Tag: Commercial Real Estate (CRE)

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3 Hybrid Workplace Predictions for Corporate Real Estate

With 85% of employees saying they prefer to work remotely at least 2-3 days per week, hybrid workplace models are here to stay, but the ramifications of that stretch beyond organizing team meetings and the right communication technology. 

What is the “next normal” when it comes to corporate real estate in the hybrid workplace? 

Though experts see 2022 as the continuation of post-pandemic rebuilding for the real estate industry, the tapestry of the commercial real estate sector will patch together new uses for old buildings. 

Deloitte’s 2022 Commercial Real Estate Outlook predicts businesses will focus on retrofitting properties and repurposing spaces that are seeing decreased usage, enhancing buildings’ sustainability, and refreshing their perspective on making space more people-driven and flexible.

Hybrid work predictions for corporate real estate

1. CRE leaders will focus on repurposing commercial real estate space

Just because a building has been used as an office in the past does not mean its future is as an office. As companies consolidate underutilized real estate, more buildings are becoming vacant – which presents opportunity rather than problems.

Architect and founder of Real Estate of the Future Nikki Greenberg discussed her new initiative regarding repurposing space in a post-pandemic world, AnyPlace WorkPlace. In a Workplace Innovator Podcast episode, she shared her passion for innovating real estate for the future so that there is no underutilized space.

“I don’t think that a space should ever be vacant,” Greenberg said. “It should always be vibrant.”

If homes can morph from places to primarily eat, sleep, and live to become workspaces, yoga studios, and schools, we can reinvent other corporate real estate spaces too. This mindset is emerging in the development of office neighborhoods.

An effective office neighborhood needs more than powerful Wi-Fi, access to various types of conference rooms and workspaces, and mail services.

This available real estate also can be repurposed to fit a larger social need – cutting down on the homeless population and the housing needs overall in larger cities.

In April, the Rand Corporation released a report that shows repurposing underutilized commercial properties, such as hotels, motels, or vacant offices, could provide 9-14% of the housing Los Angeles County needs to produce over the next eight years.

Though it takes effort, planning, and coordination, this adaptive repurposing can lead to long-term benefits to areas from large cities to smaller communities.

2. Corporate real estate leaders will improve sustainability efforts

Environmental, social, and governance (ESG) initiatives continue to rank as high priorities for CRE leaders. As buildings are either adapted for new use or built new, including elements of sustainability and environmental friendliness is imperative.

Sustainable properties play a significant part in creating a better tenant experience, especially when they include emerging technologies (proptech) that focus on ESG. 

More than 75% of survey respondents said their companies will likely expand partnerships with or invest in proptech, including sustainability and risk management software.

3. We’ll see greater flexibility and employee-focused design

Part of making workspaces more people-centric is looking at the primary factors keeping employees working from home rather than in the office. Employees who prefer working remotely cite the ability to balance work with other responsibilities (ie. children or other dependent family members), a healthier work-life balance, and a decreased commute.

During the COVID-19 pandemic, Owl Labs “State of Remote Work” reported employees saved 40 minutes a day not commuting. The JPMorgan Chase 2022 Commercial Real Estate Market Trends points to updating infrastructure to enhance roads and shorten commutes further. These investments in infrastructure benefits commercial properties by making them more accessible, connecting businesses to higher quality amenities, and attracting more talent to areas where people want to work and live.

The U.S. government this year launched initiatives to bolster infrastructure enhancement initiatives. The Infrastructure Investment and Jobs Act, signed into effect in July 2021, floods the economy with $550 billion that partially funds infrastructure improvements, such as roads and bridges for easier commutes, and marks the largest federal investment in public transit ever and passenger rail since the creation of Amtrak. The act will work in tandem with President Biden’s Build Back Better agenda, which promises to add approximately 2 million jobs per year over the course of the decade.

Effective and efficient space utilization continues to pose an issue for companies as they adjust to changing workspace use. With 87% of enterprises implementing hybrid work, according to CBRE, the trends in interior design and real estate are adjusting to fit the idea of flexibility – whatever that looks like for your company.

A hybrid office assumes employees will move more frequently between home and office. Therefore, a hybrid office should provide a seamless experience between working in the office and working elsewhere.

Ramzah Khan works with companies looking for guidance on developing hybrid and collaborative workplaces.

A studio manager at Ware Malcomb in Washington, DC, Khan offers perspectives in the Workplace Innovator Podcast episode “The Psychology Workplace Design and the Evolution of Employee Experience” on how companies can explore a holistic view of office design to create an employee experience where employees feel valued, heard, and supported.

The biggest trend she is seeing is that leaders are approaching workplace design from a people-oriented position as the idea of employee wellbeing takes on a new meaning.

Elements of an employee-focused hybrid office include:

  • A mix of collaborative and private spaces
  • Multipurpose areas employees can use depending on the work they’re doing
  • Furniture that’s easy to reconfigure
  • High-quality conference room technology
  • Technology that makes it easy for employees to find and reserve workspaces anywhere 

The way you physically plan your office space for when employees and clients are in the office can lead to greater productivity and improve the bottom line.  

