Change Emerging trends that are transforming corporate real estate
Opportunity emerges from crisis A quiet revolution Better by design Under pressure Green is the colour of money
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Enhancing productivity
2
Whatever your role, there is one word that characterises corporate real estate today – change. Wherever you are located, there is one feature that will most shape your future working life – change. Whoever you report to, there is one demand that your superiors will make above all others – change. Whenever you start a corporate real estate project, there is one issue that you need to keep in mind – change.
Evidence from the EMEA region attests to the fact that you are responding to the pressures of change and, in so doing, are converting new challenges into tremendous opportunities. But this process of conversion cannot be conducted alone. The demands are too great and the legacies too often prohibitive. Fresh thinking and a fresh set of eyes are required. We at Jones Lang LaSalle can help. We can bring the benefit and wisdom of experience, and the innovation and ‘outside the box’ thinking required to implement radical change within your organisation. This report summarises the change being experienced by the corporate real estate sector and the themes and issues to which you will be required to respond. It also articulates some of the routes that will help you, as a corporate real estate professional, to map and drive real estate transformation. I firmly believe that there has never been a more promising or exciting time to be working in our industry, and for there to be such outstanding opportunities for change. Vincent Lottefier CEO, Corporate Solutions Europe, Middle East and Africa (EMEA)
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Conditions are now in place for a radical transformation of the corporate real estate industry. The ability to make a difference to your wider business, and thereby elevate yourself higher in the organisation, has never been greater. The willingness from C-suite leadership to listen to and learn from your expertise has never been stronger. They are ready to back you financially. They will support you philosophically. But you have to present a solution to the dynamic of change. You have to provide a new way of seeing things, a new way of doing things and a new way of measuring the impact you are making.
3
Opportunity Emerges from Crisis Global Corporate Real Estate Survey 2011
Jones Lang LaSalle’s inaugural Global Corporate Real Estate Survey, drew responses from more than 500 corporate real estate (CRE) executives in 36 countries worldwide. The Survey’s findings unveil four overarching global trends impacting the future state of CRE, which are summarised below and further explained in the full report.
1
Higher demands on productivity:
CRE teams are required to be more relevant and resourceful, enabling CRE leaders to further enhance productivity and efficiency Having been placed in the eye of the storm during the Global Financial Crisis (GFC), CRE teams now experience more scrutiny from internal stakeholders, increased demand for realtime reporting, and tougher performance targets. This should help CRE teams be better prepared to address returning growth as well as continued uncertainty in some sectors and markets.
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Driving improved productivity through the implementation of more strategic real estate initiatives will define best-in-class CRE organisations. A shift from short-term survival tactics towards medium-term strategic initiatives aimed at driving productivity enhancements is both possible and required.
4
2
Balancing the dual forces of growth and right-sizing:
CRE organisations are exposed to complex targets such as dealing with the contrary pressures of growth and right-sizing Tasked by corporate leadership to deliver sizeable cost savings, CRE teams embarked on a series of short-term tactical real estate plays focused exclusively on driving direct cost savings from real estate portfolios. This forced a ‘step change’ in the form, function, and structure of the CRE organisation’s engagement with leadership. Moving forward, a key challenge for CRE teams will be to deliver a platform that enables the business to pursue select growth opportunities, often in markets that lack transparency, while simultaneously right-sizing CRE portfolios within mature markets.
3
Progressing towards partnerships:
CRE teams are moving towards more sophisticated partnership models To meet the challenges of the next three years, CRE teams will need help from the outside. Evolution along the outsourcing curve will be necessary to provide capacity for CRE leaders to elevate the function within the organisation. For those already engaged with the market, a re-evaluation of existing partnerships with key service providers may be undertaken to ensure that value and benefits are being extracted to the satisfaction of the higher levels of the organisation.
4
Reshaping CRE structures and skills:
A new talent requirement is emerging, resulting from a tougher operational environment, forcing CRE leaders to rethink team structures and skills CRE teams were exposed during the period of economic uncertainty as senior company executives - the ‘C-suite’ - gained a better appreciation of real estate fundamentals and the costs associated with real estate portfolios. While this presents new, tougher challenges for CRE teams, it also creates an opportunity for greater engagement. CRE leaders should consider reassessing their existing teams and skills. They must be prepared to redesign team structures in order to reduce focus on tactical (more easily outsourced) activities. Greater attention on driving sustained relationships with business leaders will facilitate better long-term alignment between business and CRE strategies. Whether through investment in up-skilling existing staff or acquiring fresh talent– including talent from both within the industry and possibly outside the traditional boundaries – CRE leaders must broaden the skill sets residing in their organisations today. Over the next three years, the challenges of managing CRE will intensify. The strong and continued interest from senior
business leaders in real estate costs and strategy represents an unparalleled opportunity to further elevate the CRE function and its contribution. At the same time, CRE professionals will have an unprecedented opportunity to accelerate their careers.
