Are Australian companies missing out on opportunities for productivity by not utilising their real estate strategy?

A JLL Report says shifting the conversation from real estate metrics to business performance is the future for internal real estate teams working in corporate Australia

November 24, 2015

​Australian corporates could enhance opportunities to maximise the full potential of their workforce by utilising their real estate assets.

A JLL report, Australian CRE (Corporate Real Estate) Survey – Getting the Strategy Right identifies opportunities for real estate teams working in corporate Australia to shift their focus from real estate metrics to business performance goals.  

JLL's Australian Head of Corporate Solutions Integrated Portfolio Services, Tony Wyllie said, "It is being recognised that a big factor of business success is the workplace, which contributes to talent attraction and retention and productivity.

"Our latest JLL survey has found that when it comes to the expectations that are placed on internal teams managing real estate in corporate companies, they continue to walk a tightrope between delivering cost savings for the business and creating value from real estate assets owned by the company.

"There's a real opportunity for these real estate teams to shift the conversation from cost to business strategy, focusing on outcomes like productivity that will create real value for the organisation," said Mr Wyllie.

The survey found that 88% of respondents reported that productivity gains are still behind achieved predominantly by cost savings, but 'workplace improvements' also rated highly in the survey, with 72% of respondents reporting productivity gains had been made this way.​

JLL's third report on Global Corporate Real Estate Trends tracks insights from 544 CRE executives in 36 countries. The 'Australian CRE Survey – Getting the Strategy Right' report shares the views of real estate teams operating in corporate Australia.

The major shifts in CRE sentiment since the last JLL global survey in 2012 are:

  • The CRE mandate is stronger than 3 years ago – 26% rated it 'much stronger' and 40% said it was 'stronger'
  • Over the past 2 years, the majority of CRE (56%) say that their strategy has been more cost driven compared to 42% who say it has been more value driven
  • 77% of respondents said that over the past 2 years, productivity has become a more important goal for the CRE team.

Based upon the results of the last three biennial global surveys conducted since 2010, there continues to be an unrelenting focus on cost for corporate real estate teams at the expense of allowing these teams to create value beyond just financial savings.

Mr Wyllie said, "Internal real estate teams need to move from being a technical specialist to being a trusted advisor.

"For corporate real estate teams to elevate their role away from just a cost focus, they need to expose what they have traditionally held as their organisation's 'strategically sensitive' functions around portfolio strategy to service providers and shift their own focus on the pinnacle levels of strategy such as stakeholder management and integration with the key supporting business functions of HR, IT and Finance.

"The results from JLL's latest survey show that the demands from the C-suite (CEO's, COO's, CFO's) are growing, not slowing.

"Since the GFC, companies have been honing in on what is typically either their second or third largest cost base – their real estate or office footprint.

"Not only has the C-suite continued to demand cost savings from real estate but their expectation is for corporate real estate teams to deliver on both the value and cost side of the real estate equation.

"That's why corporate real estate teams are still walking a tightrope. It is those team members that can walk the tightrope between the two that will elevate their role and perceived value inside the organisation," said Mr Wyllie.

How to elevate the CRE function

The JLL report identifies opportunities for corporate real estate teams to shift their focus and increase the visibility of their role in managing a company's real estate assets.  The survey found that the CRE mandate to do this was stronger than 3 years ago – 26% said it was 'much stronger' and 40% said it was 'stronger'.

"While the survey showed that the majority of CRE executives believe they can elevate their function through delivering cost savings (35%) and have spent the past two years with a strategy focused on cost savings, this succeeds in garnering support from the business, but leaves a lot of value on the table that companies could be using to maximise the performance of the business," said Mr Wyllie.