"You've got to have some transparency about the P&L of what's going on here" in executing a corporate real estate strategy, said Alan Scott, managing director and Americas regional head of corporate real estate services for Deutsche Bank. Scott and other panelists cited cost pressures on corporate real estate functions—one of the reasons companies are outsourcing some functions to begin with.
David Arena, president of Grubb & Ellis New York and himself a former corporate real estate insider, commented that "the outsourcing business is as hot as can be. In firms like ours, outsourcing is actually making up for the deceleration in transactions."
As corporations look increasingly toward outside providers, they're also raising their expectations. Arena said "the history of companies looking for things for free" from outside providers was "long and continuing." Scott noted that the ante has been upped in terms of the sophistication of managing an account.
That sophistication comes from within as well as outside the corporate client's own offices. Scott said managing corporate real estate entails "a 360-degree" understanding that encompasses all aspects of the end user's requirements. Mitra Meshgin-Poosh, SVP of global real estate services for McGraw-Hill, said she's aiming at a strategic partnership with McGraw-Hill's service provider to deliver what the company's individual business units want.
Corporate clients may themselves be less than clear on that subject. Scott said that if a company terminates its contract with a service provider, it's more likely because the client didn't communicate well enough to enable the provider to do the job properly.
Moderator Paul Garity, Los Angeles-based partner at Capstan Advisors, said corporate clients—especially multinationals—increasingly are looking for a full-service menu, and service providers are increasingly global in their reach. For providers just getting started with meeting clients' outsourced needs, panelists agreed that the essentials of facilities management, transactions and project management were a good starting point. Arena called integrated services "the holy grail," and Meshgin-Poosh said she prefers to be able to read about the portfolio from a single report.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
