the leader may june 2012

may / june 12volume 11, issue 3

corporatereal estate

& workplace

Work-Life Support:Fostering Employee

Productivity & Retention(page 12)

Fidelity’schris Horblit(page 48)

mastercard’s workplacetransformation in ireland(page 22)

Some show up just to rev their engine. We’re focused on pulling ahead as the first true alternative to real-estate-as-usual. We’ve put the pedal to the metal to help our clients race forward with investments in new markets, top talent, and a unified global brand in more than 500 offices in 62 countries worldwide. We’ve got the inside track on service to accelerate your success.

Putting the pedal to the metal.

www.colliers.com

FASTERFORWARD

AD_F1_8.375X10.875_201203.indd 1 3/23/12 12:59 PM

LeadershipThe leader is prinTed

on recycled paper

coreneT Global board of direcTorsYour leadership makes the difference.

Jim Scannell, ChairSenior Vice President, Administrative ServicesThe Travelers Companies, Inc.

Randy Smith, Chair-ElectVice President, Real Estate and FacilitiesOracle

Steven Quick, TreasurerVice President and General Manager EMEAJohnson Controls, Inc.

Matthew J. Fanoe, Immediate Past ChairVice President of Real EstateCoca-Cola Refreshments

Erica Chapman, Esq.Vice President, Real Estate and FacilitiesinVentiv Health

Micheal CreamerPartner and Head of EMEA Corporate Occupier and Investor ServicesCushman and Wakefield

Maureen Ehrenberg Global Director of Facilities Management, Global Corporate ServicesCBRE

John Forrest CEO, Corporate Solutions Asia PacificJones Lang LaSalle

Philip Grossberg, LEED APManaging Director, Global Corporate Services CBRE

Lydia Jacobs-Horton Director, Global Facilities and Real Estate Procter & Gamble

Irene MastertonGM Retail Real EstateShell International Petroleum Company Ltd.

Denis McGowanGroup Head CRES Business Alignment & Asset ManagementStandard Chartered Bank

Sean PrasadVice President, Real Estate and FacilitiesT-Mobile

Christopher L. Staal, MCRVice President and Global Head, Real Estate and Facility ManagementThomson Reuters

Lee R. Utke, MCRSenior Director, Global Corporate Real EstateWhirlpool Corp.

coMponenT leaders coUncil represenTaTiVeTBA

2012 The leader 4 M a y / j U n e

associaTe direcTors

Jessica Beers, MCRSenior Director, Business DevelopmentUGL Services

T. Patrick DonnellyPrincipal, BHDP Architecture

Gina RizzoGlobal Client Relations, Herman Miller

Robin RonneManaging Director, CEO CouncilGreater Fort Lauderdale Alliance

leGal coUnsel To coreneT Global

David GochWebster, Chamberlain and Bean

ediTorial adVisory coMMiTTee

George Bouri, MCR, SLCRConsultant, New York

Del BoyettePrincipal, Boyette Strategic Advisors

Ian CameronManaging Partner, Intresinc

Barbara Donaldson, CFM, MCRVice President, Global Real Estate and FacilitiesSynopsys

Larry EbertHead of Corporate Project ManagementCushman & Wakefield

Scott Foster, MCRSenior Vice President, Corporate WorkplaceBank of America

Roger G. GaudetteDirector, Asset Management, Ford Land

Thomas GlatteCorporate Real Estate Management, BASF Group

David KontraManager, Real Estate Operations, General Electric

Rick KrivaVice President, Global Real EstateHoneywell

Richard M. McBlaineChief Executive, Strategic ConsultingJones Lang LaSalle

Keith PerskePrincipal, eBusiness Strategies

Robin RonneManaging Director, CEO CouncilGreater Fort Lauderdale Alliance

Jim ScannellSenior Vice President, Administrative ServicesThe Travelers Companies

Tony Shou Fat Wong, MCRDirector, Workplace Resources, APJCorporate Real EstateCisco Systems

ediTorial sTaff Richard KadzisediTor

Chelsie ButlerManaGinG ediTor

Bailey Webbsenior conTribUTinG ediTor

David HeatonediTorial associaTe

Tim Venable senior ad adVisor

Sonali Tare conTribUinG WriTer

adVerTisinG and prodUcTion sTaff Bonnie HoftocreaTiVe direcTor

Michael Mooney

Tim Abrams

Matt DirksadVerTisinG ManaGers

THE LEADER, CoreNet Global’s Official Publication, is published six times a year, as a bi-monthly publication commencing January/February, by CoreNet Global. Subscription rates for non-members (in U.S. dollars): = in the United States, $75; in Canada, $85; outside North America, $95. To order, contact Nicki Williams at 404-589-3241 or [email protected]. Office of Publication: CoreNet Global, 2500 Broadway St, Ste 200; Boulder, CO 80304-4237. The opinions expressed in this publication are not necessarily those of the association. THE LEADER is sent as a benefit of membership to all members of CoreNet Global. Articles published in this magazine may not be re-printed without written permission from the Editor. Editorial inquiries should be addressed to Chelsie Butler at [email protected].

POSTMASTER: Send address changes to: THE LEADER; 2500 Broadway St, Ste 200; Boulder, CO 80304 or [email protected].

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may / june 12volume 11, issue 3

corporatereal estate

& workplace

Work-Life Support:Fostering Employee

Productivity & Retention(page 12)

Fidelity’schris Horblit(page 48)

mastercard’s workplacetransformation in ireland(page 22)

THE LEADER Online! Go to www.corenetglobal.org, click THE LEADER link under the Publications and Resources tab, and click on the magazine cover.

2012 the leader 6 m a y / j u n e

mayjune

12

executive Profiles: david driver, northeast utilities 46 chris horblit, fidelity 48

Industry Tracker 50navigating the lease accounting standards maze

Young Leader 54newmark Knight frank’s joey vlasto

Dashboard 554th Quarter 2011

Capital Corner 56Benchmarking your delivery model

dePartments: leadership 4 message from the ceo 8 real estate in the news 10 members on the move 57

a look ahead 58 In our Next Issue Calendar of Seminars Index of Advertisers

executive vieWPoints: Work-Life Supports = Organizational Results

12

the future of WorKsPace: Lessons from the Cloud

mastercard technology: Workplace Transformation in Ireland

location strategies: Development of the College Park, Ga., Atlanta Airport Area

more than the sum of our molecules: The Successful Merger of Two Biopharma Giants

the risKs and reWards of outsourcing: Transferring Technology from Internal to External Service Providers

18

22

KeeP calm and carry on: Preparation for the NATO Summit in Chicago

42

28

30

34

38customer relationshiP management: Making The Connections

by angela cain, ceo

Message

froM the

ceo

2012 the leader 8 M a y / j u n e

CoreNet Global’s Board of Directors approved a 10-plus year envisioned future for the organization, as well as a strategy map for the next three to five years at its February meeting. The future plans build a culture and DNA for CoreNet Global that lead to perpetual innovation and improved programs and services for individual members, the companies they serve and the profession.

We have to be an indispensable resource for members. We must advance and support the practice of corporate real estate (CRE) locally and globally and align products and services with members’ corporate needs, establish market-driven development and delivery models and identify the core competen-cies and skill sets that contribute to overall enterprise success. In partnership with Chapters and our Special Interest Groups, we must strengthen global-local operational alignment and accountabil-ity to continuously improve stakeholder loyalty. These endeavors enable us to raise the profile of the CRE profession, serve as a voice for the industry and broaden the CRE professional network and its influence.

For CoreNet Global and our mem-bers, a five-year forecast can be tricky enough, and looking out a decade is even more daunting. Still, it’s an essential exercise for us to map organi-zational strategy, where we want to be tomorrow and where we want to be in 2022. We’ve set a clear and attainable path ahead.

Again, we have an abiding vision and will work to create a future where CoreNet Global is indispensable to suc-cessful corporate real estate practitio-

ners, just as CRE is indispensable to the success of the practitioner’s enterprise. We will serve as CRE’s champion to further the industry’s regard globally and help companies establish educational, experiential and credentialing require-ments for executives engaged in CRE. We also will reach out to create effec-tive partnerships across the corporate infrastructure (HR, IT, finance, procure-ment and legal, for example) to foster integrated solutions that drive enterprise success and shareholder value.

Further, as an organization, we will produce intellectual property where there is demand and ensure that our MCR and SLCR designations are the standard by which all CRE hiring deci-sions are made. We will lead CRE’s evolution and become the pipeline for trained, networked and credentialed tal-

ent as we broaden the reach and influ-ence of CRE within corporations. We will partner and/or compete with other organizations to achieve this vision and work to make a positive contribution toward a sustainable future.

At the end of the day, though, we are a local organization, no matter where you go in the world – from Mumbai to Menlo Park, Calif. We will continue to serve as the critical hub for CRE networking and professional develop-ment, whether at a Global Summit, Discovery Forum, MCR/SLCR seminar or local Chapter event.

Ultimately, we can’t achieve any of this without you.

envisioned future

Sodexo Helps Patients & Staff Rest Easy With Mission Critical Upgrades

2012 Award Winner

www.sodexoUSA.comhttp://bit.ly/sodexosolutions | [email protected] | 888 SODEXO7

© Sodexo

SOLUTION

Sodexo’s energy and construction services team of project engineers, working closely with HMC facilities management group, engineered a turn-key, innovative solution to design, engineer and construct a new replacement air handling unit. This complex plan upgraded the air handling unit with zero-tolerance for down time, and maintained mission critical hospital operations.

HIGHLIGHTS• Uninterrupted air supply to health care facility operations during

design, and installation

• Systematic replacement of fans, coils, and air to air heat recovery system using heat wheels

• Installation of a glycol to glycol heat recovery system

• Specified energy efficient variable speed drives on supply and exhaust fans for air balance.

OUTCOMES

• Improved indoor environmental quality through consistent and finite control of internal temperature and humidity

• Increased total heat recovery capacity to 1,440 MBH

• Eliminated opportunities for unplanned outages

• Realized annual operational savings of $235,000

In the 30 years since the original HVAC system was installed at Hamilton Medical Center (Dalton, GA), significant changes in building infrastructure, higher patient occupancy, along with new modern medical equipment placed significant burden on one of the main air-handling units.

As a result, optimal thermal regulation and humidity control were difficult and costly propositions. Patients, staff, and visitors were uncomfortable.

Sodexo Helps Patients & Staff Rest Easy With Mission Critical Upgrades

2012 Award Winner

www.sodexoUSA.comhttp://bit.ly/sodexosolutions | [email protected] | 888 SODEXO7

© Sodexo

SOLUTION

Sodexo’s energy and construction services team of project engineers, working closely with HMC facilities management group, engineered a turn-key, innovative solution to design, engineer and construct a new replacement air handling unit. This complex plan upgraded the air handling unit with zero-tolerance for down time, and maintained mission critical hospital operations.

HIGHLIGHTS• Uninterrupted air supply to health care facility operations during

design, and installation

• Systematic replacement of fans, coils, and air to air heat recovery system using heat wheels

• Installation of a glycol to glycol heat recovery system

• Specified energy efficient variable speed drives on supply and exhaust fans for air balance.

OUTCOMES

• Improved indoor environmental quality through consistent and finite control of internal temperature and humidity

• Increased total heat recovery capacity to 1,440 MBH

• Eliminated opportunities for unplanned outages

• Realized annual operational savings of $235,000

In the 30 years since the original HVAC system was installed at Hamilton Medical Center (Dalton, GA), significant changes in building infrastructure, higher patient occupancy, along with new modern medical equipment placed significant burden on one of the main air-handling units.

As a result, optimal thermal regulation and humidity control were difficult and costly propositions. Patients, staff, and visitors were uncomfortable.

real estate

in the news


Global job market improvingAccording to the “2012 Global Hiring Forecast” from Ferguson Partners Ltd., the global real estate job outlook is on the rise with 61 percent of respondents planning to increase hiring this year, which is an increase of 70 percent from two years ago. The more than 120 people surveyed are senior-level executives from companies active in commercial property investment and commercial mortgage lending, investment banks, REIT securities, law firms, corporate real estate groups and pension funds. Out of those questioned 65 percent plan to hire junior-level management.

It was also recently announced that the U.S. added 227,000 jobs in February, the third month in a row of gains of more than 200,000. While the unemployment rate remained at 8.3 percent, the Labor Department reported that there were stronger gains in December 2011 and January 2011 than previously reported.

shell to Build Plant in PennsylvaniaAccording to the PRA Post, Shell has signed a site option agreement to build a petrochemical plant in Beaver County in Pennsylvania to process natural gas from the Marcellus Shale. The facility will include an ethane cracker, a facility that breaks down large molecules from natural gas into smaller ones, and is a step toward the manufacturing of plas-tics products. The facility is expected to generate thousands of construction jobs and employ hundreds of people full time after completion.

aia announced 2012 top 10 Green ProjectsThe American Institute of Architects (AIA) and its Committee on the Environment (COTE) have selected the

top 10 examples of sustainable archi-tecture and green design solutions that protect and enhance the environment. The projects will be honored at AIA 2012 National Convention and Design Exposition in Washington, D.C.

• 1315 Peachtree Street/Perkins + Will, Atlanta, Perkins + Will. A civic-focused adaptive reuse of a 1986 office structure transformed into a living labo-ratory and educational tool for sustain-able design.

