Corporate real estate and facilities management

Corporate real estate (CRE) encompasses all the property owned by an organization. It is important to manage CRE well for both day-to-day success and long-term planning. This duty can fall to property managers, real estate portfolio managers, asset managers, and/or facility managers (FMs). 

When FMs manage corporate real estate, they typically use facility management software. This type of software offers particular benefits to real estate management: it integrates with software that already manages other important aspects of a workspace. 

In this article, we will explore the intricacies of corporate real estate, along with the benefits of using FM software to manage it. 

Understanding corporate real estate

As mentioned, corporate real estate refers to all the properties that an organization uses to operate. 

Every real estate property—whether it’s corporate headquarters, an office building or office space, a manufacturing plant, a laboratory or testing facility, a retail space, and beyond—presents unique challenges. 

A real estate portfolio that includes both owned and rented spaces can create a more complex challenge.

Corporate real estate costs can place a large burden on companies, often their second largest fixed cost after payroll. For example, the average yearly cost to rent corporate space in New York is $14,800 per employee . 

That’s why companies will typically use corporate real estate management to find ways to reduce costs without sacrificing employee well-being. 

What’s the difference between corporate real estate and commercial real estate?

Many people often confuse corporate real estate with commercial real estate. 

Individuals or organizations own commercial properties with the goal of generating profit through capital gains or rental income. 

In other words, corporate real estate is something companies need to do business. Commercial real estate is something individuals and companies use to make money, in and of itself. 

As with corporate real estate, commercial real estate software manages it best. 

How has COVID and hybrid work impacted corporate real estate?

Like it has so many things, the pandemic has also impacted CRE. 

Namely, the rapid pivot to hybrid work has dramatically changed how companies are using their office spaces. 

Coupled with the already growing trend of flexible seating and the need for greater social distancing at the office, the reality is that workspaces are becoming increasingly digital, as people work from home, from the coffee shop, and on the road. 

And as companies need less physical space for their workers, they may be able to cut back on CRE costs.

For example, if hybrid work means a company no longer needs a certain percentage of their office space, they can rent that space or find another way to use it. 

Of course, this can only happen when companies manage CRE well and have a good idea of how people are using their space. These insights can only come from tracking space utilization real-time in a meaningful way. 

What’s involved in corporate real estate management?

Real estate portfolio management encompasses all the immediate and long term management of a company’s real estate assets. 

As such, depending on the amount of properties and the complexity of the portfolio, this can be a challenging task. It is not one that can be done well with some simple spreadsheets. 

For example, one of the main duties of CRE portfolio management is lease tracking. This includes overseeing lease terms and costs and also managing relationships with property owners. 

Perhaps one small company with one small office location could get away with keeping track of their commercial lease by hand. 

But start adding in multiple properties or property types, and lease tracking can get unwieldy fast. 

Beyond lease tracking, CRE management typically involves the following two main functions. 

1. Real estate asset management and allocation 

Especially when an organization has a large real estate portfolio, part of managing it includes determining the best way to use its assets through investment management. 

For example, if a certain amount of real estate is unused or underused—as is now more likely with hybrid work—it needs to be reallocated in a smart way. 

This type of management can also include investment strategies, real estate development, joint ventures, and capital improvements to existing real estate. 

2. Space optimization

Of course, an organization is only likely to have space to reallocate if they are optimizing that space to begin with. Anyone who manages corporate real estate will therefore need to ensure their properties are being used in a smart financial way that includes a return on investment, while also benefiting employees and ensuring an organization’s long term success. 

Optimizing space for the benefit of both employees and employers is also a major concern for facility managers. This is why, as we’ll cover below, they often manage CRE as well. 

Facilities management and corporate real estate

Facility managers (FMs) are increasingly more involved with managing CRE. Their typical roles and responsibilities share many of the same objectives, especially in hybrid offices. 

Facility management entails running one or more facilities, working with organizations to increase efficiency and effectiveness. 

FMs keep workspaces running smoothly, and they work to ensure employees have the tools they need to do their jobs well. That’s why bringing CRE portfolio management under the facilities management umbrella often makes sense. 

Housing all pertinent information about a workspace—including relevant property and space utilization data—into one Integrated Workplace Management System (IWMS) that can be managed by one individual or team can ultimately lead to a more dynamic, productive and innovative workplace. 

Benefits of real estate portfolio management software

Clearly, CRE portfolio management is complex, demanding robust and user-friendly software. 

