I read with great interest yesterday the results of the survey on Corporate Real Estate Benchmarking Techniques that was commissioned by CoreNet Global and DTZ Research. There is one particular figure that really resonated with me. According to the survey, 98% of the 200 real estate practitioners that participated in the survey, find benchmarking data to be very valuable, valuable or somewhat valuable. Only 2% of respondents felt that it had no value at all.
As principal of a corporate real estate consulting company that specializes in benchmarking and portfolio optimization, these results are music to my ears. However, in all honesty, the results do not surprise me. Because the truth is, almost everyone in the industry knows benchmarking is valuable. However, sometimes we’re so bogged down with our day-to-day jobs that we’re not always able to “see the forest from the trees” so to speak. And in reality, most organizations don’t have the time or the resources to engage in benchmarking.
Over the last five years, I’ve met with many corporate real estate groups in an effort to promote the benefits of benchmarking and to engage them in the theory that benchmarking not only leads to operating cost savings, but also to a leaner and more streamlined real estate portfolio. Quite often, I’m met with a great degree of scepticism and excuses that range from “we do it internally” to “we have other priorities” to “meh, benchmarking is a waste of time.” However, every now and then I’ll meet with a particular organization who is slightly more avant-garde and who is willing to begin a benchmarking pilot project on a smaller scale and then take it to the next level. And guess what? I’ve never had a client who has regretted engaging in a benchmarking exercise. Benchmarking is basically about thinking outside of the box. You don’t have to do it, but wouldn’t it be great if you could?
Benchmarking could be endless but it’s important to start small. Here are some elements that you could benchmark:
- Facility Management: How effectively is your facility manager performing?
- Project Management: How effectively are you managing your projects?
- Space Usage: How effectively is space being used? Does surplus space exist? Do synergy opportunities exist?
- Satisfaction: Are your stakeholders satisfied with your performance? Stakeholders could be employees, tenants, Board of Directors, etc.
- The environment: What can you do better to ensure that your property is a best in class property from an environmental perspective?
One important piece of information to note before beginning any benchmarking exercise is that it will not make whatever issues you have with your corporate real estate portfolio disappear overnight. You need to embark on your benchmarking/portfolio optimization exercise with the idea that you are just looking for red flags. Doing this will allow you to gain a much broader understanding of your current situation. Red flag identification will usually lead to cost savings and portfolio optimization through quantifiable action plans. Some key points to consider:
- It’s all about finding the right benchmark and then using it in a meaningful way so that you can add value to the efficiency of your real estate portfolio.
- Not an exact science but an essential and cost efficient exercise.
- In all likelihood, you will more than make back your money by investing in such an exercise and you’ll uncover things about your portfolio that you never knew about.
- This is an integral senior management and board of director reporting tool and a tremendous way to show that you’re really on top of your game and doing your job.
- As a property manager or owner, it is important to think outside of the box and try to identify the most logical and cost efficient way of improving the efficiency of your operations through benchmarking and portfolio optimization.
If you’re interested in learning more about benchmarking and portfolio optimization and how it helped one particular organization, be sure to attend the breakout session that I’ll be presenting entitled “The Benefits of Benchmarking: Improving Real Estate Efficiencies at CBC/Radio-Canada” at the next CoreNet Global Summit in Phoenix from Septmber 19-22, 2010.
Finally, the real question is, how many companies within the 98% of respondents who find benchmarking valuable are actually engaging in a meaningful and value-added benchmarking exercise? And secondly, what are the other thousands of CoreNet members who did not participate in the survey doing with regards to benchmarking?
William Jegher is President of Wika Consulting, a consulting company specializing in facilities management and real estate benchmarking, communications and consulting. Contact him at wjegher@wikaconsulting.com
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