Five keys to CRE success 1. Generate a long-term plan for the evolution of the CRE team that supports and facilitates wider business growth. 2. Place a strong emphasis on real estate strategies that are highly efficient and drive enhanced productivity, and align them with top business goals. 3. Leverage service providers and find partners that will help increase capacity and capability to tackle the twin pressures of right-sizing and pursuing selective growth. 4. Refocus and restructure the CRE team both in response to growing scrutiny from senior business leaders and the need to drive a more strategic agenda.
For a copy of the full report, Opportunity Emerges from Crisis: Global Corporate Real Estate Survey 2011, please visit www.joneslanglasalle.com/global-cre-survey-2011 For more information, please contact: Vincent Lottefier Tod Lickerman CEO, Corporate Solutions CEO, Corporate Solutions EMEA Americas vincent.lottefier@eu.jll.com tod.lickerman@am.jll.com
John Forrest CEO, Corporate Solutions Asia Pacific john.forrest@ap.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
5. Concentrate on talent to ensure that the CRE function is suited to engage and manage the raised expectations of an informed C-suite.
5
A quiet revolution The past 12 months have seen corporate real estate adapt and evolve to reflect a number of new operating realities in the wake of the Global Financial Crisis. Greater visibility of CRE at the C-suite level is leading to internal change - to team size, structure and remit. How have these new realities impacted the outsourcing of CRE? Outlined below are some of the key trends that we have witnessed in the outsourcing market, and which we believe represent a quiet revolution in the way companies are procuring CRE services.
Dynamic marketplace
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
There is certainly no shortage of activity in the CRE outsourcing market with a high volume of re-tendering and renewal activity from some of world’s largest corporate occupiers. Such second or even third-generation outsourcing is often driven by more sophisticated and demanding business requirements as companies seek new ways to derive additional value from their real estate. Senior personnel change is also keeping the outsourcing market fluid and dynamic with a ‘war for talent’ increasingly in evidence among the top strata of CRE professionals.
6
approach is often a reflection of the current decentralised CRE structures found in many European corporates. Alternative models, such as the integrator model, are also under review by major corporations and beginning to enter the marketplace; in this model, as CRE evolves to a more centralised form, further consolidation and integration becomes more feasible and companies then look to further evolve their outsourcing model.
The scope and range of services that are outsourced continues to extend. CRE teams are seeking greater support on tactical delivery while they concentrate on partnering with the core business. Teams are also seeing value in ‘bundling’ services around portfolio transformation, which can include everything It is not only the more mature players renewing and re-tendering from gathering portfolio data and running the portfolio to fullexisting contracts. New entrants to the outsourcing market are scale transformation of the portfolio. Service providers are being seen in growing numbers and are procuring CRE services increasingly expected to provide access to experience and in new and innovative ways. A new tier of corporates in EMEA innovation, in addition to helping shape strategy. They are also is evaluating centralised operations and alternative ‘leveraged’ being challenged to provide solutions in areas such as estate models to reduce costs. management and lease administration, underlining the growing linkages between market intelligence, strategy and execution.
A new approach?