• ASU Polytechnic Academic District, Mesa, Ariz., RSP Architects and Lake Flato Architects. The trans-formation of a decommissioned airbase into a pedestrian campus with five LEED Gold-rated buildings.

• Chandler City Hall, Chandler, Ariz., SmithGroupJJR. A low- to mid-rise gov-ernment complex that responds to the desert climate and provides for appropri-ate outdoor green spaces.

• Iowa Utilities Board Office of Consumer Advocate Office Building, Des Moines, Iowa, BNIM. An infill development on the six-acre (2.4-hectare) site of a former landfill.

• Mercy Corps Global Headquarters, Portland, Ore., THA Architecture. The restoration of a 42,000-sq.-ft. (3,902-sq.-m.) neglected historical landmark.

• Kensington High School for the Creative and Performing Arts, Philadelphia, SMP Architects and SRK Architects. A transparent and inviting project with visible sustainability fea-tures that are used as teaching tools for students.

• Music and Science Building, Hood River, Ore., Opsis Architecture. A pub-lic building that truly fuses sustainable design with sustainability curriculum.

• Portland Community College Newberg Center, Newberg, Ore., Hennebery Eddy Architects. Designed to

be the first net-zero energy, higher-edu-cation building in Oregon and to reduce greenhouse gas emissions by 80 percent by 2050.

• University of Minnesota Duluth Bagley Classroom Building, Duluth, Minn., Salmela Architect. The project serves eight different departments and incorporated the German Passiv Haus system in the design process to meet the client’s performance goals.

• University of California, Merced 2009 Long-Range Development Plan, Merced, Calif., UC Merced. The approach features economic, social and environmental sustainability in all aspects of its built environment, opera-tions and approach to programming.

morgan stanley expands new york City spaceAccording to Bloomberg, Morgan Stanley has signed a lease for almost 1.2 million square feet (111,480 square meters) of space at Brookfield Office Properties’ New York Plaza in Manhattan. The agreement is the largest office lease for a single building in the city since 2008. Already leasing part of the property, the bank is consolidating its operations in Jersey City, N.J.; and Brooklyn and Midtown in New York City. The build-ing is now 85 percent occupied, includ-ing the 950,000 square feet of leases that would have expired in 2014.

Peugeot Plans to sell its Paris hQPSA Peugeot Citroen is selling its 48-year-old, 548,000-sq.-ft. (50,900-sq.-m.) headquarters in Paris for $237 mil-lion (245.5 million euros) to Ivanhoe Cambridge. According to Bloomberg, the car manufacturer also recently com-pleted a 1 billion-euro share sale where General Motors took a seven percent stake in the company.

Executive Viewpoints:Work-Life Supports =

Organizational Results

B Y B Y T R A C Y B R O W E R , P h D

2012 ThE lEADER 12 m A Y / j u n E

because of their visibility and influence. Together, their span of influence touches 1.2 million people.

Defining Work-life SupportsTraditionally, work-life supports have been defined as the benefits, policies and informal cultural practices that compa-nies provide to support workers in navi-gating and integrating their work and personal lives. Through this research, however, work environment emerged as an integral element of these work-life supports. The fact that work environ-ments are now a part of executives’ definitions of work-life supports is testa-ment to the influence CRE is having on the business. In addition to the benefits packages that provide work-life supports (vacation, medical benefits, maternity and paternity leaves, elder care), flexibil-ity in the work environment and alter-native working options have become factors in work-life support. Companies are increasingly providing technology tools and programs for employees to

interviewees represent Fortune 100 and 500 companies, and they are all C-suite or within two reporting levels of the C-suite. They represent banking, finance and insurance; manufacturing; media; oil and gas; and technology companies. These executives each shape policy and practice within their organizations. They do so formally, through the decisions they make, and they do so informally

Senior executives representing 1.2 million employees believe that work environments mat-ter to business outcomes. Through this study of non-real

estate-related decision makers, it is clear that the Corporate Real Estate (CRE) model is becoming the business model, and at the junction of people, place and technology is organizational perfor-mance. Our real estate, our facilities and our work environments need to be accountable to both organizational out-comes and employees, and it is through work-life supports that they can be.

Accessing Senior Executives Recently, I had the opportunity to explore senior executive opinions regard-ing the work-life supports provided by organizations. Specifically, my study asked senior executives about the work-life supports their organizations offer to employees, and it explored the vari-ables that affect the provision of these work-life supports. The senior executive

1.2 million People

Fortune 100 and 500 Companies

REAl ESTATEmAnAgEmEnT

COvER STORY

work anywhere. They are providing ame-nities such as relaxation rooms, lacta-tion rooms, onsite daycare, dry cleaning and take-home dinners. They are provid-ing for alternative working hours, com-pressed working hours, summer working hours, flex time, job sharing and staged retirement. In short, companies are expanding their definitions of work-life supports and responding to a wide vari-ety of worker needs through multiple options that offer work-life support.

Responding to ChallengesToday, we are all faced with the chal-lenge of successfully navigating and inte-grating our work and personal demands. Technology has blurred the lines of our work and personal lives, and we are faced with unprecedented time poverty – too many demands and too little time to meet them all. We face pressure both as organizations and as employees because of the increased globalization, competi-tion, complexity of work and rates of change. At the same time, we are seek-ing a measure of balance in our lives: We want personal fulfillment both at work and at home. As a result, the work-life supports that companies provide are criti-cally important to workers and to the companies themselves.

Work-Life Supports + Work Environments Positively Contribute to Organizational Outcomes Companies are offering these options because they believe that work-life supports, including alternative work-ing and the work environment, matter to organizational outcomes. Overall, senior executives in this study reported that providing work-life supports contributes to employee engagement, productivity, cost savings, attraction and retention. In particular, senior executives believe that providing work-life supports sends a strong message to their employees that the company cares about them. One executive from a multinational media company believes that employees “will always go the extra mile” when they believe the com-pany cares about them. Another senior executive said, “If you offer work-life supports, you increase engagement and retention, keeping costs down because

2012 thE LEadER 13 m a y / j u n E

four sets of lessons learned for those seek-ing to successfully implement or expand work-life supports in their organization.

1. Align with Programs, Work, and People• Diversity Programs and Gender

Programs. When companies are focused on diversity, they tend to have more work-life supports. For some companies, programs are more generalized, includ-ing multiple aspects of diversity. In other companies, programs are more focused on the particular needs of women. In either case, the companies focused on diver-sity and gender programs tend to have a broader array, as compared to other com-panies, of work-life supports.

• Nature of the Work. Senior execu-tives also report that the nature of the role and the nature of work are factors in whether work-life supports are offered. For roles with a lot of travel, customer-facing time, significant work load or security regulations, it is more challeng-ing to offer work flexibility.

you have employees that are more pro-ductive. If you give employees flexibility you’re meeting them more than halfway to facilitate that productivity.” Another executive reported that people perform better when they are happier at their jobs and have flexibility. Yet another said, “You win the hearts and minds of your employ-ees by ensuring their needs are met as well as the business needs. You’ll get much more productivity and innovation and out-of-the-box thinking.” Other executives report that without work-life supports and flexibility, companies simply will not be able to attract the top talent they need.

What drives the Provision of Work-Life SupportDespite the panacea that work-life sup-ports seem to be, there is still a great deal of variability in what companies offer. Considering this variability, the study finds there are 10 factors that affect the extent to which companies offer work-life supports. Together they cluster into

ExEcutivE viEwpoints: work-LifE supports = organizationaL rEsuLts

2012 thE LEadEr 14 m a y / j u n E

some of corenet global’s member

experts weighed in on the importance

of attracting great talent, flexible work

arrangements and taking advantage of

technology to make it easier for people to

work anywhere, anytime.

does your company have any initiatives

in place to aid in attracting good talent?

jim scannell, the travelers companies:

yes, we offer a multitude of hr programs

focused on both younger and older workers.

george Bouri, consultant: a firm needs

to have initiatives in place that are custom-

ized to the talent it wants to attract.

del Boyette, Boyette strategic advisors:

Being a small firm, i try to be as flexible

and supportive of employees personally

and professionally. it seems to work, as

we have very little turnover.

keith perske, eBusiness strategies:

we allow employees to live and work from

anywhere. to the people we hire, that is

a big attractor. we also are actively con-

scious about worker autonomy and the

need to balance work and family.

what is your take on flexible work

arrangements and alternative work-

place strategies?

robin ronne, greater fort Lauderdale

alliance: flexible work arrangements and

alternative workplace strategies play an

increasingly important role in the attraction

and retention of high-performing managers

and employees. the integration of technol-

ogy that allows managers and employees

to maintain their workflow regardless of

location – office, on the road, at home – has

become the enabler that helps maintain

productivity and in turn, profitability.

integrating technology so that connectivity

is available at all times leads to the oppor-

tunity for a better work-life-family balance,

which is a key and critical objective.

scannell: to a certain point. for some

employees it doesn’t matter, as they

legally can’t be working anytime from

anywhere. for others, their work needs

to be with the rest of the team. for the

remainder, it does help with overall

results and efficiency.

Boyette: we have employees in three

cities, and this totally works for us. it is

more about the skills of the employee

and commitment to quality client service

that is most important. when i decided to

move the firm’s main office to Little rock

from atlanta two years ago, it wasn’t an

issue and we have not had turnover. as

long as the work gets done and the cli-

ent’s needs are met and responded to in

a timely manner, who cares? anywhere,

anytime is the only way in 2012.

Bouri: it is increasingly embedded in the

way people do business, and even though

more attitudes are open to it, not all com-

panies are on the same spectrum. it is part

of the culture of most organizations, and

the reality is that people today are more

mobile. as the labor market becomes

more competitive in the next year or two,

this kind of thing will become a competi-

tive advantage for organizations.

perske: it is how we do business. our

company would not exist without work-

anywhere policies and remote management

techniques and technologies. outside our

company, it is the way knowledge work is

done in 2012 whether a company has a for-

mal mobility program or not.

is it crucial for the success of your busi-

ness to make your employees content?

perske: content is the wrong word. that

is the employee’s responsibility. Engaged

is what we strive for because engaged

workers are the most productive. our

company consciously works to match

employee wants and talent with the jobs

we offer them. Employees want autonomy

and opportunities to grow. we offer that.

Boyette: absolutely. i care about them

and their families and they know it. i am

as flexible as i need to be, and between

christmas and new year’s, we take the

time off to reflect on the past year and

begin the new year in the right way.

ronne: if you look at the single-largest

operational expense for the majority of com-

panies, it’s payroll and payroll-related items.

so it would naturally flow that if employees

are not content – if they don’t feel respected,

appreciated and fairly compensated – the

cost of employee turnover or churn will

negatively affect the company’s profitability,

lower the overall morale and detract from

the overall mission statement. the com-

pany’s commitment to providing attractive

and well-designed workplaces along with

maintaining investments in technology are

key elements, but paying attention to basic

human nature through communication of

respect and appreciation along with fair

compensation, cannot be overlooked.

Bouri: without sounding too cliché, a com-

pany is only as good as the people in it.

are more companies taking advantage of

technology so that employees can work

anywhere, anytime?

perske: absolutely! the very definition

of work today includes the robust use of

technology. it’s like trying to define car-

pentry without talking about hammers.

separating work and technology is no lon-

ger part of the discussion.

ronne: to ensure that connectivity is avail-

able at all times regardless of location –

office, on the road, at home – can lead to an

enhanced work-life-family balance, which

in turn leads to the ability to recruit and

retain those high-performing managers

and employees that are critical to a com-

pany’s ultimate success.

member viewpoints By chELsiE ButLEr

• Personal Match. Senior executives also report that work flexibility should be provided based on match to personal skills and character. They believe that some employees may be more or less suited to working flexible hours or working at home.

• Team Match. The senior execu-tives also make a strong point about the importance of work as social and some work that must be accomplished face to face. They believe that work flexibility should be offered but not to the exclusion of time for team interac-tion. They believe that arrangements for working in alternative locations or working flexible hours should be devel-oped with the agreement of an entire team. Work is fundamentally social, they believe, and work-life support should not be offered if it constrains the ability of employees to connect with others and interact effectively to accomplish their objectives.

2. Foster Effective Leadership & Manage to Outcomes

• Work Team Leaders. One of the primary variables affecting whether employees have access to work-life sup-ports is work team leaders. There is a trend toward companies having less writ-ten policies to guide the implementation of work-life supports. As a result, an employee’s access to work-life supports is significantly influenced by his or her work team leader. A work team leader’s attitude makes a difference in whether s/he allows flexibility for employees.

Some executives report that work team leaders who have to “see the white’s of peoples’ eyes in order to manage” are less likely to provide work flexibility. One executive said, “I can have the greatest pol-icies in the world, but if I haven’t changed the mindset of the manager who is mak-ing the decision, there is potential that the employee isn’t going to be approved for this flexible working arrangement.” In



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addition, while most companies have gen-eral training for work team leaders, very few companies have training or develop-ment specifically related to work-life sup-ports. Those that do, see better adoption.

• Management to Performance Outcomes. Companies that have a greater emphasis on performance out-comes tend to offer more work-life sup-ports. One executive from a technology company said, “The bar needs to be on productivity and innovation, not on time. It is results that matter. We are mov-ing away from a culture that manages eyeballs. You don’t want to work more hours, you want to work better, smarter.”

