Corporate Real Estate Gets Professionalized

CHICAGO—Top corporate officials used to consider their real estate departments an unimportant backwater. Today, however, these departments play a key role in deciding how to steer vast organizations. As a result, large and mid-sized companies, and even large law firms, have made sure to attract people with a variety of skills, including experience in human resources and information technology, to their in-house real estate operations, dramatically increasing their professional capacity. Maureen Ehrenberg, the executive managing director of global facilities management for CBRE, was a panelist at last week’s BOMA/Chicago’s mid-year market review. She also spoke to GlobeSt.com yesterday on how this transformation came about, and the key role Chicago played in the big shift.

“The whole corporate real estate function has been up-skilled,” Ehrenberg says. “It’s a response, of course to the market,” and the need to cut costs, but the true roots of the change goes deeper. In the mid-1990′s, the increased importance of information technology led to its centralization in the corporate world, but that also sparked a reconsideration of corporate real estate. “There were strong parallels between the two. Many people were saying, ‘well, wait a minute, when you make a real estate decision it stays with you for a long time, just like IT. We should centralize the real estate function.’” Therefore, instead of allowing local offices to make rental decisions, companies began lining up their entire portfolio, forecasting out rents across many markets, analyzing market trends and developing a comprehensive strategy. The result was typically “millions of dollars that can be invested back into the business.”