Traditional CRE operating structures are also undergoing Many corporates are taking a ‘matrixed’ approach to outsourcing change. Procurement teams are playing a greater role in real – segmenting opportunities by work stream, service provider estate outsourcing decisions, taking a menu approach to and geography, with the option of outsourcing one or more operational outsourcing to drive competitive pricing. services or geographies to multiple providers. This segmented
‘productivity’ become the new watchwords for CRE. Portfolio data, space utilisation and occupancy analytics are in focus as One thing that has remained consistent over the past 12 months large corporates seek to actively manage previously disparate and decentralised portfolios. Greater attention is being placed is cost pressure. The need to reduce occupancy costs is now on workplace productivity and agility as a holistic approach to deeply ingrained in the corporate consciousness and is driving CRE and business partners to accept change. With less ‘sacred improve the work environment, improve retention, enhance hiring for talent and optimise the way space is utilised. The end cows’, corporates are showing a willingness and indeed a determination to consider locations and implement solutions not goal is to improve employee satisfaction and productivity, deliver greater overall value to the core business, and reduce total seen in the years prior to the Global Financial Crisis. occupancy cost. Some companies and sectors are beginning to see selective To the future capital expenditure return as they pursue smart growth, particularly in emerging markets. But the focus on long-term As we look forward to 2012, it appears that the quiet revolution sustained cost control will remain – and continue to drive currently underway in CRE outsourcing will gather pace. As innovation and greater productivity. greater numbers of new entrants look to the outsourcing market for cost and efficiency savings, the diversity and complexity of Innovation, Innovation, Innovation! solutions in the market will also increase. Service providers will Cost pressure, combined with the substantive change outlined be challenged to take greater ownership of a wider range of above, is driving innovation in the outsourcing marketplace. services and to develop deeper partnerships with CRE teams. As corporate occupiers seek new ways to find value, then But the challenges will not end there. As companies seek to both internal CRE teams and service providers are also under reinvest in emerging markets, while simultaneously rationalising intense pressure to innovate in order to outperform. This is their operations in mature markets, the delivery of seamless inextricably linked to results; while the business demands service provision across new geographies will test but also innovation, any innovation must be embedded within the business and have a real and positive impact on productivity or present opportunities for CRE teams and service providers alike.
Cost pressures continue to shape solutions
preferably the bottom line.
To learn more about how we could help you with outsourcing of your real estate services, please contact our experts who would be happy to advise Jeff Schuth Director, Corporate Solutions EMEA jeff.schuth@eu.jll.com
Shelley Frost Director, Corporate Solutions United Kingdom shelley.frost@eu.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
The workplace is one of the areas where such innovation can occur, and is once again under the spotlight as ‘efficiency’ and
7
Better by design
Reshaping the CRE function for greater impact Today’s CRE executive is being challenged to support an increasingly complex array of corporate initiatives. These can include global expansion or contraction, sustainability, winning the ‘war for talent’, ‘speed to market’, cost reduction or avoidance, and enhancing operational efficiency. Faced with such a range of interrelated and important demands, engineering an optimal team structure is crucial to achieving best-in-class performance. As well as elevating performance, a leaner and more effective team structure can improve business alignment and reduce cost – demonstrating the full value of the CRE function to the wider business. Most importantly, the onus is being put on CRE teams by their core businesses to adapt the team’s skills to meet changing requirements and demands.
Choosing the right model A range of factors must be taken into account when designing the right CRE model, as each organisation operates in very different ways. But in each case, there are common factors that need to be addressed. Alignment with the core business is the most fundamental of these as, without it, the structure cannot be truly effective. On top of this, the size of the team and the skills required of it will depend on a series of key factors as outlined below: ●● ●●
●●
The prospect of adding value through the refocusing of the CRE structure is alluring, but how is it best achieved?
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Towards a strategic future There is already a clear evolution underway driven by dynamic macroeconomic conditions, continued globalisation and a growing realisation among corporate leaders of the value that can be delivered by an effective and focused CRE function. This evolution will ultimately be characterised in a range of ways. However, one thing is clear: best-in-class CRE teams will be more streamlined, more strategic and more focused on internal stakeholders, working alongside the wider business as influencers and leaders of change. This evolution is likely to require a fundamental reassessment of team structure, roles and skills (Figure 1).
●●
●●
●●
●●
Figure 1: Towards a Strategic Future Potential Value
Typical Time
Typical Time
Potential Value
Strategy and Relationship Management
5%
50% Planning
25%
70%
Strategy and Relationship Management
50%
25% Planning
25%
Operations
25% Operations
70%
Source: Jones Lang LaSalle 8
●●
The objectives and targets set by the board / leadership The complexity of the portfolio in terms of property and ownership types The existing mandate and remit of the real estate team, which is particularly crucial as a clear remit and control will strengthen the process The composition of the core business; i.e. the number of business units The manner and frequency of the real estate functions ability to interact with the business The number of stakeholders and their input into real estate decisions The mandate and remit of any outsource partner, which is also critical as it directly impacts resourcing and the focus of the internal team The level of management within the outsource partner contract
25%
5%
25%
With a return to optimism and growth, there is concern over the CRE function’s future readiness in terms of structure and skills. The Jones Lang LaSalle Global Corporate Real Estate Survey 2011 positioned a number of future scenarios in terms of potential CRE structures and asked respondents to assess the likelihood of these scenarios emerging over the next three years. According to respondents, the structural scenario that was most likely to occur is a shift towards more highly-centralised real estate functions, which are driven by core regional or global teams. As a result, in-house talent
CRE function to become highly centralised and driven by a core global team CRE function to be overseen by the CFO/ COO as an operational part of the business
3.4 2.9
CRE team to be split into different functional roles and structured/ managed globally
2.7
CRE function to be reduced in size
2.6
M E A N VA L U E A C R O S S T H E S U R V E Y
SCENARIO
1 = Will definitely not happen 5 = Will definitely happen Mean values exclude those respondents who believe scenarios are already occurring Source: Jones Lang LaSalle, Global Corporate Real Estate Survey 2011
requirements are shifting. Encouragingly, given the size of the task facing CRE teams in a post-GFC era, there is no anticipation of a strong reduction in the headcount size of CRE teams over the next three years.