Architectural Record discussed trends for innovative offices in the hybrid workspace and suggests paying attention to the type of materials you purchase to make the office space flexible. Flooring, for example, can be a key element in creating acoustics to aid, not detract, from work. Materials such as tiles with inherent acoustic properties or carpet with noise-reducing cushion can play a part in helping the functionality of a space filling multiple roles.

Another recommendation is to use the physical space design to give employees a feeling of empowerment. You can achieve this through unassigned desks, lounge-style seating in common areas rather than conference rooms, and rooms sectioned with flooring and furniture to create specific-use areas where employees can choose where they work based on the task. 

This strategic use of furniture and physical elements also play into the continued prevalence of social distancing policies. Physical considerations such as enhanced ventilation help with physical wellness, but more and more businesses also are finding the need to plan space in regard to emotional and mental benefits, as well. 

Learn more about the future of commercial real estate and hybrid work in our resource on managing change in the hybrid workplace.

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Real Estate Portfolio Management Software: Five Critical Functions

By Devon Maresco
Marketing Coordinator
SpaceIQ

Managing a commercial real estate portfolio is more difficult than ever. Work-from-home, flex work, and agile workplaces have all made it more difficult to benchmark and optimize workplaces—and to understand their efficiency. Thankfully, there’s real estate portfolio management software. As the workplace becomes more dynamic, specialized software helps portfolio managers better-understand the various physical cost centers a company operates.

To be effective in managing a portfolio of buildings and workplaces, managers need to understand them. What’s the cost to operate them? How do they assist in revenue generation? What kind of maintenance and upkeep goes along with them? What’s the demand for each workplace? Answering and acting on these questions is the primary role of a portfolio manager. To do it effectively, they’re increasingly relying on real estate portfolio management software to give them the lay of the land.

What is real estate portfolio management software?

Portfolio management software offers top-down insight about the governing metrics of properties operated by a company. It can show top-level information such as the location, occupancy, and lease costs of a facility. It can also narrow down to more specific metrics such as utilization, total cost of ownership, or even real-time data about how employees use it. The purpose of this software is to gauge property as an asset. How does it contribute to the success of the company?

The purpose of using real estate portfolio management software is to get insights and make decisions about how to maximize the productivity and cost efficiency of each workplace. It boils down to return on investment. Is a facility helping to generate more revenue and profit than it costs to operate and maintain? If not, what opportunities are there to right-size it on the balance sheet? The answers come from portfolio management software; specifically, the tools it offers.

Here’s a look at five must-have functions that make portfolio management software an asset to decision-makers charged with maintaining a healthy real estate portfolio.

1. Lease administration

Cost is everything in maintaining a real estate portfolio. To understand its weight on the balance sheet, portfolio managers need lease information pertinent to each location. What are the monthly and annual lease costs? What is the cost per square footage? If it’s a triple net lease, what fees or additional expenses factor into the building’s operation? These variables demand attention as part of the real estate evaluation process.

2. Accounting tools

It’s important to have an accounting standard that benchmarks all properties in a real estate portfolio relative to one another. What percentage of budget is allocated where for each location? What are the ROI metrics for each location against a clear standard? Accounting is an important function of real estate portfolio management software because it provides clear and unbiased insights about the cost of ownership for portfolio properties.

3. Budgeting and forecasting

Alongside accounting tools come budgeting and forecasting capabilities. These critical functions give portfolio managers context for understanding assets from a forward-looking perspective. The ability to look at past years’ expenses and projected costs allows for a more complete understanding of the cost of ownership of properties now and into the future. This fuels better decision-making about how to allocate spend and whether to expand, reduce, or sustain leased square footage or even entire locations.

4. Strategic planning

With cost and operations data in-hand, strategic planning is possible. Portfolio managers can liaise with individual facility managers and executive leadership to determine if the current portfolio meets the needs of the company. Strategic planning also happens at the facility level, such as the decision to undertake a capital project based on the likelihood of occupying that space for the foreseeable future. Real estate portfolio management software brings these insights together with context.

5. Space utilization oversight

Second to justifying the cost of properties within a portfolio, real estate managers need to ensure they’re utilized to the best of their abilities. While this utilization occurs at the facility level, portfolio managers can use high-level data to make decisions about how to optimize each location. The portfolio manager may reduce leased square footage at Location A by 10% and charge the facility manager at that location to optimize space—all this, while saving significant cost to the company.

How do I manage my real estate portfolio?

Property portfolio management software is an essential ingredient in the future of business cost management at a macro level. Facility overhead is the largest tangible expense on a company’s balance sheet (outside of salaries). It’s vital to have software that can drill down into each workplace to identify those expenses and, more importantly, how they’re offset by revenue generation. In doing so, portfolio managers can make better decisions about how to invest in real estate—or identify when it might be time to divest.