Another executive said, “I don’t care if people are working upside down in the bathtub at home as long as they’re exceeding expectations.” Most of the executives report that they are driving for an organization that sets expecta-tions for deliverables and manages to those, evaluating performance based on



about the author

For more information on this topic, please visit CoreNet Global’s Knowledge Center Online.

Snap Session 8C: How the Working Environment Can Impact Social Capital in the Workplacehttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12433717

Is “Place” Relevant?http://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12100458

Tracy Brower, PhD & MM, is Director of Performance Environments for Herman Miller.

factors affecting work-Life supportsresults. Organizations with this focus on performance outcomes tend to offer more options for work-life support.

3. Leverage the Organizational Realities• Global Work. Organizations with

a greater global penetration are more apt to have work-life supports. This is driven by the reality of work hours that must conform to multiple time zones and teams that interact across the world.

• Technology. Work-life supports are also more prevalent in companies where more technology is present. When orga-nizations have progressed further in providing multiple technologies to their employees, they are more likely to have work-life supports in place. One execu-tive said, “Technology is accelerating the breakdown of barriers of a traditional work schedule and a traditional office environ-ment. Companies have two choices. They can either resist it or they can embrace it and use it to their advantage.”

• Younger Cohorts. Companies that have a greater proportion of younger work-ers on staff are also more likely to have more work-life support options for all employees. “They [younger workers] don’t view their workplace as a place anymore, they view it as the technology they have at their disposal. They’ll figure out where they need to work, but they need to know what [technology] allows them to get their work done,” said one senior executive.

4. Pay Attention to CultureOf course the sum total of these factors

is organizational culture. An organiza-tion’s culture – the norms and unwritten rules of an organization – affects the fac-tors and in turn are affected by them.

anticipating the futureSenior executives are unanimous in their belief that the prevalence of work-life supports will only continue to increase. They believe that global work, demands, competition, the speed of information flow and the competition for top talent, will all continue to drive the need to provide work-life supports. According to one senior executive, “This is more than just a trend. It’s reality now. It’s the way work is done. Those individuals and com-

panies that aren’t familiar with working this way will become obsolete.” Another executive said, “I think it’s really an evo-lution, and you just really have to keep listening to your employees. Demand for work-life supports will only grow. People will demand it. They will vote with their feet if we don’t give it to them.”

make the case: work Environments matterUltimately, work-life supports matter. The executives in this study agree that work-life supports have a direct effect on organizational outcomes such as profit-ability, growth, brand, stock price share-holder value and employee engagement. This research helps prove a business case for the effects real estate and facilities and work environments can have – and this is helpful to all of us who are telling the story and proving the importance of the work environment every day.

Fundamentally, work-life supports exist at the intersection of people, place and technology. The workplace needs to be accountable to both the organization and to the employees, and work-life sup-ports are one mechanism through which it is.

The Future of Workspace:Lessons from the Cloud

B Y B R A D Y M I C K

2012 the leADeR 18 M A Y / j u n e

ReAl estAteMAnAgeMent

laboration with advantages in agility, reliability and performance. By storing software and data virtually on the net-worked cloud, tools and resources are scalable and can be shared, which cre-ates an open domain for all behaviors of connectivity.

the Imprint of the CloudThe advent of any technology exerts a fundamental shift in the way people behave. Just as the wheel revolutionized society by bridging distance and thereby closing the physical gap among people groups, so, too, cloud computing has disrupted the way business is done in the workplace: Results can be accom-plished from and with any location around the globe. The ability to actively collaborate and share information across continents instantaneously is shaping the global business culture: Time zones are blurred, personal technology devices are critical, and the physical office is less relevant. Work under the cloud has

As the mobile work force surges and becomes dominant, it is essential for corporate real estate (CRE) executives to view the function of workspace from a distributed and global context. While the cloud will be replaced with some-thing new in the future, the behaviors altered by the current technology will remain. Cloud technology provides cues from which to infer the future of the global workplace.

What Is It?Cloud computing is the delivery of and accessibility to data and software through a shared network, such as the Internet. Though a great deal of technology and science lie behind the cloud, users only need to know this information is accessible through this channel, much as a telephone dial tone tells us we can initiate a call without understanding the inner workings of telephony. Cloud computing is a vehi-cle that fosters corporate digital col-

Our minds cannot imag-ine today the evolving technology that will soon enable and affect the way people work.

It has yet to be invented and cannot be predicted, but all facets of tomorrow’s business will impacted by it.

Cloud computing represents the lat-est technological development in a long-standing and accelerating revolu-tion that changes the way professionals, students and even the youngest children work and play – in many cases without full awareness of its impact or the con-sequences. With the adoption of cloud computing into today’s work environ-ment comes yet another paradigm shift in the way people will perform and accomplish their work. Once again, employees are becoming less bound to a predetermined and set geographical loca-tion. With the cloud, work can be done from any location with the requisite device and permissions.

precipitated a cultural shift in the under-standing of when, how and with whom work is created.

The Imprint of the Cloud on OrganizationsTechnological advances are being made faster than imaginable. Flash-based thumb drives, recently the best method of sharing data, have been obscured into antiquity by cloud computing. The next iteration of development will likely relegate the cloud-enabled devices to similar status, perhaps affording users access to their data on animate and inanimate objects, alike. Companies are subject to a constant state of flux in developing procedures and protocol around changing technologies. Users and organizations are forced into a posture of constant adaptation to technology, begging the question which is – and which should be – the driver of adaptation: the people and their behaviors or automated tools? While security, legality and intel-lectual property are weighty considerations in any orga-nization, behavior is the primary factor on which to base decisions around tech-nological-adaptation.

The Imprint of a Cloud on PeopleCloud computing is irre-vocably impacting human behavior. Like no other time in history, people have the choice to instantaneously connect to and communi-cate with copious volumes of informa-tion and with others around the globe through cloud-enabled devices like the iPhone. Interpersonal relationships are forever changed as a result. Technology has bridged the distance between people and the information each person val-ues and as a result enables high levels of collaboration in the workplace. But has technology improved the quality or content of human communication?

Technology itself must not be mistaken for the end all of communication or information; rather it is a channel or ves-sel to transmit and display them.

Keith Perske, of eBusiness Strategies, suggests that another sig-nificantly changed behavior is that of “memory delegation” wherein people no longer apply themselves to memorizing information because they know it will always be available. They need only recall where to locate the information again in the future. This allows the brain to deploy effort

toward synthesizing the vast amounts of information available. Memory del-egation requires the brain to develop critical thinking skills to evaluate information presented and not merely sleuth out data that validates a posi-tion already held. Ultimately, the brain has been freed to do what a machine cannot: CREATE. The result is tremendous potential for novel ideas and ground-breaking innovation.

The Imprint of the Cloud on WorkspaceBecause of the portability of data in the cloud, choosing work locations requires decisions to be made intention-ally about when and where face-to-face interaction is beneficial to people. There are still many reasons for which in-person meetings are necessary. The nuances of human interaction cannot be fully replicated digitally yet, so the workplace remains an effective way to draw teams together for collabora-tion, innovation and creativity that

come from groups building off of one another’s ideas. The greatest gains in team building, group cohesion and mentoring all are made dur-ing in-person interaction.

As the proportion of the mobile work force continues to rise, less office space is des-ignated for individual employ-ees, in favor of open-plan workspaces to foster collabora-tion. No longer is workspace something “owned” by the employee as a place to store belongings, similar to a bed-room in one’s home, but rather something shared and used for collaboration and innovation, as parallel to a liv-ing room. Just as computing and software have become ser-vices provided to employees through the cloud rather than products owned, so too work-space has become a service.

With this in mind, it is important to design work-space to elicit the profitable, innovative gains made from face-to-face work interac-tion. It must compel users to

be present and open to honor, evoke and support creative levels of work among team members. Individual cubes, whether assigned or “agile” for mobile workers who move through the office, simply cannot facilitate the interactive process today’s work culture requires for competi-tive advantage. The venue for independent work can be left to individuals’ discretion to select according to where they are most productive in accomplishing their work.

2012 The leader 19 m a y / j u n e

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The FuTure oF Workspace: Lessons From The cLoud

2012 The Leader 20 m a y / j u n e

service for successDecisions regarding real estate and workspace shouldn’t be predicated on ownership but instead on service, flow-ing from the mindset of fostering col-laboration and innovation as a means of tapping into the changed behaviors to enhance the company’s overall success. This requires an organizational shift away from viewing space as a product toward viewing space as a service. Space needs to provide value to employees and the organization at large.

While cloud computing is currently shaping the way people think about work and place, this technology, like all others, will eventually become obsolete and another will rise in its stead. The effects of cloud computing on work-space are a valuable lens through which to ask significant, probing and global questions about where work happens most effectively and how to understand the future of workplace design.

about the author


The Power of Cloud: Driving Business Model Innovationhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=13111087

Emerging Technologies’ Impact on Urbanization and the Workplacehttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=10943901

Brady Mick is architect/workplace strategist and client leader for BHDP Architecture.

1. What technologies does your com-

pany anticipate will have the next big

impact? how are those technologies

being investigated?

2. What work behaviors does your

company anticipate will have the great-

est impact on business results? how

will they impact business?

3. Where is your organization on the

continuum of viewing space as a prod-

uct vs. service?

4. how is technology fostering the

creative engagement necessary to

solve the complicated challenges of

your business?

5. What criteria do your teams use to

determine the value of face-to-face

collaboration vs. virtual interactions?

6. If a face-to-face interaction is deemed

most desirable, in what ways does

your workplace support the behaviors

needed to the fullest potential?

Important Questions For Business Leaders To address

CoreNet Global Summit17-19 September 2012

REGISTER NOW!Today’s best practices alone are not enough for a successful way forward. Future success requires innovation to pioneer new business models and drive value creation. Now more than ever, the impetus is on rapid change and the need to REIMAGINE business, REORIENT skills and REIGNITE value.

Registration is now open at www.corenetglobal.org/Events/LondonSummit2012/Register IMMEDIATELY for the best rates!

MasterCard Technology:Workplace Transformation in Ireland

B Y M E G F O R B E S A N D C H R I S T I A N V O N H A L A S Z

2012 THE LEADER 22 M A Y / j u N E

REAL ESTATEMANAGEMENT

intrinsically linked with government – agency tax incentive initiatives and with the government’s risk management of Ireland’s real estate market.

“MasterCard’s decision to locate a global office in Dublin, with the cre-ation of approximately 130 new jobs, is most welcome news,” said Barry O’Leary, CEO of the Irish Development Agency (IDA) in Ireland. “This announcement is in keeping with IDA’s focus on targeting technological invest-ments in the financial services sector, which is a key growth area.”

3. The Dublin office, led by Garry Lyons, MasterCard’s Chief Innovation Officer, sought a non-cookie-cutter solu-tion with a “wow” factor to support new product development while retaining existing staff and attracting new technol-ogy hires. Corporate and commercial branding was to be featured front stage in the design development. Lyons asked the design team, “If you were dropped into the center of the office, would you know you were in MasterCard?”

mass appeal for our global customers and cardholders.”

Clear from the start – this project would differ from recent MasterCard regional office projects in several ways:

1. The business owner chose to change its historical occupancy strategy by significantly expanding outside the technology headquarters site in the U.S., getting closer to customers worldwide. Guiding the U.S. team members on European issues would play a critical role in the project’s success.

“We are pleased to make this invest-ment in Ireland, which builds on our existing presence,” said Reeg. “The calibre of highly qualified, talented people and the government’s commit-ment to science, technology and inno-vation gave us confidence that this was the ideal setting for our new Global Technologies office. We’re confident that this larger office in Dublin will help further our technology agenda and innovation vision.”

2. The site-selection process was

In early 2011, senior management from MasterCard’s technology operations and corporate support functions met in Dublin, Ireland, for strategic planning sessions.

Mission expansion of the existing Dublin-based technology group was high on the agenda. MasterCard’s global real estate department was invited to participate in one of the sessions, and from there a steering committee was created with representatives of the critical work streams: MasterCard Technology (business owner), finance, tax, HR and real estate. The steering committee members pursued their respective work stream tasks in paral-lel, coming together for regular calls to exchange information impacting the team members.

“MasterCard is a technology com-pany that happens to be in the pay-ment space,” said Rob Reeg, President, MasterCard Technologies. “Our focus as a company is on offering innovative, game-changing technologies that offer

Jones Lang LaSalle tenant represen-tation was engaged to drive the site-selection process, initially introducing 28 options that were narrowed to four preferred offices. Jones Lang LaSalle proj-ect and development services, together with the design and build team lead by StructureTone, supported the decision-making process by preparing early feasibility studies and a site-scoring matrix. A sublease from Vodafone at the Mountainview building in Dublin’s Central Park provided the best answer to MasterCard’s need for a single floor with full potential for open-plan design, a two-phase occupancy schedule to align with 2012 - 2013 staffing ramp up, suf-ficient parking for staff and visitors, good highway and public transportation connections to city’s Central Business District, suburban residential commu-nities, green spaces (mountain and sea views) and an affordable commercial deal benefiting from Mountainview’s shared amenities.

“When MasterCard advised they


the new location features ample masterCard branding.

for MasterCard in a fully fitted build-ing with numerous amenities for staff, including a shared restaurant, coffee shops and retail zone in the building.”

However, as we all know, no project is without its challenges.

