JLL survey suggests real estate teams in Australian companies should shift focus to business strategy

Australian companies could increase their workforce potential by utilising their real estate assets, says a JLL report.

The report, Australian CRE (Corporate Real Estate) Survey – Getting the Strategy Right, identifies opportunities for real estate teams working in corporate Australia to shift their focus from real estate metrics to business performance goals.

“It is being recognised that a big factor of business success is the workplace, which contributes to talent attraction and retention and productivity," said Tony Wyllie, JLL’s Australian head of corporate solutions integrated portfolio services.

“Our latest JLL survey has found that when it comes to the expectations that are placed on internal teams managing real estate in corporate companies, they continue to walk a tightrope between delivering cost savings for the business and creating value from real estate assets owned by the company.

“There’s a real opportunity for these real estate teams to shift the conversation from cost to business strategy, focusing on outcomes like productivity that will create real value for the organisation,” he said.

The survey found that 88% of respondents reported productivity gains are still behind achieved predominantly by cost savings, but workplace improvements also rated highly in the survey, with 72% of respondents saying productivity gains had been made this way.

JLL’s third report on Global Corporate Real Estate Trends tracks insights from 544 CRE executives in 36 countries. The report shares the views of real estate teams operating in corporate Australia.

The major shifts in CRE sentiment since the last JLL global survey in 2012 are:

• The CRE mandate is stronger than 3 years ago – 26% rated it much stronger and 40% said it was stronger
• Over the past 2 years, the majority of CRE (56%) say that their strategy has been more cost driven compared with 42% who say it has been more value driven
• 77% of respondents said that over the past 2 years, productivity had become a more important goal for the CRE team.

The last three biennial global surveys conducted since 2010 indicate a clear focus on cost for corporate real estate teams at the expense of allowing these teams to create value beyond just financial savings.

“Internal real estate teams need to move from being a technical specialist to being a trusted advisor," Wyllie said.

“For corporate real estate teams to elevate their role away from just a cost focus, they need to expose what they have traditionally held as their organisation’s ‘strategically sensitive’ functions around portfolio strategy to service providers and shift their own focus on the pinnacle levels of strategy such as stakeholder management and integration with the key supporting business functions of HR, IT and finance.

“The results from JLL’s latest survey show that the demands from the C-suite (CEO’s, COO’s, CFO’s) are growing, not slowing.

“Since the GFC, companies have been honing in on what is typically either their second or third largest cost base – their real estate or office footprint.

“Not only has the C-suite continued to demand cost savings from real estate but their expectation is for corporate real estate teams to deliver on both the value and cost side of the real estate equation.

“That’s why corporate real estate teams are still walking a tightrope,” said Wyllie.

The report identifies opportunities for corporate real estate teams to shift their focus and increase their visibility in managing a company’s real estate assets. The survey found the CRE mandate to do this was stronger than 3 years ago – 26% said it was ‘much stronger’ and 40% said it was ‘stronger’.

“While the survey showed that the majority of CRE executives believe they can elevate their function through delivering cost savings (35%) and have spent the past two years with a strategy focused on cost savings, this succeeds in garnering support from the business, but leaves a lot of value on the table that companies could be using to maximise the performance of the business,” said Wyllie.