Portfolio management software needs to provide decision-makers with clear and valuable insights about each physical location, from a cost-center perspective. That means relying on tools for lease admin, accounting, budgeting and forecasting, strategic planning, and utilization metrics. Given these features, real estate portfolio management software becomes a valuable instrument in making smarter decisions about physical workplaces as a whole.

Keep reading: What Can You Do with Real Estate Analytics?

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It’s Time to Reconsider the Best Use of Your Workspace

By Fred Kraus
Senior Director of Product Management, Archibus
SpaceIQ

For years, workplace trends have been shifting away from the traditional 9-to-5 work model and toward more flexible styles. Up until early 2020, telecommuting and remote work were considered perks in many companies, an emerging trend for some, or a rare work option for others. COVID-19 changed things forever, with lockdowns and shelter-in-place orders driving many traditionally office-based employees to work from their homes indefinitely.

This has set a precedent for how workplaces will operate for years to come. Looking ahead, companies are contending with how to embrace variable work setups and what the best use of their workplaces should be to position them for long-term success.

Preparing for hybrid work setups and agile workspaces

Employers of all sizes are contending with if and when they can bring their workforce back to the office and how they can do it successfully. In early February, Spotify announced it will offer employees the option to work from home or anywhere – permanently. Other organizations are planning for returns to the workplace in phases. Microsoft, for example, is in the midst of a six-stage strategy for a return to its headquarters. Meanwhile, organizations such as Citadel and JPMorgan Chase have started to reopen offices to essential and non-essential employees.

The range is wide as far as plans for returning to the workplace go. The reality is that most companies will not be 100% virtual or 100% in-office as long-term work strategies take shape. Instead, the focus likely will be hybrid, agile structures that allow for both in-office work and remote setups. To do so, businesses must reevaluate their current workplaces, determine how it functions in support of employee productivity, and whether a change in lease agreements, designs, and other considerations is warranted for the space moving forward.

Meeting employees’ new expectations

Employers need to focus on optimizing spaces to meet employee needs and keep productivity and engagement high. These are expectations that are far different from those your staff may have had more than a year ago.

Employees working from home since early 2020 continue to contend with the dichotomy of remote work: the flexibility and freedom it can bring and the challenges and isolation that often comes with it. When welcoming them back to work, you should prepare for specific expectations your employees will bring with them:

  • A workspace that allows them to collaborate and rebuild relationships with coworkers.
  • A quiet, distraction-free space where they can concentrate on work that requires considerable focus.
  • An environment that mitigates their risk of illness and upholds all health and safety precautions.
  • A space built with hybrid work setups in mind, where employees can seamlessly go between the office and home without productivity downtime.

The spaces we’ve become accustomed to before the pandemic are not the same ones that will drive optimal output going forward. Businesses that offer employees the flexibility to move freely between spaces for both collaboration and individual work are poised to have an engaged and productive workforce.

Creating workplaces that withstand change

Companies may find that they have unused space or the ways they used space before the pandemic can no longer be used in the same manner. With careful planning, your future workplace will be defined by how agile it can be in response to employee needs and expectations, as well as future crises and business disruptions.

Even though you can’t predict when problems arise, they are inevitable, and you should have plans to address them. COVID-19 is just one example; business disruptions can come in many forms — natural disasters, a sudden mass exodus on the Sales team, or losing a major investor. When an unforeseen circumstance happens down the road, will the work environment you’ve created be able to withstand volatility?

Defining the workplace’s role moving forward will help companies make smarter decisions about their spaces and how to manage them. Reevaluating purpose and making changes are also great ways to make workplaces more conducive to flexibility and efficiency than they had been before. But agile workplaces aren’t for everyone. Some employees find the lack of privacy and noise associated with collaboration spaces to be distracting. Flexible workspaces may be used more for collaboration, while heads-down work is done remotely.

For some companies, decisions will be relatively small-scale, such as whether to repurpose a few unused desks and meeting rooms. For others, it might mean more complex choices, such as revisiting leases to determine whether they are an expense that still makes sense for the size of the business.

There are four strategies to consider when evaluating space use:

Repurposing

Assume that employees’ work habits have changed to some extent since they were last in the office. This is a great time to rework office space in a way that’s safe and supports productivity. Companies that have extra room can find opportunities to square footage through desk-sharing concepts:

  • Redistribute desks and seats to meet safety protocols
  • Alter workspaces into areas or pods where people can create their best work
  • Turn an open-concept office into a diverse hoteling area
  • Transform individual offices into pods for small group collaboration
  • Rethink conference rooms as reservable “conversation rooms”

Remember that any workspace repurposing needs to align with health and safety protocols and should be executed with employees’ space preferences in mind.

Subleasing

Subleasing in commercial real estate is currently booming as a result of the pandemic. In July 2020, subleasing was up approximately 12%, according to a CBRE report. Since then, and in some larger U.S. cities, in particular, subleasing has soared. The prospect of shorter lease terms (standard is typically six-to-nine months versus typical multi-year lease contracts) is attractive to those still contending with the continuing uncertainty stemming from COVID-19.