• Challenge 1 – Overall Scheduling. The project team was given aggres-sive relocation target dates to support business-development commitments

were expanding their operations in Dublin, it was an exciting prospect for all parties involved and for the Irish economy, “said Fionnuala O’Buachalla, Director of Tenant Representation at Jones Lang LaSalle. “The timing of the requirement in a tenant-friendly market with a vacancy rate of 20 per-cent was excellent and allowed us to secure very favorable leasing terms

thanks to the teams that made it happen

• MasterCard Global Real Estate & Global Facility Management

• Jones Lang LaSalle Tenant Representation & Project and Development Services

• Facit Consulting

• Henry J Lyons Architects

• Axis Engineering

• StructureTone Limited

• Art 4 Business

• Harkess-Ord

• Arthur Cox

MasterCard teChnology: WorkplaCe transforMation in ireland


with associated housed headcount growth; staff numbers were forecasted to double by Q2 2012. The real estate space acquisition process had to align with gov-ernment agency-related business negotia-tions and with the existing early lease termination deadline. The legal process for (detailed) business-as-usual reviews

the location features a non-cookie-cutter solution with a “wow” factor to support new product development while retaining existing staff and attracting new technology hires.

was extended by a complex deal structure for MasterCard as sub-lessee, with several levels of ownership approvals.

Our Strategy. MasterCard engaged the full real estate project team from the beginning: tenant representation, project management, design/build, facility management, IT & security.

The project manager, designer and contractor had prior team experience on similar projects, which ensured a quick start up. The team developed a fast-tracked schedule with a comple-tion deadline of April 2012. As pro-gram dependencies changed, flexibility, adaptability and good humor were critical to dealing with changes outside the team’s control.

“The project has had its challenges, chief amongst them being the coordi-nation of client-related third parties, sometimes on different continents, and ensuring that the client’s very specific needs and design intent have been interpreted and accommodated,” said John Atkinson, Project Manager at StructureTone. “Luckily we have had a client that has been very proactive in this regard.”

• Challenge 2 – “Wow” Design with MasterCard Identity. Where to start? What flavor of ‘wow’ suits MasterCard? How much branding is enough? How much branding is too much?

an overview of MasterCard’s new global technologies location in dublin, ireland.



Our Strategy. MasterCard selected a local architect with technical project design experience. Early in the design development, the business owner was interviewed for his vision and feedback on various design elements. Design devel-opment proceeded with a mix of classic design, playful elements and colors, collaborative spaces and MasterCard branding. In support of the overall project goals, several project team members partici-pated in a workshop at Steelcase’s WorkLife Center in Rosenheim, Germany, to focus on workplace strategy and furniture solutions.

“We developed the use of geographical and brand identity to differ-entiate neighborhoods within the fit-out,” said Conor MacCabe, Director at Henry J. Lyons Architects. “We found that this was particularly nec-essary when dealing with a very large floor plate such as that in Mountainview, and we have developed in con-junction with the client a strategy for separating the plan into neigh-borhoods, which are informed by the regions in which MasterCard operates. Graphics and branding material drawn from MasterCard’s library of advertising and promotional images are used to get this across and are applied to columns and walls throughout.”

In line with the theme of innovation, meeting rooms are named after innova-tors, enhanced with related supergraph-ics and quotes. Additional inspirational supergraphics representing innovative

www.admtl.com

WHERE MONTRÉAL MEETS THE WORLD

meets going greener

Where going further

Aéroports de Montréal firmly believes that when it comes to the environment, it’s important to walk the talk. That’s why we’ve already implemented programs to increase energy efficiency and reduce greenhouse gas emissions both within and beyond our facilities. For example, we’ve improved our HVAC efficiency by 70%, and we’re also concentrating on better lighting management. In terms of ground transportation, we’re actively working towards the implementation of an airport shuttle, and our vehicle fleet is more eco-friendly. And in recent developments, our ongoing involvement in promoting green spaces near our site will contribute to the reproduction of monarch butterflies that migrate to Mexico. That’s a lot more than just talk. To find out more, visit www.admtl.com.

ADM12014_Enviro_4_325x6_75_Ad_v2.indd 1 3/23/12 1:48:04 PM

breakthroughs are incorporated into open-plan elevations. The interior design is complemented with a fine art program of two- and three-dimensional works by Irish artists, connecting creativity and Irish identity with the global theme.

• Challenge 3 – Achievable Sustain- ability. Sustainability was a hot topic from the start. However, it was not the aim to achieve a sustainability certi-fication of the interior fit-out project; rather, the team developed the design

and undertook the construction works according to sustainability principles. Next to the environmental and eco-nomic aspects of sustainability, the social aspect of sustainability was the focal point in the design development

phase. Economic aspects became evident when Mountainview was chosen: Occupying space in a multi-ten-anted building offering a variety of high-qual-ity, on-site facilities led to less dedicated space needed/leased for MasterCard.

One of the highlights of the environmental aspects was reusing existing services and facilities within the space such as patch rooms and potable water stations, as well as the reuse of installations such as raised floors, suspended ceilings, fold-ing walls and existing furniture. Therefore, purchasing new equip-ment and construction materials was sig-nificantly reduced com-pared to starting with a building in core and shell condition. Another sustainable achievement was the use of a new way of installing carpet tiles without the need for glue.

With regard to the social aspects of sus-tainability, the overall objective was to cre-ate a comfortable and safe work space that would be perceived

by all employees as a home away from home. The design team achieved this feel-good factor through the diversity in design and use of graphics reflecting the multicultural background of the staff, as well as through the integration



of local art on permanent exhibition in the open-plan space and meeting rooms. The integrated communication and col-laboration spaces in the open-plan area were included to facilitate and promote cross-departmental exchange of ideas, information and knowledge.

“Upgrading an existing space offers both challenges and opportunities from a sustainability perspective,” said Andrew McCracken, Director at Jones Lang LaSalle Project and Development Services. “The team used a variety of innovative methods to ensure the reuse of materials wherever possible and where new materials are used, that they have been sourced with a careful eye on their environmental impact and future recycling potential. This has been an important issue from initial design throughout the project to ensure a low as possible carbon footprint for the project within the confines of an already par-tially built environment.”

Mountain View with sea ViewThe collaborative nature of the project team and MasterCard’s direct suppliers have been critical to the development of this project, as has the engagement of many others – from MasterCard’s Chief Innovation Officer to the building

owner – and we hope the finished proj-ect is a reflection of the effort put into it by all parties.

“The focus was on a move away from a typical office work and feel environ-ment to a more funky, cool place to work – we wanted the wow factor,” said Ann Marie Clyne, MasterCard’s HR Business Partner for the Dublin office. “It was important to us that the new retrofit harnessed our innovative

culture where employees would feel free to be creative and inspired. As we grow the organization and attract new employees, one of our key points about why MasterCard is such a good com-pany to work for will be its work envi-ronment. The hope is that the Dublin office will lead the way and become the template for other MasterCard offices around the globe.”

about the authors


MasterCard Technology: Expanding the Euro-Foothold in Irelandhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12751565

Quality Content and World-Class Talent: The BBC’s New Hub in Northern Englandhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=13179559

Meg Forbes is a Director of Global Real Estate for MasterCard in Europe and beyond. She has degrees in mechanical engineering and anthro-pology and has a passion

for building corporate fine art collections.

Christian von Halasz is a Senior Project Manager in the Project & Development Services Department at Jones Lang LaSalle in Ireland. He has a par-

ticular interest in strategic sustainability and corporate social responsibility.

Meeting rooms are named after innovators, enhanced with related supergraphics and quotes.

CoreNet Global Summit7-9 October 2012

REGISTER NOW!Today’s world requires innovation to drive value creation and pioneer new business models. Companies must develop strategies to successfully partner functional areas and drive enterprise solutions. Success in the global marketplace will hinge on a well-designed, coordinated infrastructure with a common vision and well-defined points of interface between key support functions including Human Resources, Information Technology, Sourcing, Finance and CRE.

The ability of these functions to REIMAGINE their relationships with each other requires innovative thinking. Now more than ever, the impetus is on rapid change and the need to REIMAGINE business, REORIENT skills and REIGNITE value.

Registration is now open at www.corenetglobal.org/Events/OrlandoSummit2012/Register IMMEDIATELY for the best rates!

Location Strategies:Development of the College Park,

Ga., Atlanta Airport Area

B Y B A R B R A C O F F E E

2012 thE lEAdER 28 m A Y / j u n E

REAl EstAtEmAnAgEmEnt

neighborhoods have been wiped out, and population loss has been dramatic over a period of 40 years.

So College Park began to reinvent itself. With residential use out of the question because of the noise impacts, most of the land in College Park is transition-ing to commercial uses such as Class A office and hospitality. The city suc-cessfully demonstrated this in the development of the Gateway Center that surrounds the city-owned and oper-ated Georgia International Convention Center (GICC), the state’s second-largest convention facility with 400,000 square feet (37,161 square meters) of meeting space.

Two hotels – a Springhill Suites and a full-service Gateway Marriott Hotel – along with the first Class A office build-ing opened in 2009-2010 as a public/private partnership with Atlanta-based developer Grove Street Partners. The hotels are experiencing close to 70 per-cent occupancy on a regular basis, and the office building is 50 percent leased after two years – with deals pending for the remainder of the space in this four-story, 130,000-sq.-ft. (12,077-sq.-m.) building.

of respects, we have everything it takes to compete.

Atlanta is home to Hartsfield-Jackson Atlanta International Airport, the world’s busiest passenger airport for more than a decade. More than 240,000 travelers a day come through the airport, which totals almost 90 million people a year. The numbers are significant, as is the economic impact.

There are approximately 58,000 on-airport jobs, with another 169,500 visitor-related jobs generated because of traveler needs for area hotels, restau-rants, entertainment and transportation. This amounts to more than $7.5 billion in wages and salaries. With that much business taking place in and around the airport, it doesn’t take a rocket scientist to figure out that people just might want to live and work closer to the heart of that activity.

The city of College Park, Ga., has found itself right in the middle of this renaissance of the Atlanta airport area. The city boasts Georgia’s fourth-largest historic district, but it has morphed over time. With the growth of the airport and runway expansions, whole residential

Each year we find ourselves thinking about what’s in and what’s out – what’s fashionable and what isn’t. For the development

community, it’s not about choosing between bell bottoms or straight-leg jeans, rather it’s about choosing where it will be most strategic to locate your next high-rise office development or make your next real estate investment.

This year, that conversation is steering investors and developers more toward airport-area environments. No doubt you have been in a conference audi-ence where social economists discuss the rapidly changing world in which we live and the trend toward the rise of airport cities across the globe. Whether your industry is warehousing, logistics, biotech or manufacturing, or if your company is simply engaged in sales of some product or service, the need to be in close proximity to an airport is para-mount in this global economy.

Communities are responding by cre-ating development opportunities sur-rounding major international airports, and Atlanta is no different. And in a lot

What makes it work, you might ask? Not unlike most major American urban cores that fight the perception of crime and most airport area neighborhoods that strive to create a balance of indus-try and community in a once-perceived industrial area, College Park made an investment. Participating in the financ-ing of the automated people mover, the ATL SkyTrain that takes travelers to the new car rental facility, College Park saw an opportunity.

The city invested in the develop-ment of a station that would allow people the ability to access the Gateway Center/GICC and adjacent hotels and office. These facilities are now transit-connected to the world’s busiest airport. There is not another hotel or office building in the world that can claim that kind of connectivity.

In addition, College Park owns more than 200 acres (81 hectares) within its own city limits for future develop-ment; property that sits conveniently west of its downtown and stretches to its city-owned, nine-hole golf course. Complete with a traditional street grid, ideal for a westward expansion of its downtown, this property sits along one of the city’s most traveled thoroughfares, Camp Creek Parkway, which connects Interstate 285 to the airport. More than 40,000 vehicles per day travel this road, most of which are headed directly to the airport. The opportunity to develop prop-erty along this corridor is ideally suited for mixed-use office and retail with immediate access to the convention cen-ter on the south side of the street. The city anticipates finding a master devel-oper to assist with the build out of this prime real estate.

From Shanghai to Paris to Denver, airport cities around the globe are pro-moting the competitive advantage of growing businesses near their interna-tional airport. And residential and enter-tainment complexes are following, as the advantage of accessing jobs, custom-ers and opportunities comes more criti-cally into focus. The airport is no longer a facility stuck way out on the outskirts of town, rather, it is a core economic engine, a vibrant hub of activity that attracts rather than repels; that supports rather than burdens.


marriott at Gateway Center

College Park, in its fortunate location at the doorstep of Hartsfield-Jackson Atlanta International Airport, will lead by example in its endeavor to attract everything from corporate headquarters to retail and tourism development – to build an airport city this country can be proud of as it welcomes millions through its gates every year.

Springhill Suites atlanta airport.

about the author


Sea, Air and Land: Bill Dobbs Leads Georgia’s Aerospace, Defense and Advanced Manufacturing Economic Development Teamhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12126085

Breakout Session 23: Economic Development Roundtablehttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12489241

Barbra Coffee is the Economic Development Director for the City of College Park. She directs the business attraction, retention and redevelop-ment programs for this

city in the heart of metro-Atlanta.

More than the Sum of Our Molecules:The Successful Merger of Two

Biopharma Giants

B Y R O G E R H U M P H R E Y A N D B O B B O V E E

2012 tHE lEADER 30 M A Y / j U N E

REAl EstAtEMANAGEMENt

Company to create a path toward value-creation goals.

