Survey sheds light on strategies of corporate RE executives.

A new study conducted by Alvarez & Marsal Real Estate Advisory Services, LLC, indicates that corporate real estate (CRE) operations are at a crossroads, with some executives continuing to view CRE as a non-core business, while others are recognizing corporate real estate as a key business enabler.

Those who see the potential are seeking new strategies to add value by aligning the corporate real estate operating model with the overall business strategy.

"Companies are recognizing that real estate and facilities can be a key business enabler, but in order to make this happen, CRE executives must reinvent themselves and play a more active role in the business," said Maureen Welch, senior director with Alvarez & Marsal Real Estate Advisory Services.

"There is new breed of CRE professional emerging that acts like a "product manager", using a lifecycle approach that blends the financial acumen most often associated with a traditional asset manager with the service orientation most often associated with CRE."

Welch also pointed out that the research showed that CRE executives recognize the need to integrate the CRE operating model with the business strategy.

This means putting in place a proper organizational structure with the appropriate governance; evaluating and reengineering critical processes; assessing and updating technology systems; and implementing management reporting to support decision making.

A&M's research, based on interviews with corporate real estate executives from 25 organizations and three national full service providers, presents insights on how corporates can proactively "Align by Design" to create an operating model that is integrated with the business and supports the transition from tactical to strategic.

Among the key findings of the research:

* 80% indicated that CRE had strategic objectives, but noted that these were not always formally documented. Of those that had a CRE strategy, roughly a third could tie the strategy directly back to the enterprise strategy. "Cost control" continues to be identified as the number one strategic objective.

* The required skill set for CREs has shifted dramatically from execution to strategic planning and management. Service providers generally agreed, but felt more strongly that general operations experience should be a required for a CRE professional. Service provider participants reported they had to augment their execution skills with strategic planning and management skills and considered "oversight skills" less of a necessity.

As a means of reducing costs and augmenting capabilities, 92% of the participating firms are outsourcing to some degree, but very few single source to one provider.

* 76% of the participants reported that they use key performance indicators (KPIs). Most metrics fell within the financial and internal operations quadrants of the scorecard.

* In the past, CREs considered capabilities and resources the biggest challenge. Presently, alignment with the business units, organization structure and governance, and portfolio rationalization are the largest concerns. In the future, CREs expect an even broader range of primary challenges.

"Building on A&M's operational heritage, our real estate professionals work closely with organizations to develop strategies to improve operations, unlock value and minimize risk," said William "Biff" McGuire, head of Alvarez & Marsal Real Estate Advisory Services, LLC.

"This research is designed to examine how corporate real estate executives are ensuring that their operating models support their enterprise strategies and provides a fact-based foundation from which best practices can be identified and implemented."