Subleasing office space also offers an opportunity to help smaller companies to appeal to employees who are returning to work. Great workspaces often come with hefty price tags that are far out of the reach of many businesses. But the cost efficiencies of subleasing can put attractive office spaces within their reach. Most importantly, a space with cutting-edge technology or an office in a great part of town provides a “wow factor” for employees and makes coming to work something they look forward to.

Buying

While many companies lease space, now may be a time when they’re in a position to consider purchasing commercial real estate. Property ownership offers the benefit of an asset on the balance sheet and accompanying tax advantages. But consider location, industry, and other factors before signing a long-term mortgage. A decision this large-scale requires real estate managers to take a close look at company data. It needs to make sense not only for the current needs of the business but must reflect long-term planning and budgeting.

Although there are signs of recovery, the pandemic stifled industries such as hospitality and retail with widespread hotel, restaurant, and retail store closures. It’s also spurred demand for industrial space to support areas such as distribution and storage. Keeping in mind that there are opportunities and drawbacks across sectors and industries, the demand for space that’s conducive to social distancing and worker safety is here to stay.

Downsizing or selling

For the few companies planning to have a 100% remote workforce or that have significantly downsized, a physical workspace may no longer be essential to daily operations. Removing the overhead costs associated with office space, especially if you don’t foresee using it even after the pandemic is over, could be a smart financial decision.

Leveraging technology during the decision-making process

Before making any decisions about real estate, companies should consider their budgets, growth models, business forecasts (think 5-10 years out), and other long-term decisions and scenarios. Technology is crucial for managing every aspect of a back-to-work plan and provides insights for decision-makers when evaluating next steps for the workspace.

Space planning platforms such as those offered by SpaceIQ take all factors into account and allow HR, Facilities, IT, and company leaders to visualize the current space (both occupied and unoccupied) at a high level, decide which option is best for the business both now and in the future, and manage every aspect of a back-to-work plan once decisions have been made.

Planning for resilience

If workspace planning wasn’t part of your strategy planning before, it needs to be now. To stay competitive, the workplace must be a purposeful, engaging environment where employees want to work, collaborate, and be productive. Tap into data insights to help you uncover opportunities, take the appropriate next steps, and build resilience for the long term.

Keep reading: Planning Your Workplace with Office Space Software

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Digital Twin Use Cases

Female hand using smartphone while working at desk in office

By Devon Maresco
Marketing Coordinator
SpaceIQ

Digital twins are an exciting piece of technology that’s becoming ubiquitous across industries. It’s easy to see why as they take their place alongside proliferating IoT and other tech such as machine learning. There are a bevy of digital twin use cases out there to showcase the power of digital asset monitoring. The interesting thing is that despite the same technological framework, almost every industry has found new and exciting ways to utilize digital twin technology.

What are digital twins used for? That depends on the industry. Let’s take a look at some of the most prevalent functions and features of digital twins across a diverse array of industries and applications.

Energy

Energy production and management are a huge market for digital twins. They’re already established technologies in the oil and gas sector, utilized by multinational companies such as British Petroleum (BP) and Shell. The reason? Digital twins aggregate the abundance of data that comes with downhole drilling operations—everything from visualizing well production to condition monitoring for the equipment extracting resources.

Fossil fuel producers aren’t the only ones using digital twins. Solar and wind farms also rely heavily on digital twins to monitor the performance of critical generators: solar panels and wind turbines. Smart technologies make it easy to monitor equipment off site and get real-time insights that enable proactive service. And, of course, digital twins make it easier to visualize the flow of power into a traditional grid.

Healthcare

Hospitals and healthcare facilities are filled with critical assets. In this sector, digital twins serve the role of integrated asset management and life cycle maintenance. From ultrasound machines to radiography equipment, these are investments totaling between tens of thousands and millions of dollars. Facility managers and maintenance professionals need to know where they are, what condition they’re in, their service records, and more to ensure they remain fully operational.

Healthcare facilities are also increasingly intelligent environments. Everything from access control, to networked devices, to patient wearables, and more all generate data—and that data needs to go somewhere. Digital twins embrace and route data from these many signals to help coordinate care within the cloud, at a digital level. Moreover, they provide relevant data to stakeholders that need it most: the individuals responsible for orchestrating a healing environment.

Manufacturing

Digital twins were born in the world of manufacturing. They’re used for everything from asset maintenance and monitoring, to predictive maintenance and shop floor improvements. They tie into many Lean manufacturing initiatives because the focus is on using data to drive solutions. Manufacturers rely on digital twins to show them where bottlenecks are in their production lines or what machinery is due for preventive maintenance based on real-time performance.

The growing Industrial Internet of Things (IIoT) has made digital twins even more robust. Manufacturing is inching closer and closer to an era of dark factories, where off-site monitoring and a skeleton crew are all it takes to keep major production lines running. With digital twins serving as the backdrop for production insights and a strong IIoT to support it, factories will soon run in the cloud.