CRE models: the options Only once these factors have been assessed and clarified can CRE leaders determine which organisational model is the most appropriate. Four of the most frequent models observed are: 1. Functional – a traditional CRE model that promotes autonomy based on real estate function, with each function or ‘silo’ reporting to the global lead. 2. Geographic – allows the global lead to have overall control of the real estate functions, with regional executives liaising with local business units and service provider representatives on the ground. 3. Process – involves structuring the real estate team and functions around delivery and transformation processes, matching each activity to the lifecycle of real estate. Executives accountable for each process then report up to the CRE lead. 4. Market/Customer – assigns relationship managers to key business units who then report back to the CRE lead. Each business unit manages a range of strategic and tactical services on behalf of the business unit.
Conclusion Reshaping the team structure can be a demanding process. Although the benefits can be great, the length of time such a change can take should not be underestimated. Nor should the potential challenges be overlooked, particularly in terms of skill sets and realigning people within new structures.When it comes to choosing the right CRE organisational structure, there is no single, standard template that can be applied, regardless of company size and structure. There is, however, an evolution in best practice. Those CRE organisations who can adapt and reflect this evolution will be best positioned to reap the rewards of a more effective and strategic function that is more closely aligned to their core business.
To learn more about the four organisational models for CRE, download a copy of the original report, Better by Design: Reshaping the CRE function for greater impact, at www.joneslanglasalle.com/CRE-Impact For more information, please contact: Ralf Heuser Tom Bayne-Jardine Director, Corporate Solutions Director, Corporate Solutions Germany United Kingdom tom.bayne-Jardine@eu.jll.com ralf.heuser@eu.jll.com
Guillaume Savard Director, Corporate Solutions France guillaume.savard@eu.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
A shift towards centralisation
9
Under pressure
Five forces for further workplace transformation There are five powerful forces at work in the workplace. While not new, these forces, felt in combination and against the backdrop of a post-GFC operating environment, demand an urgent and radical transformation of the form, fabric and function of the workplace.
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Cynics will protest that we have heard this before. They will point out that ‘new’ or ‘alternative’ workplace strategies have been an established part of the CRE tool kit for many years and yet, despite this, they will maintain that adoption levels have been low; case studies of successful transformation limited; and outcomes far less radical than originally envisioned.
10
But there is a clear blind spot in this argument. Think about your own workplace of just a decade ago and contrast it with that of today. Think about how you work now, compared to how you worked at the turn of the century. Change has occurred. Technology has enabled more agile ways of working, with wireless environments becoming commonplace. More flexible working practices have been accepted by senior and middle management. There has been a gradual reduction of allocated space and area per person with more aggressive corporate space standards being enforced. Significantly, there has been a clear reduction, if not removal, of private cellular space and an associated acceptance of open-plan working environments across organisations.
It may have been less radical or far-reaching than proponents had claimed, but that is typical when articulating revolution –the shortterm impact is often overstated and the long-term implications are generally underestimated. The conditions for further and faster change are ripe. Corporate confidence, although still shakeable, is on an upward trajectory and will enable the release of capital to invest in the workplace and to address corporate concerns regarding cost reduction and the enhancement of productivity. CRE teams are more engaged with and accountable to senior business leaders than ever before – creating both a pressure to perform and promote alternative real estate scenarios and solutions. Business leaders are receptive to alternative thinking about the real estate portfolio and will be increasingly capable of backing this thinking with investment capital. A ‘perfect storm’ is brewing for a fundamental shift in ‘thinking’ and ‘doing’ in relation to the corporate workplace. Not only is the operating context for CRE leaders creating an environment accommodating of change, but broader socioeconomic and market forces are concentrating the corporate mindset on the growing importance of the workplace as a contributor to brand, productivity, employee wellbeing, talent attraction and retention, and corporate social responsibility. We have identified five emerging forces for change which, when experienced together, will place tremendous pressure on CRE teams to drive and deliver a new round of workplace transformation: shown in (Figure 2).