The guiding principles we established for the real estate function set big-pic-ture parameters that would serve as fil-ters for individual market strategies. We also made a commitment to consolidate the portfolios by reducing operational costs rather than other factors such as write-offs or geographic preference.

Furthering our focus on ongoing occupancy cost reduction, we dismissed purely market-driven decisions and committed to not making site-disposal decisions based on the current state of the real estate market. This meant our primary goal was to identify ways to increase overall productivity by creating the most efficient and effective business locations – not to find buildings that would yield the highest return on a sale or leases that could be exited to achieve the most savings. Finally, strategic align-ment was reinforced, and we committed that all our recommendations would be consistent with established Merck real estate and business strategies.

transactional results or property sale pro-ceeds, but rather from operational run-rate savings achieved on an actualized basis during the three-year execution period.

the Road to the Most Effective WorkplacePrior to the merger, Merck and Schering-Plough collectively employed more than 100,000 people, generated an excess of $40 billion in revenue and invested more than $9 billion in R&D. The combined real estate portfolio included more than 500 sites in more than 80 countries. In short, two monoliths had combined to form a single, leaner organization. For our CRE and facilities teams, the oppor-tunity was as large as the portfolio it would streamline.

With only six months to establish a three-year value-creation strategy, the Merck CRE team and alliance partner Jones Lang LaSalle immediately estab-lished daily cooperation with the inte-gration management office (IMO) and began to work with the M&A execution framework developed by McKinsey and

Merck and Schering-Plough sold to the same customers, competed for top researchers and raced

to bring drugs to market. As fierce com-petitors, we also shared industry-wide challenges from patent-loss bulge, ris-ing research and development (R&D) costs, yet shrinking productivity and pricing pressures. So when the merger of our two companies was announced in May 2009, the need to find financial and operational efficiencies – even in the high-stakes R&D function – was a high priority. Significant location overlap cre-ated a milestone opportunity for the cor-porate real estate (CRE) function to play a leadership role in realizing the $3.5-bil-lion overall merger synergy targets.

Our goal: achieve $200 million in occu-pancy cost savings within three years, while creating a highly effective work-place for the combined organization. Our goal was specifically to reduce the cost of operating our real estate; the savings we achieved would not be calculated using

From Principle to ExecutionLiving up to these principles meant being fast out of the gate on day one in November 2009 when the two legal entities officially merged. To make our cost savings tangible from the beginning, we identified a three-wave process that would allow us to achieve significant blocks of operational savings early in the initiative. Wave one began with large sites, prioritizing high-volume locations. For example, in Montreal, we consoli-dated two offices across the street from one another and relocated an R&D func-tion to New Jersey, achieving cost sav-ings of more than $15.4 million in 2011 and anticipated savings of approximately $32.2 million in 2012.

Wave two addressed multi-functional sites (medium and large), while wave three is addressing small sites. While it can be tempting to look to small sites first to reduce total locations, typically the larg-est sites offer the most immediate and impactful opportunities for value creation.

What Red Tape? Envision a typical consolidation of mul-tiple multi-function facilities with all its affiliated required approvals and meet-ings, and then multiply that by 500 sites around the globe. Clearly, to achieve the $200-million savings goal within the three-year timeline, a streamlined yet disciplined process would be required.

We established an analytical frame-work that would integrate occupancy information sourced from external mar-ket teams around the world along with the limited data available internally. Our team then developed multiple scenarios for each target site, ultimately bringing a single recommendation to the table with an overarching market consolidation strategy designed for the achievement of the most effective workplace. While we had ambitious cost-savings goals, some markets required investment rather than savings. Our leadership backed our spending money where it was needed to achieve our goals.

Once a recommendation was ready, the leadership role of the CRE func-tion began to play out, and the cross-functional IMO model began to prove its relevance. The IMO provided a multi-functional group of senior functional

2012 ThE lEadER 31 m a y / j u n E

The 3,000-sq.-m. development, spread over two floors, includes a restaurant and coffee bar (above) and open-plan working environments and informal meeting spaces (below).

More than the SuM of our MoleculeS: the SucceSSful Merger of two BiopharMa giantS


Confident in the data we did have, our in-house and outsourced team would make it possible to avoid getting mired in red tape. We worked in fierce dedication to the 80/20 rule: We did not let the 20 percent of inaccessible data discourage us from making sound decisions based on the roughly 80 percent of the data our teams ensured was available when needed.

you’ll never please everyone: leading with confidenceYet even with total agreement from the IMO cross-functional group, no decision is without its supporters and detractors. It is necessary to have a strong leader in the CRE function who can stand up to business-unit pushback and who has developed strong relationships with senior management.

There will always be certain execu-tion details that directly impact specific businesses that benefit the company as a whole but displease a number of indi-viduals – sometimes high-ranking execu-

the working environment at Merck’s Shared Business Services centre (SBS centre) facility in dublin, ireland, fosters and encourages team work and interaction.

each of our business units, human health (sales), R&D and manufacturing.

working without a data net What made such rapid movement on con-solidations and other value-creation strate-gies possible was our confidence in those decisions despite real estate portfolio data gaps. M&A regulations block the free flow of portfolio information before a merger deal is closed, so it’s important to realize that in M&A situations, you’ll never have all the information you would like.

To fill in some of those gaps, the exter-nal alliance relationship proved its value, as local market teams were able to pro-vide real-time market intelligence that was not available through internal chan-nels, organized through a coordinated global approach. This on-the-ground information was used to inform critical consolidation and move management and real estate portfolio strategy, which established a strong – if never all-encom-passing – foundation.

leaders empowered to make decisions with the backing of senior management, and we were able to make recommenda-tions structured to support rapid yet dis-ciplined decision making.

Having a seat at the IMO table was critical to our success. During the most intense period of operational planning, sometimes site-selection and consolida-tion strategies were confirmed in less than a week – a process that would typically require months. Focus was important: The people assigned to the IMO team from sales, manufacturing, IT, finance, security, HR, etc., were almost entirely on special assignment from their “day jobs.” The resulting focus ensured that the adage of “measure twice, cut once” was followed. All scenarios were structured to anticipate the questions or concerns of other IMO members and were fully vetted by our integrated team. Additionally, the in-house team leveraged strong internal relationships with the CEO and executive committee, as well as with executives in

More than the SuM of our MoleculeS: the SucceSSful Merger of two BiopharMa giantS


about the authors

tives with C-Suite influence. Resolving this inevitable tension is where backing from senior management is critical; the leadership role that the CRE and facilities function played on the integration team meant we had senior management back-ing for the tough decisions.

We also were team players; when decisions had to go in a direction that benefited the organization as a whole but didn’t advance our goal in specific situa-tions, we simply went back to the draw-ing board and looked elsewhere for more opportunities to merge the real estate portfolios in the most effective manner.

informed partners, informed real estate StrategiesExternal and internal teams must share an understanding of an organization’s corporate culture and business objec-tives to work together effectively under ambitious timeframes. The fact that a centralized, globally integrated facilities management and real estate relationship was already in place kept the focus on the merger goals, not on team ramp-up.

Jones Lang LaSalle was already doing business with both companies, including a global outsourcing alliance relation-ship with Merck that included both real estate and facilities components, as well as lease administration work for Schering-Plough. This informed global team was able to develop and test hypotheses and run multiple scenarios during the planning process. Equally important during execution, Merck seamlessly expanded the outsourced global facilities management platform already in place to include Schering-Plough sites.

Additionally, merger-specific best practices were brought to the table dur-ing both phases. For example, business continuity is an issue that must be addressed during any international M&A situation regardless of industry. There are multiple international locations where local law indicates that the legal entity change could materially impact lease terms, such as suspending ten-ant rights. Access to a global team with local resources meant we were able to advance-manage those situations.


Mergers & Acquisitions: Real Estate’s Role in Successful Planning and Executionhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=11227390

M&A and Divestiture Bulletin http://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=11279033

Roger Humphrey is the Executive Director, Global Real Estate and IFM Governance, for Merck.

a tale of two cities: tokyo and londonAll these factors combined helped iden-tity more than $200 million in cost-saving opportunities and the creation of workplaces that increased effectiveness. Through close IMO team collaboration, particularly with the HR and IT repre-sentatives, we were able to put solutions in place that supported not just our cost-savings targets but also looked carefully at where it made the most sense for people to work. We were able to leverage the historic opportunity of the merger to look for ways real estate could support other functional goals. For example, in many cases we consolidated multiple R&D locations so that more scientists would be co-located, encouraging more organic sharing of scientific insights.

For each market, we applied a stan-dard, disciplined analytical process. In the Tokyo market, we identified a total of four original locations in the met-ropolitan area, representing nearly all functional groups from both Merck and Schering-Plough. We ran scenarios that considered data for leased and owned space, lease expirations, run rates, occu-pied-space versus total capacity and other information about the space and how it was used.

Ultimately, we made an $11-million investment in the region, consolidating operations in Tokyo to improve overall workplace productivity, enable col-laboration and provide value capture savings of greater than $8 million. In London, we conducted the same struc-tured analysis and also found signifi-cant cost savings opportunities. Total run-rate operational savings in London are expected to provide value capture of more than $2 million by the end of 2012, a result of consolidating out of high-cost office space.

Though many of our decisions were straightforward from a strictly real estate point of view, there were always com-plex human resources and business-unit factors at play. The real estate achieve-ments could not have been possible without internal alignment with the IMO cross-functional team, coupled with external market insights.

confidence is KeyBy establishing clear guiding principles early, then empowering our global real estate partners to execute in-market strat-egies from day one, we not only achieved our cost-savings target ahead of schedule, but we also created numerous workplaces featuring collaborative environments and other improvements. Confidence in our team was critical to the real estate func-tion playing a change-agent role, making a material financial impact to the Merck bottom line and improving overall work-place productivity and effectiveness.

Bob Bovee is Senior Vice President, Jones Lang LaSalle, and worked with Merck throughout the merger process.

The Risks and Rewards of Outsourcing: Transferring Technology from Internal

to External Service Providers

B Y P H I L W A L E S

2012 tHE LEAdEr 34 m A Y / j u n E

rEAL EStAtEmAnAgEmEnt

and shedding tactical services, internal CRE professionals can spend more time focusing on strategic activities that drive them toward a slimmer, more agile and strategic staffing model. This strategic focus shifts the perspective from real estate as just provisioning space to a resource that supports the organization’s productivity and competitive goals.

Outsourcing can literally be a trigger for transforming the way work is done – delivering more effective processes and higher customer satisfaction. To make that happen, however, several key issues must be addressed around this topic. These include a real or perceived loss of control, the loss of institutional knowledge, loyalty and trust by an orga-nization’s work force and the impact on culture, just to name a few. However, this discussion is deliberately focused on the risks and rewards of including real estate and workplace technology as part of the outsourcing effort.

untangle outsourcing relationships that are no longer working. Though there are numerous reasons why this occurs, one key component creating significant entanglement is the very inclusion of supporting technology in the relation-ship. Technology seldom gets the right level of emphasis during the selection of a partner, thus ironically giving it entirely too much emphasis during the relationship’s dissolution in a variation of a Catch-22.

In today’s technological world, let’s examine what outsourcing is all about and how organizations can more consis-tently emerge as winners.

BackgroundCRE organizations are being forced to adapt their operating model to address the changing landscape of today’s busi-ness reality, which includes the proper use of outsourcing and partnering. By partnering with outside service providers

Over the past few decades, the role and operational model of corporate real estate (CRE) has under-gone dramatic change

with high-profile impact. Not only is this fundamental shift affecting how they provide their services, it is also affecting the services themselves.

A significant enabler of this shift has been outsourcing. When considering the outsourcing of CRE services, the driver is almost always financial – generating bet-ter service at a lower cost. However, other important issues must be considered or the outsourcing decision will be based on inaccurate, or at least incomplete, assump-tions. Outsourcing is not simply moving service from internal resources to external partners. Rather, an entire shift in organi-zational philosophy must be addressed to be successful in the technology arena.

Unfortunately, far too many organiza-tions have found themselves trying to

Transferring Technology to Service Partners: A Cautionary TaleImplementation of an Integrated Workplace Management System (IWMS) is the current technology standard for CRE organizations. These IWMS systems give the CRE organization visibility into their operations and coordination in service delivery, along with providing significant factors of effi-ciency and the ability to get real-time assessment of their business. In fact, a successful IWMS implementation can potentially provide hard-dollar savings far exceeding cost and create the oppor-tunity to make better decisions in a much more proactive fashion. However, with the growth in outsourcing of CRE services, the direction of solution auto-mation is also being affected.

A significant cost of implementing an IWMS, calculated in both time and capital, is integration of the software into existing CRE processes or the development of processes, if none exist. When a service is outsourced, the pro-vider is typically selected because of

2012 The leAder 35 m A y / j u n e

attractive user interface around it as part of their offering. This technology is often more of the aforementioned illusion than a reality, and it is decidedly not free. To the contrary, the cost of manual data manipulation and reporting is built into the service price.