Retail

Retail is a fast-paced environment that requires no small amount of coordination. From feature displays and fixtures to stockroom management and inventory, digital twins have a role in retail. Where they really shine is in efforts to improve customer experience—especially in the post-COVID-19 world. Digital twins are also instrumental in coordinating inventories during the rise of omni-channel fulfillment. As businesses pivot to meet changing shopper habits, digital twins serve as a constant to support new operations.

Commercial

This list of digital twin use-cases wouldn’t be complete without a mention of commercial office buildings. In an age where remote work, flex work, and distributed teams are the new norm, digital twins help businesses reevaluate the physical workplace and understand its capacity for change. Digital twins serve as the great integrator for intelligent sensors and beacons, and interface with critical IWMS software to provide meaningful insights to decision-makers. Roll in asset management and digital twins become a must-have tool for businesses striving to make the most of their overhead.

Digital twins are becoming must-have tech

Digital twin industry use is on the rise, and it’s easy to see why. From energy to healthcare, manufacturing to retail and commercial applications, this tech offers critical support for operational excellence. And it’ll only continue to get better. As the IoT expands and more integrations come online, businesses will find digital twins instrumental in maximizing their efforts.

The beauty of digital twins is that they’re a transcendent technology. No matter the industry, no matter the application, so long as they’re configured and maintained accordingly they provide value.

Keep reading: Digital Twins – A Revolution in Workplace Management

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What is Real Estate Asset Management?

By Dave Clifton
Content Strategy Specialist
SpaceIQ

Many enterprise companies employ a team of professionals to manage their real estate portfolios. It’s because real estate is an asset that companies can optimize and leverage into broader goals. But what is real estate asset management, really? What does it mean to treat real estate like an asset vs. a practical, functional space?

The role of a real estate asset manager is to maximize the value and return on property from an investment standpoint. In the same way companies monitor the performance of employees or departments and their contribution to success, real estate asset managers develop the criteria for real estate return on investment.

What is asset management?

To understand real estate as an asset, it’s best to define what an asset is. The simplest definition of an asset is “anything of value or a resource of value that can be converted into cash.” From a business standpoint, the definition becomes more specific. “Assets are reported on a company’s balance sheet and are bought or created to increase a firm’s value or benefit the firm’s operations.”

Using this definition, often businesses choose to evaluate real estate as an asset. How do facilities contribute to the company’s bottom line? What is the ROI on office space? What is the intrinsic value of facilities vs. their current market valuation? There’s no limit to the number of questions businesses can ask from an asset evaluation standpoint. Each answer matters in the scope of real estate asset management.

Core tenants of real estate asset management

Looking at real estate as an asset means shifting focus to managing it like an asset. The core tenants of asset management are all about optimizing returns, minimizing risk, and reducing expense. For real estate, it’s no different.

  • Optimizing revenue: What is the cost of facilities vs. the revenue they generate? Are there ways to increase revenue through reinvestment in facilities? What is the total ROI on facilities over time? These questions and countless others are the focus of revenue-minded asset managers.
  • Risk management: What risks are inherent to facilities and how can companies manage them? What is the debt risk of property on the balance sheet? What liability and insurance costs accompany facilities? Managers who identify and mitigate risk improve the ROI of real estate.
  • Reducing expenditures: Can the company consolidate facilities and maintain revenue output? Are in-house or contracted maintenance services more cost-efficient? What lease negotiations will reduce monthly/annual costs? Cutting the bottom line is an efficient way to boost the performance of real estate as an asset.

Being mindful of real estate as an asset allows managers to tell a factual story of how a property contributes to the company. Asset management breaks it down into costs and expenditures, revenue opportunities and risks, and other intrinsic values that benefit the company—and it does so in dollars and cents.

Data accumulation and presentation

Quantifying real estate as an asset is only the first part of the job. Real estate asset managers need to take that data and contextualize it for portfolio managers, executives, and other stakeholders, so that they can make high-level decisions about broad real estate strategy. To do this requires access to a real estate forecasting dashboard.

Today’s Enterprise Asset Management (EAM) and Integrated Workplace Management System (IWMS) software provide real-time insights to asset managers who need up-to-date information. Lease tools, cost projections, accrued YTD costs, and countless other variables come together in a property-specific picture of real estate and its contribution to the company’s financial standings (and outlook). Real estate asset managers use this data to generate reports and forecast models as a source of truth for those in the position to make decisions.

As real estate asset managers do this for multiple properties, it paints a clear picture of portfolio performance. From there, portfolio performance can be a deciding factor in top-down decisions—such as the decision to expand to a new facility or the shift to permanent remote work and downsize facilities. It all depends on the tale of the data and the direction of the company.

Real estate asset management comes into focus

Treating real estate as an asset yields tremendous insight into its quantitative values. This is paramount when it comes to forecasting and decision-making surrounding facilities, and it provides even better context for the qualitative benefits of maintaining a physical workspace.