Figure 2: Workplace Transformation
Continued cost consciousness will make the rethinking of workplace an obligatory first step in any corporate real estate strategy A dearth of quality solutions within EMEA’s real estate markets will force attention towards improving the existing portfolio through the creation of more agile environments
2 3 4 5
Ubiquitous technological solutions will finally enable improvements to the flexibility and productivity of the workplace A shrinking talent pool will make greater and louder demands about the how and where of work The workplace will be viewed as the key means by which corporate occupiers can respond to growing pressure to act more sustainably and responsibly
To learn more about how you could use workplace solutions to enhance your productivity, please contact our experts who would be happy to advise John Dodd Head - Workplace Solutions United Kingdom john.dodd@eu.jll.com
Steven Khoury Head - Workplace Solutions France steven.khoury@eu.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
WO RKP LACE TRANS FO RMATIO N
1
11
Green is the colour of money
Sustainability as a business driver for your real estate portfolio Environmental sustainability and cost reduction go hand in hand for corporate real estate as many buildings can yield up to 25% in annual energy savings through attentive energy management
Leadership CEOs across the globe and from many industry sectors are convinced that environmental issues are critical to the future success of their business1: ●●
●●
96% believe that sustainability issues should be fully integrated into the strategy and operations of a company (up from 72% in 2007) 91% report that their company will employ new technologies to address sustainability issues over the next five years (e.g. renewable energy, energy efficiency, information and communication technologies)
Simultaneously, CRE executives are keen to raise the importance of sustainability in their real estate decisions2. ●● ●●
92% consider sustainability criteria in their location decisions 88% consider green building certifications and 87% consider
Financial savings on high-performing properties Such CRE executives are increasingly encouraged by the recognition that managing their carbon footprint can, at the same time, improve their bottom line. A decarbonisation plan can target investments that deliver significant cost savings while achieving a high-performing property. Jones Lang LaSalle identified potential energy savings of up to 25% across seven sites with a return on investment for a global financial services company. Business leaders’ increased attention on sustainability and cost savings, together with a rising tide of energy legislation and regulation, are helping to drive low carbon refurbishments. Successful refurbishment delivers low-energy buildings that are cheaper to operate and have a lower carbon footprint, both of which are attractive occupational factors. Whole-life costing is a key analytic tool to ensure that refurbishment delivers the lowest combined operating and capital costs.
energy labels in administering their portfolios
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Figure 3: 10-year ‘business as usual’ expenditure forecast of a company. This included energy and Facilities Management. Rising energy costs and poorly-performing assets drive the steep increase.
Annual expenditure £
£25,000,000
Insurance
£15,000,000
Opex & Cleaning Maintenance
£10,000,000
Energy & CRC £5,000,000
£0
2011
2012
2013
2014
2015
2016
Time - years
1
12
£20,000,000
2
UN Global Impact Survey Jones Lang LaSalle CoreNet Global Survey results 2010.
2017
2018
2019
2020
2021
Figure 4: An Asset Efficiency review identifies opportunities to reduce energy and operational costs. Annual expenditure for this building is reduced by over 30% through implementing the proposed recommendations.
£25,000,000
Cost £
£20,000,000
£15,000,000
Insurance Opex & Cleaning Maintenance
£10,000,000
Energy & CRC
£5,000,000
£0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Time - years
Next Steps
For more information, please contact: Nevin Sood Associate Director – Corporate Sustainability +44 (0)20 7399 5203 nevin.sood@eu.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
CEOs are recognising the value of sustainability to help their organisations meet aggressive cost management targets. Specific expertise in whole-life costing and carbon building performance are vital to creating an informed Carbon Reduction Programme and separating green ‘bling’ from the real gems of opportunity. Companies that bring these skills to bear will achieve a high-performing portfolio and reap the associated financial, environmental and reputational benefits.
