real estate strategies for non-profit-organisations (npos)

Real Estate Strategies forNon-Profit-Organisations(NPOs)

17th Annual European Real Estate Society Conference 2010Milan, Italy23rd – 26th June 2010

Carmen Bader

25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 1

Case Study: REALESTATETUDARMSTADT2020

Agenda


Background information and motivation

Research approach

Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020

Conclusion

Agenda



Research approach


Conclusion

Background information


Motivation

Characteristics of NPOs as a challenge for real estate management

Changing external and internal effects are challenges for the NPOs (e.g., Bologna Process, demographic change and bylaws).

Times of tight budget complicate the financing of new projects and the deferred building maintenance (e.g., limited financial resources at self-governing universities).

Large number of specialised properties which can only be used for the special purpose (e.g., teaching and research building or churches). The challenge consists of evaluating the sentimental value of real estate.

Lack of transparency in real estate portfolio (e.g., occupancy costs on building level). Non distribution constraint for NPOs in contrast to For-Profit-Organisations with profit-related objectives. Nevertheless

NPOs even have to allocate and use their resources efficiently. Real estate is managed in a more reactive than pro-active manner (e.g., maintenance at the time of user requirements

instead of state of construction). Lack on aligning real estate with corporate strategy. Short-term space needs are not balanced with long-term requirements. Lack of minimising property costs.

Real estate strategy formation with holistic approach to real estate management and user interests


Agenda



Research approach


Conclusion

Research design

A single case study was chosen as research approach

Study question:

How can a NPO professionalize its real estate management implementing a real estate strategy for further planning and decision making?

Propositions are shown in the areas of activities

Data collection: Literature research Analyzing previous surveys of real estate management topics at Darmstadt University of Technology Questionnaire survey for ranking targets of a real estate strategy Expert interviews concerning specific areas of activity

Unit of analysis: Real estate management at Darmstadt University of Technology

Logic linking the data to the propositions: Appropriation of the tasks, subgoals and collected data to the areas of activity

Criteria for interpreting the findings: Subgoals in the target conceptSource: Yin (2009)


Agenda



Research approach


Conclusion

Strategy formation


Process steps

Part of the management process but not of the strategic planning

Strategic options

Strategic evaluation

Strategic programmes

Environment:opportunities/threats

Enterprise:strengths/weaknesses

Implemen-tation

Strategic control

Source: Steinmann/Schreyögg (2005), S. 172.

scientific input through integration of the workgroup “real estate strategy“

Target concept development


Implementation of a target workshop

Members: chancellor, department heads, professor Definition of objectives due to findings in CREM research

User survey for measurement of target importance

Conception of a questionnaire: “Which importance do you attach to the targets of real estate management?” Questionnaire with 18 items Evaluation scale ranges from 1 to 5 (1 = extremely important, 5 = not important at all) Study participants: members of the target workshop and professors of the workgroup “real estate strategy”

Analysis of the survey (I/II)


–– Standard deviation

Analysis of the survey (II/II)


Targets with the highest extent from the viewpoint of the workshop members

User satisfaction with same importance Workshop members attach a higher importance to user interests and core business than the workgroup “real estate strategy“ Lack of importance attached to lowering of property costs

Target 1 (EVERY)

Target 2 (EVERY)

Target 3 (EVERY)


Key target

Efficient provision of space according to the business process

Dimensions of targets

Real estate management goals of the TU Darmstadt

Interrelation between goals

A prioritization concerning the dimensions of targets has to follow in case of competing objectives

Draft of the target concept

1. Minimisation of property costs

2. Optimisation of value creation in real estate

concerning the business process of TU Darmstadt

4. Maximising the sustainability in real estate management to ensure the future viability of TU Darmstadt

3. Strengthening Corporate Identity for positive

positioning of TU Darmstadt in environment

Dimensions of targets and subgoals


1. Minimisation of property costs Life-cycle cost minimisation Investment cost minimisation Rent payment minimisation for not

remaining property Maximising the space efficiency

2. Optimisation of value creation in real estate concerning the business process of TU Darmstadt Service orientation by maximising the quality of all real estate functionsMaximising the response in real estate

3. Strengthening Corporate Identity for positive positioning of TU Darmstadt in its environmentActive management of university life concerning places for meetingProfiling through integration of internal expertiseMaximising the image of TU Darmstadt in its environmentStrengthening the competitiveness

4. Maximising the sustainability in real estate management to ensure the future viability of TU DarmstadtMaximising the ecological sustainabilitySecuring the attractive locations for survivability of TU DarmstadtMaximising the provision of required infrastructureReducing financial risks in regard to long-term conservation of real estate valueRisk minimisation through an effective compliance system

Target state

Identifying areas of activity and their interdependencies depending on the target concept

Formulating measures for each area of activity

Institutionalisation

Derivation of recommendations as transfer from the measures

Target state and recommendations


2010 2020RecommendationsREALESTATETUDARMSTADT2020

Agenda



Research approach


Conclusion

Conclusion


Complex target system particularly in NPOs increases the target conflict

➢ Increase in user orientation (strategic planning is to bring into agreement with other functional units)

➢ Ranking of subgoals by the stakeholder

➢ Stakeholder acceptance in regard to the target concept

➢ Analysing user satisfaction for measurement of success

Tight budget is a general problem of NPOs

➢ Development of alternate financing models

➢ Efficiency in resource allocation

➢ Increase in space efficiency

Implementation of a real estate strategy means a clearer understanding of real estate planning

and decision making by user's perspective.

Carmen Bader

Technische Universität DarmstadtFachbereich 1 Rechts- und WirtschaftswissenschaftenFachgebiet Immobilienwirtschaft und Baubetriebswirtschaftslehre / BWL9Hochschulstraße 1D-64289 Darmstadt

Telefon: +49 (0) 6151/16-4727Fax: +49 (0) 6151/16-4417Email: [email protected]

http://www.real-estate.bwl.tu-darmstadt.dehttp://immobilien-forschung.de/

Thank you for your attention!


Background details - backup-

Definition of NPO

There's no correct definition due to “the complexity of their operations and their relationships withy their environment, the difficulties of defining the boundaries of NPO activity and determining, categorically, what is and what is not an NPO.”

Source: Helmig/Jegers/Lapsley (2004)

NPOs are class-divided in 12 Major Activity Groups:

Source: ICNPO 1996


1 CULTURE AND RECREATION

2 EDUCATION AND RESEARCHTU Darmstadt

3 HEALTH 4 SOCIAL SERVICES

12 NOT ELSEWHERE CLASSIFIED

NPO 5 ENVIRONMENT

11 BUSINESS AND PROFESSIONAL ASSOCIATIONS, UNIONS

6 DEVELOPMENT AND HOUSING

10 RELIGION 9 INTERNATIONAL 8 PHILANTHROPIC INTERMEDIARIES AND VOLUNTARISM PROMOTION

7 LAW, ADVOCACY AND POLITICS

Identifying areas of activity - backup-

Description of property related tasks for each area of activity concerning the critical realisation and success of the real estate strategy

Appropriation of the subgoals and the gathered information

Determination of responsibility for the measures within the organisational structure

Implementation of a control system such as transfer prices for the achievement of objectives

Stakeholder management means an increase in user satisfaction


INSTITUTIONALISATIONTarget systemOrganisational structureControl systemStakeholder management

real estate strategies for non-profit-organisations (npos)

Documents

real estate portfolio

tu darmstadt eres

real estate strategy

tu darmstadt research

carmen bader25th

research building

corporate strategy

background information25th