As companies begin to look at their real estate portfolios post-COVID-19, asset-based observations will be among the most important they make. Executives and other high-level decision-makers want to see, in plain numbers, how real estate contributes to success. Real estate asset managers hold the keys to providing this data.

Keep reading: Real Estate Asset Management Certification

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What Does a Real Estate Portfolio Manager Do?

By Devon Maresco
Marketing Coordinator
SpaceIQ

Enterprise companies with multiple real estate holdings have a lot of money tied up in static assets. As such, it’s critical for someone to monitor these assets to make sure they continue to generate revenue and other means of substantive ROI. This task falls to real estate portfolio managers—the people on the front lines of ensuring company properties align with mission-critical operations.

While facility managers oversee individual pieces of property and real estate asset managers examine them from an ROI standpoint, real estate portfolios are the true decision-makers of how to leverage all properties into company success.

What is a real estate portfolio manager?

Like you might pay someone to manage an investment portfolio of stocks, bonds, cash, and equities, in the corporate world, a real estate portfolio manager focuses on the properties owned and leased by a company. Their goal is to make sure the sum value of the properties—both their tangible worth and their contributions to operations—benefit a company.

Portfolio managers determine how facilities fit within the growth strategy of the company. They’re charged with looking at how the company’s resources are allocated, what risk real property poses for the company, and how to best leverage individual properties for greater portfolio performance.

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Chief tasks of a portfolio manager

Because they deal with the performance of an entire portfolio of properties, the role of portfolio managers shifts to broader considerations. They may make decisions affecting specific properties, but they do so with the intent to affect better performance for the portfolio at large. Some of the chief tasks they’re engaged in include:

  • Asset allocation: Real estate is an asset, but there are smaller assets within each property that contribute to its revenue output. Allocation of assets—including budgeted capital—can affect the performance of a portfolio by enhancing the revenue-generating capabilities of specific properties. The simplest example might mean moving unused assets from Location A to Location B, where they become part of a revenue stream.
  • Risk adjustment: Real estate carries risk. As an asset, that risk manifests in the form of debt on a balance sheet. The job of a portfolio manager is to ensure the collective ROI of properties is enough to outweigh their risk, and to understand which properties in the portfolio are riskier vs. safer. Risk adjustment can involve making decisions like where to allocate funds for capital improvements, to mitigate the risk of future costs.
  • Transaction supervision: Similar to a securities portfolio, properties may enter or leave the fold of a real estate portfolio. As they do, a portfolio manager needs to see that they’re purchased and divested the right way. This can involve everything from overseeing the financial transaction to receiving or divesting the property as an asset on the balance sheet.
  • Execution of asset strategy: Real estate needs to align with the company’s goals and trajectory, and serve to move it forward. It’s the job of real estate portfolio managers to make sure real estate serves its intended purpose, whether that’s solely revenue production or strategic goals. When real estate and company goals align, the business can move forward with a cohesive operational strategy.

All these tasks lay the groundwork for one final, critical objective: to liaise with executives and other stakeholders and support data-backed decision-making involving real estate. Portfolio managers work to understand the effect of company decisions on real estate, as well as relay real estate information to help influence those decisions.

Real estate portfolio manager software

Real estate portfolio management is quantitative. Managers need access to the vital insights and data streams that contextualize the decisions they make. While they can get much of it from real estate asset managers, much of that data comes from software.

When examining a collection of portfolios across different building types, geographic areas, property sizes, and other variables, data becomes a source of truth in decision-making. With clean, organized, reliable data from various property funnels at their disposal, it’s easy for managers to delve into the portfolio with a mind for each property and its contribution to the whole.

What do real estate portfolio managers do?

In a nutshell, real estate portfolio managers make sure a company’s investment in property is worth the ROI is offers. Rather than dissecting the microcosm of any individual property, portfolio managers make higher-level decisions that affect the company at large—decisions like whether to move headquarters, consolidate facilities, or buy vs. lease a property. Most important, they juxtapose real property to the business in fundamental ways that allow for better decision-making.

Keep reading: What Can You Do with Real Estate Analytics?

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Real Estate Asset Management Certification

By Dave Clifton
Content Strategy Specialist
SpaceIQ

Professionals handling corporate real estate need proof of concept—something that shows they understand the nuances of managing property at the enterprise level. Alongside experience and formal education, real estate asset management certification is a major indicator of competency and capability when it comes to overseeing real property.

No matter the path they take to get there, certification is an important indicator in the abilities of a real estate asset manager. It’s also a sound investment for companies, with the expectation that certified real estate asset managers will affect change that improves the ROI of property.

What is real estate asset management?

Real estate asset management involves treating corporate real estate as an asset—something that adds value to the balance sheet or benefit’s the company’s operations. Instead of looking at the needs of facilities, it looks at how facilities contribute to the success of the company through a fiscal lens. In many ways, real estate asset management bisects property management and financial focuses, which makes it important to staff a professional who can liaise between these core focuses.

