The Power of Place - Corporate Real Estate 2010

By Hal Reid

Covering the CoreNet Global Summit in Atlanta provided an insight to how the developers and users of location-based business intelligence see the world.An important indicator of how this group sees the world is that CoreNet Global has an initiative to estimate the factors that will be in place that will condition the nature of Corporate Real Estate (CRE) in the year 2010.

This is called CRE 2010 a Research & Leadership Development Program for the CRE Professional

Why is this important? It begins to identify how the world will look then, the nature of work, and how that will affect the way real estate will be developed and managed.

These are the factors that they had identified that would influence the world in 2010.

The Future of Work - Talent Won.They quoted these figures that will represent the workforce in 2010,

  • 20% White Collar worker turn over
  • 50% of Middle Managers are looking
  • 52% of all workers want to change jobs
  • 54% are confident they can earn a living without being in a corporation..
  • Most employees will not have fixed hours
  • The paradox of cheap labor.Attrition rates in the 40% range are negating the benefits of moving to cheap labor markets
Look at the mobility of the workforce.Note how corporate loyalty has all but disappeared.If 52% of all workers want to change jobs, how does the enterprise retain people and keep moral high to insure quality? When was the last time you were "re-org'd?" How much did it increase your enthusiasm?

The threat of moving jobs offshore may fade as the attrition rate kills production, limits quality and raises training costs.Is this Perot's revenge; the giant sucking sound gets reversed? NAFTA becomes a much different acronym.

A very key point is that 54% believe that they can earn a living without the corporation.This is very dependent on the worker having extremely marketable skill sets.You have to wonder how many people will be in that position.The laws of supply and demand will not go away and while that would be great, I can still remember all the Aerospace engineers driving cabs when the bottom fell out of the space business.What about IT people today? Great skills, but no market, and not a lot of room for the entrepreneur.

So perhaps talent and skill sets are the Ticket to Survive in 2010, but that is also true in 2003.

Technology is the Driver - The Web Accelerates Life and Begins to Blur the lines between life and other activities.

  • Higher Customer Demands force higher value and more technology.
  • Continued Corporate restructuring - the next round of mergers pushing toward the Value Network.He who has the best applied technology wins.
  • New threats to Corporate Continuity.The problem of balancing corporate security with transaction speed.
This concept of the web blurring the lines between work and other activities is very interesting.How often do you hit the web at work? More than you want anyone to know.If you considered that you were buying and selling on eBay or day trading, where does your income really come from? Is your bank account really mingling funds, which is very illegal with Real Estate Brokers and Lawyers?

How often are you home working using the web? Are all your emails company related in your corporate email account? I doubt it.

Two corporate mottos that reflected the CRE 2010 project were:

Motorola - "We build real things needed in a global society."

Johnson & Johnson - "Delivering the promise of technology."

Both quotes are driven by a recognized need to put the end result of the corporation closer to the customer.It is seen as a shift in corporate focus.Companies want to build useful products and not solely engage in "slick marketing."

The CRE 2010 group also felt that there was going to be an image "makeover" for corporations.This would result in greater social responsibility as evidenced by JP Morgan's establishment of their "Committee to Social Responsibility," and IBM's slogan of "Preserving the Quality of Life." Of course, a lot of people today would express that the quality of life can be retained with continued employment.

For all the thought in defining the future a key ingredient for us, the Business Geographers, was an idea well understood by the CRE 2010 Group. That was "The Power of Place."

The role of place was identified by these concepts;

  1. Corporate Real Estate would consist of A Network of Sites, constantly reconfiguring., because the needs of consumers that create the markets for products would be more fluid
  2. There would be a re-emergence of the Intelligent Building.This was due to the change in the workforce, flexible hours, shifting space requirements and a need for more efficiency and better energy management.
  3. The workforce would be more mobile (distributed) over greater geographies.
  4. The routine use of the Virtual Place.
  5. The importance of both Real Estate, real and virtual, and the inclusion of technology would create a new class of Senior Executive - The Chief Resource Officer.
  6. It would be expected that the corporation was a Global Networked Enterprise.
Number 1 is with us today as retailers move to the 3-year lease - with options to renew.In number 2, the technology for solar panels, computer controlled environments is becoming efficient enough to use and not just a way to acquire social acceptability or government tax relief.

In number 3, I believe they are correct.What are the geographical limits on the web?

The virtual place is WebEx.Anybody who is anybody has been there and it will be more common as broadband expands and WiFi is expected in more places than Starbucks.

I have some doubts re the Chief Resource Officer.It wasn't that long ago that the CIO was the coming thing.In the era of lean and mean, it maybe just another position absorbed by other functions.

A key element in the transition to CRE 2010 was the role of leadership. It would take a new type of skill set to effect these changes.A key part of the CRE 2010 Initiative was to insure the survival of the CoreNet membership and provide the path to the skill sets needed to exist in 2010.CoreNet Global currently provides their members a number of courses that deal with the world of 2010 and they are revising other courses to meet this need.

The picture that CRE 2010 is beginning to paint is a much different world.For the typical Corporate Real Estate Executive this may be fairly traumatic.At this Summit, I noticed a significant lack of retail real estate people.Retailers always made up the core members of this organization. In thinking about expansion, it was always a domestic issue.Then there was international.A great deal of international expansion was accomplished by franchising a large piece of a country that was then sub-franchised. For the franchisor, this was cost free development, but it didn't prepare them very well to operate as a global enterprise.I'll bet there are a lot of senior retail development people who don't know how many units they have in any given country (except perhaps Canada) and where those units are actually located.The step from that position to a global enterprise is a fairly big one.

CoreNet may have already moved beyond the present and that is reflected in their new membership.International real estate is much more complex than domestic and requires new skill sets and new relationships.

The basic issue may be the rate of change.In the past, you could keep your old skill sets and probably survive.It is possible that the future is now arriving sooner, making it necessary to acquire new skill sets faster or retire earlier.If this is true, then the understanding of the Power of Place is now beyond just those of us who see the world as geography. It offers opportunity not only in terms of economics, but in the ability to shape and condition the way the world will be.

Recently, speaking to a college class of budding "GISers," I made the comment that almost everywhere I had been, there was geography.Soon it will be difficult to tell the difference between real and virtual geography. Someplace you will find yourself in the very near future, there really won't be any geography, but there will always be the power of place.


Published Thursday, October 30th, 2003

Written by Hal Reid



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