Corportae Real Estate

Abstract

This article examines contribution of real estate decision to core businesses. Using theoretical research it established that CRE can add value to the businesses through cost reduction, enhancing competitive advantage, promoting human resource objectives and increased flexibility. Examples of organisations that have benefitted from CRE decisions include, BT Ltd, IBM Ltd, M&S and AAT.

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REAL ESTATE DECISSIONS AND BUSINESS PERFORMANCE

Background

This article examines potential contribution that real estate decisions can make to the overall success of an organisation’s core business. Real Estate is the basis of every living and supports every organisation in every corner of the world. Organization uses real estate to accommodate employees and processes. They either lease or own real properties in their pursuit to attain their core business objectives whether profit or non- profit making. Real estate is a resource for corporations and a factor of production. Corporate real estate is identified as the fifth largest resource of businesses after capital, people, technology and information (Bdeira, 2003), and that it makes up to over 25% of organisation’s balance sheet assets for European corporations (Glatte, 2013).

Nevertheless it is surprising that although every organisation uses real estate and that real estate makes over a quadrant of organisation total assets, very few organisations have recognised the need for effectively managing real estate resources (Gibler, 2002). If they do not effectively manage CRE how would one expect them to have CRE strategies that are aligned with business objectives? Neither would one expect that they would quantify the contribution made by CRE to the bottom line profit of their businesses. The question would be on what basis they would measure it. So if you do not measure it how would you understand it? Yet CRE support their core business objectives. So unless the contribution of real estate is measured it is...