Another major issue with this approach is that these systems are sel-dom commercially available, or if they are, the service provider has so custom-ized the solution that it is for all practi-cal purposes proprietary. Intentional or not, this makes terminating a provider’s services difficult. From their side, the model is a smart one, but for a procurer of the service, it is just bad business. With the provider’s system almost always a “black box,” buyers rarely have insight into what or how things are done and even less into the basis for reports and metrics being generated. Worse, the data is only useful when processed by their proprietary system, which frustrat-ingly makes transfer of that data (includ-ing portfolio history and performance) to another provider almost impossible.

its industry expertise. Yet, forcing the provider to utilize an internal solution either requires an organization to repli-cate the provider’s work practices into the organization’s internal system or to eliminate active management of the provider’s service area from the inter-nal solution. If the service provider is required to utilize the internal system, the desired practices and efficiencies that lead to the selection may be nega-tively impacted, creating a transition period often fraught with service-level declines and customer dissatisfaction.

Thus, the temptation is to take the easy way out. Since it is a given that organizations must have reliable infor-mation to make the strategic decisions necessary to drive effective portfolio decisions, that tends to set up illusions. Because it is easy to buy into the idea that outsourced partners can provide technology as part of their service deliv-ery, buyers often think they are getting it for free. In reality, most major service providers have cobbled together disper-sant, low-cost systems and wrapped an

The Risks and RewaRds of ouTsouRcing: TRansfeRRing Technology fRom inTeRnal To exTeRnal seRvice PRovideRs

2012 The leadeR 36 m a y / j u n e

Before engaging in discussions with potential service providers, the impor-tance of preliminary legwork should not be underestimated:

• Fully understand how the proposed technology will work.

• How will users interface to this technology?

• How will data be handed off, and which data is expected back through integration to internal systems?

• Which metrics are needed to report up to management?

All these points are critical, but the last is especially so. Service provid-ers are delighted to provide buyers with pre-defined metrics for their use. Paradoxically, however, this is scarcely more than a modern-day twist on the old truism about “letting the fox guard the hen house.” Always be proactive and define up front both the ownership of data and how data will be provided when the relationship is terminated.

standards are comingUntil recently, no communications standard existed for allowing different systems to talk to one another, thus technology buyers were faced with, “Pick a system and live with it.” Now, thanks to dedicated work at the Open Standards Consortium for Real Estate, standards are beginning to drive data normalization and a consistent tax-onomy that will, over time, eliminate some concerns expressed in this discus-sion. Also, rapid movement of solutions to the cloud will help since the cost of moving technology from one provider to the next – or even back in-house – will be all but eliminated.

However, this still requires diligence on an organization’s part. Specifically, selection of a service provider must

include the following in adequate and clear detail:

• Analysis of how the organization does its work

• Which portion of that work is being transferred to the partner

• Which controls the organization must have in place

• How data/technology will be provisioned

All items must be spelled out in the contract and its accompanying service-level agreements. There must be effort exerted toward defining where hand-offs take place. Determine how much of the service must be initiated to the organi-zation internally by the end user (move or service requests) or by the CRE team (acquisitions and dispositions). Decide on which data is passed to the service provider and in what way.

And what specifically will be expected in return from the service provider and at which points in the process? These kinds of issues must be addressed up front and have approved performance measures associated with them in the contract.

Buyers also need a clear definition and input as to how the system will be configured by the service provider and how operable data will be transferred back to them if the relationship should sour. This is analogous to a marriage prenuptial agreement. Decide up front how to get uninterrupted use of a fully-operable solution if the partner is no longer in the picture.

Taking it all inOutsourcing is an important tool in driv-ing more effective and efficient opera-tions. However, never get lazy. Just as an organization would carefully vet provider capabilities and their market penetration, also understand how the organization

about the author

will interface to them electronically – and insist on a pre-nup. Carefully define who owns the data, what system(s) will be used to support the organization’s portfo-lio and define how customization of that system is controlled.

Also, remember that there are still legitimate reasons for companies to buy and install their own technology. Do the necessary up-front work to decide on the right approach, and when that is prop-erly executed, partnering will provide significant benefits for the long term.


From Concept to Execution: How to Make IWMS a Realityhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12563568

Building the Foundation: A Successful Client/Provider Relationshiphttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=12125728

Phil Wales is CEO of Houston-based eBusiness Strategies.

“outsourcing can literally be a trigger for transforming the way work is done – delivering more effective processes and

higher customer satisfaction.”

CONNECT.

LEARN. GROW.

BELONG.

Customer Relationship Management: Making The Connections

B Y E R I C H . T H O R P E , B C C R , S L C R

2012 THE LEadER 38 m a Y / j u n E

plexity and its close cohort ambiguity – conditions that impede communication, alignment and the achievement of organi-zational goals. Managing these conditions is one of the more time-consuming organi-zational challenges and must be achieved for a firm to deliver results successfully.

Management has two formal design elements to use in conquering com-plexity and ambiguity: 1) processes to effectively link work end-to-end across functional boundaries and 2) lateral con-nections such as CRM, which provide a structural bridge to connect functional silos. Both elements are present in well-functioning organizations.

Complementing those formal ele-ments are informal structures of net-works that arise in organizations as a method of further improving communi-cation and alignment. These networks function among individuals across the firm through influence and collaboration rather than formal authority and control. When used to their full potential, infor-mal structures fill organizational voids and enable a higher level of performance than would be otherwise possible.

REaL ESTaTEmanagEmEnT

or network structures are adopted. As a consequence, both communication and effectiveness suffer while complex-ity flourishes. Bridging these silos to improve communication, integrate and align activities and reduce complexity requires robust processes for how work is done as well as dynamic lateral con-nections – such as those provided by the CRM function.

Strategy and then structureDesigning a modern organization involves shaping the structure, people, space, sys-tems, processes and rewards to support achievement of the desired business strat-egy. Once an organization’s design is set, it then shapes how well that firm is able to achieve its strategy and how effectively it innovates and evolves in pursuit of future opportunities. Getting organization design right is critically important to a firm’s ongoing success.

Structure establishes formal author-ity and control within the organization, which in turn determine how power is distributed. Two unavoidable byproducts created by any sizable structure are com-

This article concludes a series of three that describes the key role per-formed by the customer relationship management

(CRM) function within corporate real estate (CRE) departments seeking to deliver business-driven results. The first article in this series discussed the importance of building relationships and delivering results to achieving success with the CRM function (THE LEADER, September/October 2010). Frameworks for evaluating competencies and dialogs to help CRE leaders position their CRM teams to achieve that success were dis-cussed in the second article (THE LEADER, July/August 2011).

As this series closes, our focus returns to the beginning, to the fundamental purpose CRM serves in a well-designed organization – that of spanning silos and aligning activities among CRE, the business units and other support functions. Silos are an unavoidable outcome of choices made in the design process regardless of whether func-tional, product, geographic, customer

sponding tradeoff between structure and ambiguity associated with formal and informal methods. The following table lists each connection approach with its primary strength and weakness – both of

able within CRE to drive tighter integra-tion of the CRM function and minimize performance gaps. These connections parallel those used within the broader organization and provide the corre-

Therefore, a firm’s ability to deliver results – its total impact – is the sum of the effectiveness of its formal and infor-mal organizational structures (see Figure 1). To achieve its greatest impact and benefit, the CRM function must leverage both elements in building relationships and delivering business-driven results.

Managing Internal AmbiguityAs practiced today within the CRE pro-fession, CRM roles are typically given limited organizational authority in their work of connecting with business unit customers. Therefore, to function suc-cessfully, the CRM team must develop spheres of influence that exceed their spans of control, which naturally leads to ambiguity over both their internal (within CRE) and external accountabil-ity. Managing ambiguity within the CRE organization is in a perverse way the more prevalent challenge as the CRM function is often poorly integrated into the larger organization – at times simply bolted on without much forethought regarding how to drive learning, feed-back and customer strategies throughout CRE. This creates learning and perfor-mance gaps that reduce CRE’s effective-ness, which is a situation that is both unfortunate and clearly avoidable.

Figure 2 illustrates the spectrum of five lateral connection approaches avail-

2012 the leAder 39 M A y / j u n e

lateral Connection Approach Primary Strength Primary Weakness

1. direct Management: Integrated control of

CrM and a major function such as projects/pro-

grams or transactions

Provides embedded opportunities for

high-impact customer interactions

Potential for CrM to become subsumed

within a Cre functional discipline

2. Matrix Organization: CrM team reports to both

a functional manager and the CrM manager

Supports teamwork and collaboration in

organizations where both qualities are

well establishedOrganizational complexity

3. Standing Committee: typically a forum for

periodic business updates or project/program

reviews

Brings CrMs into direct contact with the

broader Cre team on a regular basisMaintains power conflicts among functions

4. Cross-Functional team: typically used to

manage major projects or programs that impact

customers

Provides interaction among the func-

tional groups and individual CrMs

does not provide regular, ongoing integra-

tion and alignment nor does it typically

involve the entire CrM team

5. liaison Function: ranges from serving as a

dual advocate (customer and Cre), the voice of

the customer or solely a planning function

Organizational simplicitytypically lacks integration processes with

the Cre functional groups

FIgure 1: the OrgAnIzAtIOnAl IMPACt equAtIOn

FIgure 2: SPeCtruM OF COnneCtIOn APPrOACheS

january / february 12

volume 11, issue 1corporate

real estate& workplace

Microsoft’s Smart Buildings(page 12)

the bbc’s new london Hub(page 20)

red Hat’s craig youst (page 42)

CoreNet Global award SubmiSSioN

iS Now opeN!(See page 31 for details)

Customer relationship management: making the ConneCtions


which must be managed proactively by the CRE leadership team.

Although ambiguity is minimized where organizational structure is stron-gest, the intent of this article is not to advocate for direct management as the recommended approach for every CRE organization. Rather, what is strongly advised is the purposeful selection of a connection approach that is consistent with your organization’s culture and practices after weighing the strengths and weaknesses of each. Ideally, this selec-tion is one of the fundamental decisions made during the process of developing and launching a CRM function, thereby ensuring that effective communica-tion and strong alignment are promoted within the broader CRE organization.

Managing internal ambiguity by con-necting the CRM function effectively is a responsibility of the CRE leadership team. Leaving that connection to chance alone is a direct path to mediocrity.

making the ConnectionsExternal ambiguity arises from the chal-lenge confronting each CRM in identify-ing the most appropriate business unit customers, establishing relationships with those customers and then main-taining those relationships through a dynamic business environment. This is particularly an issue in large or rapidly evolving organizations where leadership roles change frequently. The pace of this change is driven by management churn, duration of leadership assignments and changes in the firm’s growth trajec-tory or scale and pace of acquisitions. Recognizing that all relationships within

a corporation have a fixed shelf life requires the CRM function to become proficient at anticipating and proactively responding to change, which in turn is the key to reducing ambiguity.

What is the most effective way for CRE leaders to anticipate change and posi-tion their organizations for success? The direct path is to broaden the CRM team’s attention – and its sphere of influence – to include both informal networks and other liaison functions in addition to the formal organization itself (Figure 3). Doing so provides opportunities for building new relationships and identifying resources to provide business knowledge and aware-ness of issues, challenges and opportu-nities that wouldn’t otherwise exist. Following are three approaches for leaders to consider when starting down this path:

1. Open communication channels for the CRMs with other support functions – particularly those with structured liaison roles – such as human resources, informa-tion technology, finance, procurement, legal etc. Success here will create opportu-nities for the CRE organization to partner in developing solutions to corporate chal-lenges and building holistic approaches for exploiting corporate opportunities.

2. An equally powerful approach for building connections and increasing awareness is for CRE leaders to actively seek opportunities for engaging indi-vidual CRMs in corporate initiatives (e.g. cost reduction, workplace programs, acquisitions, business expansion, etc.). Seizing these opportunities is often the quickest and most effective method of opening doors and gaining momentum with the CRM function.

3. A less direct approach is to engage individual CRMs in business unit train-ing programs where they exist to gain deeper insights into those segments as well as to connect with colleagues and networks from within the business itself.

Making the right connections across the firm with your CRM team is essen-tial for bridging organizational silos so that activities are integrated and aligned and communication is improved. CRE leaders must play a fundamental role in this process by simultaneously integrat-ing their CRM team into the CRE orga-nization while broadening the team’s focus beyond the formal organization to informal networks and other liaison functions as well. Achieving this will reduce ambiguity and smooth the path for delivering business-driven results. And that is what leadership is all about.

about the author


Customer Relationship Management: Using Dialogs that Matterhttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=11700473

Customer Relationship Management – It’s More than Just the Relationshiphttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=9663900

Eric H. Thorpe, BCCR, SLCR, is a Founding Partner of Jamestown Advisors, an advisory practice that helps corporations and their real estate departments

adapt to the changing environment while delivering business-driven results.

Figure 3: Crm sphere oF inFluenCe

CoreNet Global’s THE LEADER is available in a new digital format packed with articles, features, special reports and award-winning content you depend on.

Read the entire magazine online with the click of your mouse. Reach advertisers by clicking on their links throughout each issue. Relay articles to your colleagues with a simple click.

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may / june 11

volume 10, issue 3

corporate

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& workplaceGreening

Existing Facilities

(page 12)

the economic

Developer

client Defined

(page 24)

time warner’s

George Bouri(page 40)

cisco’s

corporate

real estate

strategy (page 20)

march / april 12

volume 11, issue 2

corporate

real estate

& workplace

The Globalization

of Management

Structures(page 12)

iaG’s

NZi center(page 34)

onshoring

continues(page 46)

The most trusted publication in Corporate Real Estate!

