Silver linings: corporate property, I.T and the cloud
From world wars to booms and
busts, business has always had to reinvent itself to respond to
major shifts in the wider world. The latest global recession is no
different. Businesses of all shapes, sizes and sectors need to
embrace new business models if they’re to survive the latest
financial storm.Real estate is one area that’s under more pressure
than most.
In the new economy, it’s the ‘real estate - lite’ companies like
Google and Amazon who’ve rocketed to the top of the tree, with
traditional offices and shops becoming increasingly obsolete. The
rise of mobile or ‘cloud’ computing is a further development
helping occupiers to make the shift away from the traditional
bricks and mortar workplace. The difference is clear. Those who
adapt have the strongest chance of survival. As usual, the spoils
will go to those who embrace these opportunities first.
New challenges
After two years of economic turmoil, businesses of all kinds are
under mounting pressure to ‘trim the fat’. They need to find ways
to cut costs, improve efficiency and root out waste of any
kind.
Most face the same four big challenges:
1 Agility: Being ready to react to changes in the market
right away
2 Cost: Spending less and streamlining more
3 Risk: Spotting, mitigating and managing threats to
profits, business models or reputation
4 Liquidity: Freeing up cash for core business activities
or contingency.
Today, businesses need the freedom and flexibility to enter and
exit new markets at short notice. They’re less keen to put their
money into illiquid fixed assets when alternative solutions that do
not consume cash are available.
True value
The value of property for business can
no longer be measured in relation to square metres alone. All
corporate real estate professionals - advisors, project and
property managers - need to make a paradigm shift. They need to
consider their clients’ business needs, not just the market value
or apparent real estate-related costs or returns. In the short
term, for example, a business might be keen to shed excess property
from its portfolio but needs to have future expansion options
retained to cope with quick growth. Similarly, on a commercial level, outsourcing can often be an
appealing short term fix, but the wider impact on the business has
to be addressed in structuring any long term deals.
The good news is that there are now plenty of tried and tested
options that support achieving the balance between occupancy costs
and productivity. From serviced offices, to ‘property
operator’partnerships, to total property outsourcing. There is no
one right answer, the skill lies in blending these
solutions to create what’s right for a particular business.
Fresh focus
It’s time for a step change. Not long ago, it was the norm to
have long term, fixed locations in static markets with a standard
working model. Today, businesses need a blend of short and long
term locations, in fast and slow-moving markets, with people
working dynamically and itinerantly - beyond the four walls of the
traditional office.
For corporate real estate
professionals, it’s a ‘do or die’ moment. It’s time to embrace the
new world order, or be left behind.
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