Today’s most-successful partnerships – in popular culture, politics and the business community – are a result of collaboration to achieve mutual long-term goals. Jones Lang LaSalle’s 2013 Global Corporate Real Estate Trends survey (GCRES) explains how corporate real estate and procurement teams can emulate these partnerships by proactively collaborating to achieve strategic objectives, despite a price-driven outsourcing process.
“Procurement departments can add efficiency and transparency through standardized processes – but corporate real estate teams must partner with their procurement peers to build a shared understanding of real estate’s contribution to corporate strategy,” said Vincent Lottefier, CEO EMEA Corporate Solutions, Jones Lang LaSalle. “Without this collaboration, a company risks undervaluing its real estate partners or constraining their abilities to deliver long-term productivity gains.”
Outsourcing on the Rise JLL’s report, which surveyed more than 630 corporate real estate executives around the world, found that only eight percent of companies globally have retained all corporate real estate functions in-house, a significant drop from the 24 percent reported in the 2011 GCRES. In the survey, 69 percent of CRE executives describe procurement as being actively involved in corporate real estate, with 36 percent describing procurement as being involved “on a permanent basis.” At the largest companies with global headcounts of more than 100,000, an even higher percentage — 47 percent — report permanent involvement.
The involvement of procurement in real estate works most effectively when goals such as employee engagement and innovation are stated as shared objectives, along with price. The report found that 30 percent of CRE executives view outsourcing as a strategic relationship in which partnership value is assessed over the long term, while only six percent see it as a tactic to be executed with the lowest-cost supplier. Many are engaging in transformative relationships involving performance-based incentives, key performance indicators and risk-sharing to capitalize on value from deeper, strategic partnerships.
However, corporate real estate executives share a concern that procurement is not familiar enough with the real estate function to work together toward strategic goals. According to the GCRES survey, 58 percent of respondents report that procurement has a limited knowledge of real estate as well as the nature and complexity of the services being procured.
“The real estate function today presents an opportunity for strategic sourcing professionals to create value for the enterprise through worker enablement, talent attraction/retention and employee engagement,” said Lottefier. “The right partner with the right strategy can help enhance employee productivity, optimize the balance sheet and meet corporate strategic goals ranging from M&A to sustainability.”
JLL’s second biennial report on Global Corporate Real Estate Trends unearths the five top corporate real estate risks, including possible negative impacts to competitive advantage and profitability from cost cutting, procurement processes, lack of collaboration between functions and failure to drive productivity. It measures insights from more than 630 corporate real estate executives in 39 countries.