CoreNet Global’s THE LEADER is available in a new digital format packed with articles, features, special reports and award-winning content you depend on.

Read the entire magazine online with the click of your mouse. Reach advertisers by clicking on their links throughout each issue. Relay articles to your colleagues with a simple click.

It’s fast! It’s free! Just go to: http://www.nxtbook.com/nxtbooks/corenet/theleader0512/









Read THE LEADER’s Digital Edition

may / june 11

volume 10, issue 3

corporate

real estate

& workplaceGreening

Existing Facilities

(page 12)

the economic

Developer

client Defined

(page 24)

time warner’s

George Bouri(page 40)

cisco’s

corporate

real estate

strategy (page 20)

march / april 12

volume 11, issue 2

corporate

real estate

& workplace

The Globalization

of Management

Structures(page 12)

iaG’s

NZi center(page 34)

onshoring

continues(page 46)

The most trusted publication in Corporate Real Estate!

Keep Calm and Carry On: Preparation for the

NATO Summit in Chicago

B Y R . J . B R E N N A N , M A R G I E K U R K O W S K I A N D T O N Y S M A N I O T T O

2012 ThE lEADER 42 M A Y / J U N E

REAl ESTATEMANAGEMENT

tions. Other businesses, because of the nature of their work or proximity to key venues or protest routes, may have to implement some of the precautions offered by the National Special Security Event (NSSE) team.

“One thing to be sure of is that if the NSSE team has credible intelligence sug-gesting your business needs to be con-cerned, you will be the first to know,” said Heintze.

The NATO Summit has been designated an NSSE, meaning the Secret Service, in partnership with the CPD, is mandated to implement an overall security plan includ-ing before, during and after the event. The Secret Service utilizes a unified command model to integrate many different agen-cies into the development of a security plan. This model includes an Executive Steering Committee of core agencies such as the Secret Service, CPD, FBI and the Office of Emergency Management and Communication (OEMC). The team works together and then passes the knowledge to approximately 25 sub-committees. Two to

panel of top law enforcement agency and intelligence representatives with 25 years of G8/NATO event experience was gath-ered to brief the CRE community in prep-aration for this monumental event. Held at the Federal Reserve Bank of Chicago conference center, former Chicago Police Department (CPD) Superintendent Terry Hillard’s opening remarks to the standing-room-only crowd of more than 500 guests and media was a stern, “Calm down, a lot of planning and preparation is put into G8/NATO. This event starts a dialogue of communication, not only between the federal and local agencies, but between the businesses.”

Planning began in October of 2011, seven months before the summit, Arnette Heintze, Past Special-Agent-in-Charge of the Midwest for the U.S. Secret Service, explained that the briefing was about information sharing, designed to stimulate thought and to give attendees some idea about what to expect. Most businesses need to do nothing out of the ordinary, simply maintain standard business opera-

When most people think about G8/NATO summits, one may conjure up images of thousands

of protestors, road closures and chaos. What should corporate real estate (CRE) executives and building owners and managers expect from an emergency management and transportation perspec-tive? What will be the short- and long-term impacts for Chicago?

When it was announced that the G8/NATO summits were coming to Chicago, May 15 to 22, 2012, concerns and questions mounted quickly, and the CoreNet Global Chicago Chapter Programs Committee responded by plan-ning and hosting an Executive Briefing. President Obama’s announcement on March 5, 2012, that the much smaller G8 Summit would be relocated to Camp David had little impact on the practical steps to maintain CRE and operational preparedness during the NATO Summit.

On February 15, 2012, a blue-ribbon


four weeks before the event the security plan will be announced.

During the summit, 40 to 70 foreign heads of state, all of whom are protected by the Secret Service, will be travelling to Chicago. For every president and prime minister in a country there are a foreign minister, defense minister and other dig-nitaries receiving some security detail, primarily from the Department of State.

Special-Agent-in-Charge Frank Benedetto said, “Numerous motorcades moving around the city do not equal road closures and blocked access. The Secret Service has this down to a sci-ence, and there is extensive coordination with the OEMC and the local police department to ensure a smooth process.”

The Secret Service focuses on the total environment of the host city. In

downtown Chicago welcomed the natO Summit in may

local real estate organizations:

• The Chicago Office Leasing

Brokers association

• International Facility Management

association Chicago

• Building Owners and Managers

association Chicago

Chicago administration attendees:

• Lori Healy, Executive Director

of the G8/NATO Host Committee

• Megan Hart, Director of Operations

and Press Officer for the G8/NATO

host Committee

• Felecia Shallow Davis, First Deputy

Chief of Staff from the Mayor’s Office

Participating Organizations Participating Speakers

Speakers:

• Current and Past Special-Agents-in-

Charge of the Midwest

for the U.S. Secret Service, Frank

Benedetto and arnette heintze

• Current and Former Chicago Police

Department Superintendents, Garry

mcCarthy and terry hillard

• Special-Agent-in-Charge of the

Federal Bureau of Investigation,

Robert Grant

• Executive Director of the

Office of Emergency Management

and Communications, Gary Schenkel

Keep Calm and Carry On: preparatiOn fOr the natO Summit in ChiCagO


Chicago, business has to be conducted in the Loop, Navy Pier has to operate, and the general public has to come and go as they would on a typical weekend.

“If people can’t travel with a minimal amount of inconvenience, the NSSE team hasn’t been fully successful,” said Benedetto.

One example of coordination is the securing of the McCormick Place con-vention center and the adjacent Soldier Field football stadium along Lake Michigan. During a May weekend, peo-ple will be using their boats in nearby Burnham Marina, driving on Lake Shore Drive and using the bike paths. To secure McCormick Place, sweeping and securing the boats was considered and determined to be impractical. Talking to private partners, the City Park District, the CPD and the Coast Guard, it was anticipated that the marina would be 50 percent full. The solution was to move these boats to another location, with-out charge and minimal inconvenience to the boat owners. How is car traffic adjacent to McCormick Place on Lake Shore Drive and Monday rush-hour com-muter trains under McCormick Place to be affected? As of April 1, 2012, upward of 25,000 commuters and area buildings and businesses could be affected.

“The greatest concern for the CPD is to continue the progress being made as a police department, while at the same time policing an event that is sure to garner some attention from demonstrators,” said CPD Superintendent Garry McCarthy. “There will be large demonstrations, and we have to protect the first-amendment rights of the persons who want to come here and peacefully express [themselves].”

“We also want to bring Chicago through this with a sense that it is a world-class city, hosting a world-class event. That’s an expectation, not a hope,” he added. “The value of the NATO Summit is estimated to be tens of millions of dollars in addition to promoting Chicago internationally as a business, trade show, entertainment and life-style destination.”

However, special precautions do need to be taken. Special-Agent-in-Charge of the Midwest for the U.S. Secret Service Robert Grant explained that

Chicago has had a higher profile for a few years now, and this event raises it even higher as a place of interest for bad people locally and overseas.

One reason for the heightened precau-tion is the presence of high-profile over-seas dignitaries. A responsibility of the FBI is to assess the risk associated with their attendance. While there may be no threat to a dignitary in the U.S., the FBI has to assess the threat potential as these dignitaries arrive in the U.S.

The FBI has 56 field offices with 400 resi-dent agencies all connected to each other, all connected to intelligence agencies and all connected to law enforcement agen-cies. In the U.S., it is a challenge because we have a much more decentralized law enforcement structure, unlike Great Britain and other countries that are more unified.

Effective communication management for large-scale public gatherings is critical to coordinating security and the public. The OEMC handles about 10 million calls a year; more than five million of those are emergency calls; and nearly five million are for city services. They interact on a daily basis with the CPD, Chicago Fire Department and all city services.

“We are a supporting element and handle these kinds of events on a regular basis,” said Gary Schenkel, Executive Director of the OEMC. “It is not uncommon for the city of Chicago to host an event with more than one million people.”

In summary, NATO Summit or not, the following are practical steps to make your property and business better pre-pared for any situation. Have you:

• Identified the “short list” of risks, threats and vulnerabilities facing your business?

• Defined a concise, effective and actionable mitigation strategy?

• Created, updated and tested your business’s Emergency Preparedness Plan?

• Established a plan to secure property and maintain the safety of employees?

• Established the ability to continue busi-ness operations from a secondary location?

• Assembled the plans and blueprints needed to repair damaged or destroyed property?

As London prepares for the 2013 Summits, similar planning will take

about the authors


Building Security - Effective and Visible Measures are Key To Protecting Commercial Properties Against Terrorist Attackshttp://www2.corenet-global.org/dotCMS/kcoAsset?assetInode=3322343

Margie Kurkowski is CoreNet Global Chicago Chapter Programs Chair and Business Development and Marketing Director for Wright Heerema Architects.

Tony Smaniotto is Senior Managing Director and Head of the Capital Transactions Group for Studley in the Midwest. He is a 23-year veteran of real estate

capital transactions, and he is respon-sible for investment sales activity in the Greater Midwest market.

R. J. Brennan, MSC, Assoc. IIDA, LEED AP ID+C, is a recognized independent workplace strategy consultant and Past President of the CoreNet Global

Chicago Chapter.

place, and the London CoreNet Global Chapter will benefit from these best practices. Regardless of your business size, set policies that will work for you. Talk with your team. Not every business needs an elaborate plan. Business should be open as usual, and you can indeed “keep calm and carry on.”

Connect. Learn. Grow. Belong.

executiveprofile

David Driver:Happy as a Clam in His

New England State of Mind

B Y c H e l S i e B u t l e r

2012 tHe leader 46 maY / j u n e

nizations, NU has helped stretch the region’s resources through forming a coalition of six states that hosts events and activities together that they may not have been able to afford alone.

“Through these events, we capital-ize on the New England brand in a high-level way, and then the individual states market themselves under that umbrella brand,” added Driver. “It’s a group of state-level economic develop-ers working together for the greater good of the region.”

new england’s economic driversNew England, which includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, is well known as a prime vaca-tion spot with its fall foliage backdrop, hiking and skiing recreational areas, small towns and beaches, but Driver says the region has much to offer in terms of business development of which many people may not be fully cognizant.

“We are an area rich with knowledge workers, and that positions us very

Northeast Utilities (NU) operates New England’s largest util-ity system and serves electric and natural

gas customers in Connecticut, New Hampshire and western Massachusetts. David Driver is Regional Development Manager for the organization, which is dedicated to the people, energy and technology that are pivotal to the region’s economic development.

NU recently merged with NStar, a Greater Boston-area utility company that serves customers in eastern and central Massachusetts, in a $4.7-mil-lion deal that formed a utility that now serves 2.5 million customers across the multi-state region.

Driver explains that NU’s focus on eco-nomic activity in the region is designed to attract and retain business and jobs, which, in turn, increases electric and natural gas sales. In cooperation with the New England Council, a non-partisan alliance of business, academic and health institutions and public and private orga-

well for high-tech development,” he said. “We are close to Western Europe, geographically and culturally, and we have found that we appeal to Europeans particularly because we’re a very highly educated and skilled population that has cut teeth on major industries like aero-space and defense.”

The region is also home to major com-panies, including ESPN, which plans to add 450 people to its headquarters in Bristol, Conn. NBC Sports is also mov-ing its operations out of Manhattan to Stamford, Conn. According to Driver, the fact that Stamford is right at the backdoor of Manhattan is one reason companies have moved there. UBS and RBS each have enormous facilities in the region as well.

Carbonite, an online back-up services company, has opened a customer service center in Lewiston, Maine, with about 250 people. A “new media” company, 38 Studios – a start-up owned by former Boston Red Sox pitcher Curt Schilling – has opened in Rhode Island and will employ about 150 employees to make video games. Albany Engineered Composites is opening

2012 the leader 47 may / j u n e

a new 300-person plant in Rochester, N.H., which is close to Boston.

Smith & Wesson is planning a $60- million expansion with 250 jobs in Springfield, Mass., and Green Mountain Coffee is expanding its Essex, Vt., opera-tions by 550,000 square feet (and adding 450 new jobs).

“That’s a key value proposition,” said Driver. “The New England states are very compact and close to one another. For instance, I live in the middle of Connecticut, and within two hours I can be in Boston or Manhattan. People are starting to realize they can locate just outside major metropolitan areas at a much lower cost, dodging the many head-aches of living in a major metro as well.”

New England has a long history in the manufacturing industry, and two of the largest employers in Connecticut are United Technologies, specifically its subsidiary Pratt & Whitney, and General Dynamics.

“Those employees are highly skilled, very flexible and can make anything requiring high-tech, precision machin-ing,” said Driver. “Our population is one of the best educated in the country, and we have a large conclave of the finest colleges and universities, which makes for a very appealing work force.”

Keeping up its Value“It has been a difficult few years because of the recession and because New England has a little bit of a higher cost structure than other areas,” explained Driver. “We’ve been scrambling to get our economy rolling again, and we’ve seen a lot of the recent success with company expansions.”

There also has been a lot of initia-tive by the individual states to use local educational institutions as engines for generating start-up companies.

Driver said one way the region plans to keep its competitive edge is to make sure people know they don’t have to look at an individual state in New England as an isolated island.

“I think we are constantly trying to drive home that our states are proximate to each other and we have a large indus-trial market,” he said. “We’re only 500 miles from the largest industrial market in Canada. I think people tend to not

People are starting to realize they can locate just outside major metropolitan areas

at a much lower cost, dodging the many headaches of living in a major metro as well.

understand that that they can be very competitive in an area that is rich in quality labor and quality of life.”