Looking at real estate as an asset means managing it like an asset. To do this, a real estate asset manager needs to focus on three key areas of asset optimization:

  • Revenue generation.
  • Risk mitigation
  • Cost or loss savings

Within these three areas of focus is a world of opportunities and possibilities. Real estate asset management certification courses are where professionals learn to identify and capitalize on them. They learn the skills to approach real estate asset management from both property and finance standpoints, to make decisions that benefit both.

Real estate asset management courses

While some universities and higher learning institutions offer classes devoted to real estate asset management, they’re often lacking. They often provide great fundamentals for finance and real estate as an asset, but they gloss over the nuances of what a career in real estate asset management actually entails. The rare real estate asset management course may cover these duties in depth, but a class is far short of a curriculum.

Certificate programs exist to provide that missing curriculum. These programs drill down into specifics and cover not just fundamentals, but current standards, practices, trends, and philosophies. And, because they’re consolidated into several weeks or months, they’re an agile learning opportunity for a niche role in real estate management.

Where to get certified

Certification is best-earned from industry organizations or reputable secondary education institutions. There are several organizations devoted to real estate asset management and peripheral areas of focus, and each offers some form of certification consistent with industry best practices:

Professionals with one or more of these certifications are ready to step into an asset management role and govern facilities from a cost-benefit and revenue-generation standpoint. Best of all, certification programs like these frequently add extensions, modules, and refreshers to keep industry best practices current.

Real estate asset management online training

The beauty of most real estate asset management certification programs is that they’re completed online, at the pace of the person taking them. This makes certification a great opportunity for business professionals near to real estate asset management, or those who want to pursue it. In many cases, these courses are a good ongoing education investment for companies to make in their employees, and may manifest in direct ROI from well-managed real estate assets.

The benefits of certification are clear

Certification doesn’t just show core competency on the part of a real estate asset manager—it also helps them do their job better. Specialized programs and training courses devoted to asset management give property professionals unique insights not learned on any traditional career track. It goes beyond understanding real estate as an asset; it’s about understanding real estate as an asset to the business and its mission. Certification connects the dots in a way that manifests in a stronger, more cohesive real estate management strategy.

Keep reading: Ins and Outs of Facility Management Certification

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Six Reasons to Use Real Estate Asset Management Software

By Devon Maresco
Marketing Coordinator
SpaceIQ

The question on every corporate executive’s mind is whether to downsize, scale back, or consolidate the company’s real estate portfolio. This is especially important in a post-coronavirus world as the workplace undergoes yet another change. As real estate managers forecast the future, they need quantifiable data about facilities. Real estate asset management software can provide this data and the insights that contextualize it.

Here’s a look at six of the most important reasons real estate managers need asset management software and the benefits it provides.

1. 1,000-foot view of properties

Asset managers need to understand each property from a cost-benefit standpoint. That means looking from the top down, to see the factors that make up both sides of this equation. It’s easy to look at fixed costs on a balance sheet—asset management software provides additional insights that contextualize those larger figures.

A broad view of facility costs and revenue becomes particularly handy for higher-level decision-making about property-specific changes. What’s the current cost per square foot vs. occupancy vs. revenue? How do maintenance costs factor into total cost of ownership? The answers to these questions and dozens of others provide broad context for facilities, which lends credence to them as assets.

2. Quantifiable financial metrics

In the scope of portfolio decision-making, what does a real estate asset manager do? In simplest terms, they provide quantifiable insights for executives and other stakeholders. That means delivering real estate data and information in the form of key company success metrics. These insights aren’t always easy to come by, which is what makes real estate asset management software so vital.

With the proper infrastructure, asset management reporting software will deliver core company metrics available at a glance. This can include the cost of the lease and annual maintenance, month-over-month spend on facilities, revenue performance by location, and much more. These are the figures decision-makers want to see as they contemplate the future of facilities.

3. Asset-based insights

It’s easy to delineate the many functions of a property. A real estate asset manager faces the task of quantifying these functions and understanding them in the context of an asset. Asset-based insights are what C-suite executives and portfolio managers want as they make decisions about the direction of a company. Asset-based insights and their contribution to financial metrics are what aid in that decision-making.

Each asset-based insight creates an opportunity for asset optimization. Can you cut costs here? Realize new revenue opportunities there? Defining the various monetary contributors to real property’s place on the balance sheet unlocks the potential to modify them.

4. Forecasting, simplified

Real estate asset management software might tell you that a facility is operating far above capacity and generating less profit than a comparable property. Or, it might show that the maintenance costs of an old building make it a drag on the balance sheet. In these situations, available data promotes better forecasting. It’s about using the data you have now to make ROI-driven decisions about real estate for the future.

Forecasting using real estate asset management software can aid in everything from budgeting to asset planning. If companies can see the role of their facilities far into the future, they’re more equipped to make confident decisions about them in the present.