Because CRE management software can work in sync with other office planning software FMs typically use, FMs can use it to manage all the ins-and-outs of a building and its users, all from one intuitive platform.

This simplifies all areas of portfolio management. It helps FMs keep track of important information, regulate their lease management costs, and optimize how they’re using their spaces. 

This software can also track and organize issues like maintenance requests, renovations, and zoning issues, continually providing an up-to-date window into each property. 

In short, the right software simply makes real estate management easy, while ideally also offering the following three benefits.

1. Normalized lease costs

Thanks again to the pandemic, the real estate sector has changed. Many property managers are now offering incentives to tenants to extend their commercial leases. This is often in the form of a month or more of free rent or reduced rates. 

While cost savings like this are always welcome, they can be challenging when managing several properties—and several reduced rates and incentives—at the same time. 

Thankfully, the right software can ensure your books are normalized, so you’ll have clean books without any skewed data. 

2. Easy-to-use data

The right software can also instantly provide high-level portfolio performance data, along with space utilization, vacancy rates, and more. 

For example, in real time, you can access critical data like maximum capacity, cost per employee, and occupancy. 

According to corporate real estate professional and expert Linda Day Harrison, founder of the BrokerList, “I think CRE professionals should be jumping in full guns to learn how to use data and AI tools. Get in early. Start to master it. Data is everything and AI gives you the time-saving tools once you learn how to use them properly.”

3. Better forecasting

Meanwhile, data is great, but only if it’s presented in an intuitive and meaningful way. 

By making data easy and accessible, CRE software can help FMs understand where employees are working, when. This allows for better forecasting and informed decisions that can lead to more efficient spaces, cost savings, and ultimately happier employees. 

Managing your corporate real estate portfolio

OfficeSpace provides real estate portfolio management software from one intuitive platform. This is the same platform that empowers FMs with a host of features and solutions to optimize the modern office. 

Ultimately, this software arms FMs and other CRE professionals with the data necessary to optimize space and manage their portfolios easily and effectively. 

In particular, OfficeSpace offers three critical tools for managing your portfolio:

1. Portfolio reports

Comprehensive portfolio reports give FMs ready access to accurate data. It can help them see where their space and budget is being underutilized. This can help them maximize their real estate budget and make other crucial improvements as necessary. 

“It’s incredibly important for me to be able to check the density of each of our offices in real-time—what’s occupied, what isn’t—because I’m not able to be in every location,” says Bernard Morrissey, Chief Officer for Real Estate and Facilities at K&L Gates. “So when I have a question like “What’s the situation in Tokyo?” I can go to OfficeSpace and get the answer in seconds.”

2. Stack planning

Stack Plans provide a high-level view of where your teams are sitting and where space may be available. 

By having a complete picture of how their space is being used across departments, floors, and even buildings, it’s easier for FMs to manage moves, stay ahead of space allocation requirements, and ensure the right teams are able to sit together so they can be more productive and engaged. 

“We used OfficeSpace to relocate over 1600 people to our new headquarters,” says Sean Germano, Project Manager, Design & Construction at Dropbox. “OfficeSpace didn’t just streamline the process from start to finish. It drastically reduced the amount of post-move troubleshooting that’s usually involved with large-scale relocations like these.”

3. Reports and analytics

Finally, OfficeSpace offers powerful out–of-the-box reports that instantly provide all the necessary data and insights to make informed decisions. FMs can access all critical workplace metrics, whether they’re directly related to CRE or not. They can then use them to make meaningful decisions and adapt to future demand with forecast reports. 

“I’m a heavy user of occupancy and headcount reports,” says Scott Moitoza, Senior Director of Real-Estate and Facilities at Procore. “I run the Occupancy—By Location report twice a month to get a snapshot of how many seats, cubes, and rooms we have vacant to accommodate for new hires. I used to manually create these reports in Excel, but I could never pull them together as quickly or accurately as I can now with OfficeSpace.”

What does corporate real estate do? 

At its most basic level, corporate real estate provides the physical space that companies need for their work. When managed properly, it can also save money and create an environment that lets employees thrive 

As more and more employees work outside the office, corporate real estate is changing. Managing it is becoming even more complex. As such, it requires complex software to meet the demands of the hybrid, post-pandemic workplace. 

OfficeSpace offers flexible tools for corporate real estate management. Reach out for a free demo. 

Photos: julief514, Sean Pollock, Magnet.me, John Schnobrich, LinkedIn Sales Solutions, Amy Hirschi