13
Enhancing productivity: Releasing value from complex assets
Companies are now under greater pressure than ever to drive increasing value from their real estate portfolios. For those companies with portfolios containing complex assets – such as R&D, manufacturing and industrial facilities – releasing value from real estate can present an array of challenges. Increasingly, companies are assessing a range of options from ‘commercialising’ just one or two buildings on an ongoing operational site, to entire R&D and manufacturing sites. Such ‘complex’ assets or sites are often owned freehold, may have been held for a long period of time and are frequently bespoke facilities. Disparities between land and book value may be significant, and there may not be an obvious target market for disposals. In short, disposing of such assets can be problematic. Despite the presence of so many pitfalls, a successful outcome can bring significant operational and financial advantages. In every real estate transaction, market knowledge, perceptions of risk and desired financial return, can lead to widely disparate values attached to the same property
Decision criteria – key issues to consider
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
In reality there are a multitude of factors to consider before finalising a strategy and solution for exiting or disposing of a site or asset, but they can be divided into four main groups:
14
1. Business and occupational objectives: Ensuring alignment between the asset disposal strategy and broader business objectives is essential.
2. Financial implications: Sensitivity to the financial consequences of any course of action is currently very significant and has often served as a brake on activity, even if it is likely to bring longer-term savings. The advent of a longerterm cost avoidance mentality will be of assistance here. 3. Market and regulatory context: Market conditions will shape strategy, timing and solutions. Creative thinking around how to meet market demand and requirements is vital when dealing with complex disposals. 4. Stakeholder management: There is often a wide range of individuals and organisations directly or indirectly impacted by large scale disposals of complex assets. A thorough analysis of relevant stakeholders (both internal and external), how best to engage them and a clear strategy to mitigate the external impacts of the agreed course of action are crucial to achieving a successful exit.
Options and solutions Business drivers, the real estate market and regulatory considerations will significantly drive the optimal site disposal route. However, the number, type and location of the assets will also help to shortlist the options. With surplus assets there is the option to ‘bundle’ them into a portfolio for disposal, or alternatively they can be considered separately and disposed of an individual basis. With the portfolio disposal route and the single site disposal route there are a wide range of alternative options as shown below:
Figure 5
Portfolio Options Development Company
Create vehicle to own surplus assets. Sell vehicle
Joint Venture
Bring in development partner. Sell assets at current value into joint venture vehicle. Participate in upside
Portfolio Sales
Workout assets and undertake portfolio sales
Single Site Options Joint Venture
Bring in development partner. Sell assets at current value into joint venture vehicle. Participate in upside
Asset Workout
Take through planning and change of use, then sell with benefit of consent
Sale & Leaseback
Straight sale
Sell overall No operational site and lease consideration back for short - sell term or only partially
Lease
Initially let to third party then either hold or sell
Achieving the right balance There are a multitude of factors to consider when embarking on a complex disposal process. Achieving the right balance for your specific organisation and asset is often challenging – but critical to an optimal outcome. (Figure 6) Options can be initially shortlisted by analysing the key decision drivers, and although each individual situation will have a different balance between the drivers, the balance usually lies
between value maximisation and time/resource mitigation. One thing that is clear is that the factors driving disposals of complex assets - globalisation and expansion into emerging markets; corporate restructuring and change; and the need to drive greater value from real estate - are unlikely to change in the short or medium term. Those who address these issues proactively, who partner with industry experts and who plan portfolio strategy alongside the wider business are likely to outperform competitors in the years ahead.
Figure 6
Mitigation of timing & resource impact
Value Maximisation
Joint Venture
Lease
Straight Sale
To learn more about how you could use enhance portfolio productivity from your complex assets , please contact our experts who would be happy to advise Michael Evans Head - Corporate Capital Markets michael.evans@eu.jll.com
Jones Lang LaSalle | CHANGE - Emerging trends that are transforming corporate real estate
Asset Workout Sale & Leaseback
Completeness of exit
15
About Jones Lang LaSalle Corporate Solutions Jones Lang LaSalle leads the corporate real estate services sector in Europe, Middle East and Africa. The platform provides solutions across a single project, country, region or global portfolio. Our commitment to enhance the productivity of our corporate clients’ real estate keeps us at the forefront of the industry. Our global platform of transactions, lease administration, projects and facility management services is under-pinned by expertise in strategic consulting, sustainability, workplace and portfolio strategy. This provides an end-to-end service offering that guarantees success through a winning technology platform. For further information, please visit our website - www.joneslanglasalle.com
Business Contact: Corporate Solutions
Report Contacts: Research
Vincent Lottefier Chief Executive Officer EMEA Corporate Solutions Paris +33 1 40 55 49 92 vincent.lottefier@eu.jll.com
Dr Lee Elliott Director EMEA Research London +44 (0)20 3147 1206 lee.elliott@eu.jll.com
www.joneslanglasalle.eu
COPYRIGHT Š JONES LANG LASALLE IP, INC. 2011. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.