5. Contextualize workforce distribution

Asset management isn’t only about managing the asset itself—it also involves who (or what) interacts with it. In the case of corporate real estate as an asset, that means looking at workforce distribution. Real estate software readily provides this data, including data for capacity, occupation, cost per head, and other workforce-specific costs and figures.

As companies manage assets, they need to do so with the workforce in mind. After all, the core purpose of facilities is to support the people working within them. Treating real estate like an asset means considering ROI from a workforce standpoint, which means contextualizing the workforce across real estate holdings.

6. Generate reports, shareable insights

What is real estate asset management without contextual reports? Just like a securities manager might look at a candlestick chart before acting on a position, asset managers need to compile, organize, and contextualize data. This is a herculean effort without real estate asset management software. Thanks to machine learning and automation, most modern software is smart enough to aggregate and deliver the insights most important to managers—including cross-examining cost data with non-financial metrics.

Rely on the convenience of software insights

These benefits all add up to something invaluable: asset-based insights about real estate. Looking at real estate through an asset evaluation lens can provide crucial insight for portfolio managers, executives, and other stakeholders as they determine the right path forward for their real estate holdings and facilities. The simplest way to get these insights? Real estate asset management software.

Keep reading: How Agile is Your Real Estate?

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Real Estate Planning and Execution: Answering Questions About the Future

By Dave Clifton
Content Strategy Specialist
SpaceIQ

COVID-19 has left businesses with new questions, new challenges, and a new way forward—especially when it comes to their workplaces. Many companies dabbled in remote work and plan to stay that way; others are already back at work in person; still more will explore a flex work strategy. These considerations and more form the foundation for a new era of real estate planning and execution.

What role does real estate play in operations now?

Not many years ago, a change to the tax code put corporate leases on the balance sheet. FASB Lease Accounting Standard (ASU 2016-02) forced companies to change the way they account for the physical workspace. It was a painful adjustment for many. Now, after COVID-19, many companies carry the cost of their workplace on the balance sheet, but aren’t utilizing facilities in the same way. It calls for a new corporate real estate strategy.

On the surface, the simple solution is to cut costs by cutting facilities. But the simplest solution isn’t always the best one. Instead, companies need to ask themselves a series of questions designed to contextualize real estate within the broader company plan.

Consolidate or optimize current facilities?

For companies with sprawling facilities, the first question in real estate planning is consolidation vs. optimization. It’s important to look at how the space was used before the pandemic and what the prospects are after the pandemic.

For example, facilities with a capacity of 500 before the pandemic may only have space for 300 with new distancing guidelines. If your workforce of 400 is largely staying remote, consolidation might be the best answer. If you’re transitioning to flex work, optimization to accommodate these 400 employees and their unpredictable shifts becomes necessary.

This, of course, comes against the backdrop of cost. Consolidating facilities may save you money outright, but put you at an occupancy disadvantage. Optimizing may not result in immediate cost savings, but could equate to long-term value and cost efficiency.

Centralized or decentralized workspaces?

For companies with a broad real estate portfolio, there are macro questions to answer. If you have three offices in the Houston Metro area, do you still need all three? If your Seattle employees are all remote, do you still need a satellite office there? It’s vital to look at where your workforce and facilities are, and the new relationship they have with each other. It’s likely there are opportunities for change.

In some cases, it may mean consolidating offices within the same city or region. In others, it might mean splitting one corporate office into several satellites. In situations where the whole workforce is remote, it might mean major downsizing to the office or location. Real estate managers need to look at it through the lens of workforce and decide on a decentralized or centralized strategy.

Own, lease or divest?

The final question real estate managers need to ask is what their relationship with facilities needs to be. To answer it, it’s best to rely on insights from real estate forecasting software, such as predictions for workforce growth, cost burdens, and operational figures. Ultimately, the question comes down to ownership vs. leasing.

Most businesses, even large businesses, lease their space. This lease obligation appears on the wrong side of the balance sheet and can heavily affect the financials of the company. For those businesses that do own, there’s the benefit of an asset on the balance sheet—and the tax depreciation that comes with it. Should your business continue to lease? Is this the year that you build or buy? Or, if you’re leaning toward remote work, is it time to divest?

This is perhaps the biggest decision real estate managers need to make. Any long-term decisions they’ll make about facilities are rooted in whether the business owns or leases the place employees call home. This relationship is an important one to distinguish not only now, but for long-term planning and budgeting.

Reassess and strategize for the future

Despite the changes to when, how, and where we work, corporate real estate is still an asset. Leveraged accordingly in this new post-pandemic world, companies can put the real estate on their balance sheet to work in newer, better ways, to justify the cost and maximize the potential.

In some cases, downsizing and divesting will make sense. In other situations, central workplaces will becomemore important for decentralized workers. These realizations need to be the governing factors in company real estate planning for the future. Start by asking the above questions.

Keep reading: 3 Corporate Real Estate Trends To Focus On