The Corporate Real Estate Information Gap in Effective Portfolio Management

You may have heard the phrase “mind the gap” referring to warning passengers about the space between the train and the platform on London’s Underground subway; the “gap” between a golfer’s ears as the most important distance in playing great golf; or the “generation gap” dividing parents and their children in relating to one another.

The most important “gap” in effectively managing corporate real estate portfolios is the “information gap” between a company’s financial systems and the many disparate point solutions managing leases, work orders, maintenance, space and energy.

Many of the Integrated Workplace Management Systems (IWMS) that have emerged over the last decade are helpful in capturing location information and automating repetitive workflows but do little with the financials found deep within the profit and loss, balance sheet and cash flow statements. The problem is compounded when a company has an international portfolio without standardization across countries and their Business Units to capture consistent data.

There is a fundamental “gap” in meeting senior management’s need to access a summary level source of actionable business intelligence ‘dashboards’ that measure the financial performance of their owned assets and leased facilities.

Help is on the way. There is an emerging technology to fill the gap utilizing “cloud computing” where organizations will aggregate information across the portfolio from existing, siloed systems and measure occupancy costs from their IWMS, work order, lease, space, energy management systems and data warehouses while accessing data from their financials about debt service, depreciation, operational income and tangentially related facility expenses.

For the first time, organizations can compile their real estate financial performance, conduct critical analyses and develop strategic initiatives to reduce costs without the need for the deployment of new information systems. The benefit to organizations will be:
· Reliable, comprehensive information across the enterprise
· Cost effective IT expense when compared to the value of the information gained
· Ability to predict the future outlay of capital and reduce occupancy costs
· Provide critical information to shareholders, investors and regulators about the financial performance of one third of their total operational costs

How are you filling your “CRE information gap”? What would be the ‘holy grail’ solution in collecting information for you and your organization? How would access to comprehensive financial performance information change the way you manage your company’s CRE holdings?

Larry Simpson
CRE3 Consulting

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