Review

Citation

Chekijian, C.J. (2008), "Review", Journal of Corporate Real Estate, Vol. 10 No. 1. https://doi.org/10.1108/jcre.2008.31210aab.001

Review

Article Type: Review From: Journal of Corporate Real Estate, Volume 10, Issue 1

Gordon Brown, M. (2008), “Proximity and collaboration: measuring workplace configuration”, Journal of Corporate Real Estate, Vol. 10 No. 1

The mantra of “If you can't measure it, then you can't manage it” would be a most applicable to the theme of this paper, which takes a most scientific approach and articulates the subject astutely. Packed with more case studies, references, insight and debate on special patterns in form and function for workspace utilization and related productivity measures, than perhaps any such paper this reviewer has read in the past 40 years in his corporate real estate career. BRAVO.

The paper also contains breakthrough concepts in measured productivity analysis and observations in circulation space (connections between workspaces) where as much (if not more) space is consumed in a single office building or a campus of buildings than actual workspaces occupied by office workers, where most corporate real estate and facilities related professionals and business unit heads primarily focus on, in re-reengineering of workspaces. Now with more focus by corporations on productivity across the board, the paper could be an excellent guide for demand management of overall space (not just actual workspace configuration), where through overlaying the capabilities and effects of technology on proximity and collaboration issues, workspace value engineering would be applied, where overall productivity requirements in space utilizations can be solved to, to what business units can afford to allocate in occupancy costs. By the use of the approaches outlined in the paper, the offsets could be had as much if not more from circulation space than actual workspace.

Morgan A. and Anthony, A. (2008), “Creating a high performance workplace: a review of issues and opportunities”, Journal of Corporate Real Estate, Vol. 10 No. 1

The paper provides an impressive overview of the evolution of performance drivers for workspace over the past five decades, reflecting well on the priorities of the times. It also provides great insight into the drivers of high-performance workspace in the twenty-first century and how these drivers are being used by specific corporations – with a wide range of objectives, strategies and results. And the trend line in the data presented clearly indicates that with the productivity driven 1990s, “Change” has become the operative word in workplace and the actual mandate. The paper methodically sets out change drivers and how they can be used in alternative settings and combinations in varying organizations, to achieve the desired qualitative and quantitative objectives of a corporation. The paper is an excellent discussion of the ongoing debate on whether one-size-fits-all or there are no standard solutions in corporate real estate, and that there are varying combinations or rankings of corporate requirements, requiring “bespoke tailoring”. The paper makes it more apparent that understanding corporate requirements upfront, and solving for them, is in fact the corporate real estate impetrative in and by itself, as the distinguishable variances in these requirements between corporations are indeed their unique competitive advantages among their peers, which become the respective corporate cultures, which is for CRE to capture, facilitate, preserve and enhance. In fact it very much becomes part of the way of a given corporation or simply its “Branding”. Therefore, the more drive by corporations for creating high-performance workspace, the more profound CRE would have to be in delivering change.

Wills, P.C. (2008), “Corporate real estate practice in Australia”, Journal of Corporate Real Estate, Vol. 10 No. 1

This is a most astute approach to key corporate real estate performance indicators through a random selection of 25 of the 200 largest corporations in Australia. It makes for thought provoking reading, as there is both prudence and foresight in the methodology, which could (and should) be widened for global benchmarking and benefits. A case in point would be the impressive decline in the ratio indicated of “Property as a per cent of operating cost” from 12.9 per cent in 2002 to 11.87 per cent in 2006 in the sampled corporations, which would still be 20 per cent higher than the medians in peer sectors in the USA as an example, where the CRE profession has been more developed since the 1960s. The global implications of the approach in this age of more corporations earning more of their income from outside of their home countries, the paper makes an excellent case for intercontinental benchmarking in CRE, and points the way for higher productivity in global markets. Added to which, the greater volatility in global capital markets, with more of corporate real estate finance specialist looking to exploit corporate balance sheets with sale/leasebacks (SLB) of corporate real estate, these type of key performance indicators in corporate real estate, become corporate real estate imperatives and the tools with which to sensitize and manage the longer term effects of such strategies, as at the end of the day, shareholder values are created by the multiples of earnings per share, which historically have been higher than the yield multiples in property, with it, relative savings in corporate real estate usually create higher incremental shareholder value and on an ongoing basis, than a one time gains realized by yield/rent multiples of rent, and in turn incremental gains from exploiting properties of a corporation.

Liow K.H. and Nappi-Choulet, I. (2008), “A combined perspective in corporate real estate”, Journal of Corporate Real Estate, Vol. 10 No. 1

A well rounded, well considered and well written article, timely in times when the capital markets are in constrained cycles, and with many corporations' shares selling at or below book value per share – and in some cases, below the market values of their CRE, being vulnerable for takeovers, leveraging on their CRE to raise the required capital for such takeovers. The issue in all times whether up or down market/business cycles, becomes more of a credit/risk issue; one of raising lower cost funds for CRE from outside of corporations, rather than a corporation being able to realize higher return on equity that is tied up in CRE, which is more of an open-ended risk management issue (if you cannot lower your borrowing cost, then do not leverage more to invest more). In either case, according to data recently released by Jones Lang LaSalle, 64 per cent or $56.0 Billion of $88.0 Billion in CRE acquisitions and divestitures on a global basis in 2007 were in the form of SLB and that in USA, SLBs were 15 per cent of total global acquisitions and divestitures. With the further constrains on liquidity in the capital markets, it is more than likely that CRE divestitures through SLB will grow significantly, causing a structural shifts both in securities and equities' sectors and creating a significant CRE capital markets for corporation to raise capital on more competitive basis than funding internally.

The content of the paper addresses very well what is needed as an ongoing dialogue within CRE, and Executive/Management Committees of corporations and their main Boards of Directors, to task CRE to solve to higher earnings per share growth rates, as the paper demonstrates that the potential is there in intellectual resources of CRE executives to augment to that objective with more effective financial management disciplines.

Cesar J. ChekijianCORE-SERVE, LLC, USA