010, 21 percent of companies will have their employees working remotely up to half the time.
  • The work environment will be defined more as connectivity - a network of places both geographic and virtual - so that commercial real estate executives will manage networks as much as occupancy in facilities.
  • Worker productivity will be measured in real time, thus allowing for real estate decisions to be made more quickly and more effectively. Portfolios will have to be flexible in terms of the contract, financing and the ability to substitute assets during the lease term.

The findings are part of Corporate Real Estate 2010: Enabling Work in a Networked World, CoreNet Global's research and leadership development initiative identifying how the nature of work, the workplace and business are changing.

The research teams, seven launched in North America and one in Europe, were charged with defining research goals and hypotheses to be used for presentation at the CoreNet Global Summits in 2004, published research reports and a set of diagnostic tools for use by senior corporate real estate and infrastructure leaders to assist them in assessing their current state and what they need to do to move their organizations to where they need to be to compete in 2010.

On behalf of CoreNet Global, The Gallup Organization conducted a worldwide Internet web-based study among real estate management professionals. CoreNet Global Learning sent pre-notification invitations to member and non-members to participate in the study. The study was conducted from November 19, 2003 through December 15, 2003 with 315 participants. For results based on samples of this size, one can say with 95 percent confidence that the error attributable to sampling and other random effects could be plus or minus 5.6 percentage points.

In May, 2004, CoreNet Global will release 10 in-depth industry research reports detailing the changing nature of business and the workplace. The reports will be introduced at the May 15 - 19 CoreNet Global Summit in Chicago.