Connection with Corenet GlobalNU has been involved with CoreNet Global since 2002, when the organiza-tion hosted the New England Summit.

“I’ve watched the ups and down of

CoreNet Global over the last decade, and there has always been an issue with engaging the economic development community,” said Driver. “I believe great strides have been made over the last few years to make the organization more relevant to economic developers. It’s starting to come on again, and I am glad to be a part of that.”

david driver, northeast utilities System

executiveprofile

Chris Horblit:Fidelity’s Cutting-Edge Strategist

B Y c H e l S i e B u t l e r

2012 tHe leader 48 maY / j u n e

services company (managed assets) since 1997 and with FREC since 2005, holds three degrees and is the current President of CoreNet Global’s New England Chapter. He also volunteers his time at Metrowest Legal Services Campaign, a non-profit organization that provides free civil legal services for those in need, and spends ample time with his two children.

If he sounds like a busy guy, he is, and that’s exactly how he wants it.

“We are operating in an environment that’s ever more challenging in terms of competitiveness, so being a strategic thinker and realizing the importance of speed to market are imperative for put-ting together good, executable strategies for our clients,” said Horblit. “There is the need out there to continually strive to do better than what you did yesterday.”

company Strategy and initiativesFREC’s strategy is to provide the best service and experience for its customers, and it drives everything the team does. Under Horblit’s purview are all of the global real estate management functions.

As President of Fidelity Real Estate Company (FREC) since 2010, Chris Horblit says his job is intellectually rewarding

and feels everyone there is afforded a lot of opportunity to succeed and challenge themselves. He and his team are respon-sible for providing the full range of cor-porate real estate strategy and services to Fidelity Investments’ business units globally and oversee a portfolio of 11 million square feet (1.1 million square meters), including data centers and more than 160 retail investor centers.

FREC has an in-house team of about 130 people globally, and it is responsible for what Horblit terms the strategy and business functions – risk, finance, client service, planning, project management and design and leasing and acquisitions. Outsourced functions, which include facilities management and lease admin-istration, are divided geographically between Jones Lang LaSalle and CBRE. Horblit, who has been with the $1.6-tril-lion (managed assets) global financial

Currently the team is working on con-solidation and growth initiatives.

“We’re really trying to maximize the portfolio in terms of space utilization and optimization and consolidate where we need to,” he said. “Our goal right now is to right-size our portfolio every-where from North Carolina to India.”

Part of that goal involves strate-gies around alternative workplace and moblility, which also affects employee and team engagement.

“I would say we are very traditional in terms of our management approach and work styles, but we are becoming more progressive in terms of providing for employees to be more mobile and work remotely,” he said.

Fidelity recently launched its GoWork® Program, under which employees adopt a more mobile workstyle and give up their assigned desk in a Fidelity office. To support mobile workers, the company has opened four 1,200-sq.-ft. (111-sq.-m.) GoWork Centers – three in Boston and one in Merrimack, N.H. – that operate like business centers with different kinds

2012 the leader 49 may / j u n e

of work spaces, complete with support services for mobile employees. According to Horblit, the GoWork Centers have been tremendously successful and very well received.

“As businesses become more and more comfortable with this idea of mobility, they are allowing their employees more and more flexibility in where and how they work,” he added.

Sustainability StrategyHorblit’s organization also coordinates the firm’s environmental sustainability program, which focuses on how Fidelity can reduce the potential impact of its operations on the natural environment. Areas of emphasis include energy savings, green buildings, eDelivery of customer documents, supply chain and recycling.

The real estate group has been very successful in growing the firm’s green building program over the years. Fidelity’s first LEED-certified office building, developed in 2007, is in Covington, Ky., and it has since achieved LEED certification of 11 office buildings, amounting to more than 50 percent of the company’s owned U.S. corporate office portfolio. The goal is to reach 65 percent by 2015.

“We have traditionally built our corporate office buildings with green principles in mind – minimizing the built footprint, optimizing energy per-

We’re really trying to maximize the

portfolio in terms of space

utilization and optimization and

consolidate where we need to.

formance and landscaping with native plants, for example,” said Horblit. “Obtaining LEED certification reinforces and validates this commitment.”

looking ForwardHorblit is committed to keeping his orga-nization at the cutting edge. His plans for 2012 include a greater focus on innovation in products and services, such as work-spaces that support increasingly collabora-tive and mobile workstyles and new real estate technology capabilities. He also challenges his staff to focus on continuous process improvement as a way of deliver-ing superior service to clients. His orga-nization is in the second year of a “One FREC” initiative that focuses on creating a stronger collaborative culture and stream-lining work processes.

“Challenging ourselves to constantly improve our work will benefit our clients tremendously,” he said. “But it also cre-ates a richer and more fulfilling work experience for my staff. They can be fully engaged, grow professionally and feel proud of what they have accomplished.”

link to Corenet GlobalHorblit has been actively involved with CoreNet Global for more than seven years attending and presenting at local events, regional symposiums and global summits in the U.S. and Asia. He has also been involved in the local chapter

Chris horblit, Fidelity real estate Company

leadership and is the new President of the New England Chapter. He initially became involved because of the learn-ing and networking opportunities at the local, national and global levels and appreciates the learning and networking opportunities the organization provides.

“I have been able to meet and learn from other end users as well as our vendors, consultants and economic developers at various events,” he said. “It provides me personally with a lot of opportunity to connect what we do in our company with what is going on locally and globally.”

Fidelity’s GoWork Center at the 245 Summer St., Boston location.

industry

tracker

navigating the Lease accounting standards Maze: How corenet GLobaL’s sPP coMMunity is infLuencinG a LonG-runninG work in ProGress

2012 tHe Leader 50 M a y / j u n e

Call it the “long and winding road” if you’d care to cop a lyric from the Paul McCartney Beatles’ classic, but to the experts inside CoreNet Global’s Strategy and Portfolio Planning (SPP) Community, the specter of new global lease accounting standards has been more like trying to find the right path-way through a maze.

It all started coming to light during the economic dog days in the summer of 2009.

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) proposed to move all leases onto the corporate balance sheet. Leases would no longer be treated as operating eexpenses; they would be reported as capital leases and moved onto corporate balance sheets as offsetting financial liabilities and right-to-use space assets.

building awarenessCoreNet Global published a white-paper in August 2009, and the alarm was sounded. The study, “Lease Accounting Changes: Big Impact with Little Preparation,” pointed out some radical changes in how leases would be accounted for – not only for real estate but also for equipment.

Over the course of the intervening 36+ months, and without the formal issues advocacy focus that CoreNet Global is launching today, SPP mem-bers set into motion an intensive, con-tinuous vigil – tracking twists and turns over multiple rounds of redrafting of the FAS 13 regulations.

“We can take significant credit for the hundreds of comment let-ters submitted by major corporate occupiers,” said Richard Podos, Co-Chair of the SBB Community

and President of New York-based Lance LLC. “This included encouraging our cor-porate real estate members to coordinate with their financial accounting policy teams to communicate the same with both FASB and IASB.”

Certainly, the worst economic down-turn in modern memory was challenging enough, but the thought of adding at least $1-trillion in lease liabilities and new regulatory burdens to corporate bot-tom lines seemed to add insult to injury.

Three years later, a recent IBM – CFO Research Services survey still confirms those fears. As we sit here today the accounting boards have yet to iron out and finalize the details.

“Half the executives polled said they expect their debt-to-equity ratios to worsen permanently, and more than half said they think their return-on-assets numbers will suffer temporarily,” according to the survey analysis.

Growing urgencyThere’s an even higher level of con-cern among the many CoreNet Global members with direct responsibility for effectively managing their companies’

or clients’ real estate portfolios. A March 2012 CoreNet Global survey of 200 industry leaders showed that more than seven in 10 respondents regard the changes as an urgent public policy issue. But the Boards have had con-siderable difficulty in agreeing on the details, and with the original imple-mentation date of 2013 pushed back several times, it’s become a ‘hurry up and wait’ scenario for CFOs and their CRE teams.

“Assuming the Boards get their act together, the earliest effective date we’d be talking about is 2016,” SPP member Russ Howell, Managing Director from Seattle for Jones Lang LaSalle, predicted.

Decisions need to be made on impor-tant questions like IT and process changes that will enable corporations to implement the new regulations. The cost to business could be large. Another study done by Chang & Adams Consulting found the proposed standards will result in an increase in liabilities of $1.5 trillion, increased annual costs of $10.2 billion and $27.5 billion a year in lower GDP.

“The project is bogged down, and the Boards’ credibility is strained,” Howell added. “They had been talking about issuing the latest Exposure Draft some-time around the end of Q1 or early Q2, but it now looks like it won’t happen until Q3, further delaying the issuance of the new standard and having any pros-pect for a reasonable effective date.”

Howell describes the new standards as “a major migraine” akin to Sarbanes-

by richard kadzis

richard Podos

industry

tracker


Oxley. Part of the pain is associated with other improvements or revisions that still need to be made.

“The good news is that the biggest focus right now is on P&L impact; that is, how the lease expense is reported, which has been the real estate indus-try’s most strenuous objection,” said Podos. He also pointed out how the CoreNet Global SPP “has been pushing for straight-line P&L expense for almost three years.”

seeking closureResolution of the details is still in the offing, and the Boards have begun yet another round of outreach seeking addi-tional comments.

“At this point, FASB and IASB can’t agree on the P&L approach and may choose

to go their own ways,” Howell advised. “We may never get a new Exposure Draft, much less a new standard.”

We just hope there’s no Minotaur waiting at the end of the maze. With SPP’s dogged oversight, the chances that will happen are lower, as Howell con-cluded, “The Boards appear to be trying to accommodate at least some of the

concerns that were vociferously raised during the comment period following the first Exposure Draft.”

editor’s noteThe communications strategy behind the sustained effort to advice and guide FASB and IASB earned the SPP a Chapter and Components Best Practice Award.

strategy and Portfolio Planning (sPP)

is a multidisciplinary endeavor that is

growing in importance to firms world-

wide. the sPP community intends to

help further define the overall domain,

address areas of interest via research

or collaborative interaction and become

the meeting place (in person or online)

for subject matter experts to share their

experiences and best practices.

“Our goal is to gather, share and

advance best practices in the field of

cre strategy and Portfolio Planning,”

as summarized by sPP community

co-chair jane mather, Phd, President

of critical core.

For more information, please visit

http://spp.corenetglobal.org/sPP/

home/?ssopc=1

about the sPP the devil is in the details russ howell

it:

What should cre people

be most concerned about?

howell:

• Implementation costs and

resources and administra-

tive burden – the proposed

standard is complex and

will impose substantial

compliance headaches

and require significant

modification of information

management systems.

• Changes in policy and

behavior (depending on

enterprise management’s

sensitivity to P&l impacts)

– shorter lease terms,

more ownership

resulted in significant front-

loading of expense, with

negative P&l consequences

in the early lease years. this

issue is currently a stum-

bling block for the Boards.

• No “grandfathering.” All

existing leases will have to

be reported in compliance

with the new standard.

it:

What are the key impacts

for lessees?

howell:

• Ballooning balance

sheets: u.s. corporations

will add trillions of dollars

of assets and liabilities on

day one of implementation

• Erosion of reported net

income (unless a straight-

line method for reporting

expense is adopted)

• Possible technical default

of debt covenants (e.g.

leverage and coverage

ratios)

• Substantial administra-

tive burden to comply with

the new standard.

industry tracker asked

lease accounting stan-

dards expert russ howell

of jones lang lasalle

some key questions about

FasB 13 to get as com-

plete a picture possible of

the changing cre portfolio

management landscape.

industry tracker:

What are the key features

of Fas 13?

russ howell:

• No more “operating

leases.” the present value

of future lease obligations

is to be reported on the

balance sheet as (1) a

“right-of-use” asset and (2)

a corresponding “obliga-

tion-to-pay” liability.

• Rent expense will no

longer be reported on a

straight-line basis, as it

currently is for operating

leases, but by some ver-

sion of an effective inter-

est, or financing, method.

in the first executive draft,

the proposed method

thank

you


the leader extends a warm “thank you” to the following organizations that help shape the future of the corporate

real estate and workplace industry through their generous support of corenet global and its many initiatives.

2012 corenet global singapore summit gem sponsors

diamond

emerald

ruby

thank

you


2012 Corenet global Community sponsors

2012 Corenet global strategiC partners

gold

silver

bronze

ECONOMIC DEVELOPMENT AGENCY

workplace (silver)

workplace (bronze)

workplace (bronze)

strategy & portfolio planning (gold)

workplace (gold)

manufacturing & industrial (gold)

Young

leader

2012 the leader 54 m a Y / j u n e

Joey Vlasto speaks three languages fluently, has lived on multiple continents, and his projects span the globe. As Director, Global Liaison at Newmark Knight Frank in New York, Vlasto has devoted much of his life to pursuing an international career. That path just happens to have taken him into corporate real estate (CRE).

“With a degree in modern languages, specializing in French and Spanish, a career in CRE was more by accident than design,” said Vlasto, a U.K. native, who was introduced to CRE in 2004 when he interned with Atisreal, a France-based property firm.

So, What Is It that You do?In addition to being the liaison between Newmark Knight Frank and its London-based partner Knight Frank, Vlasto’s role is part transaction management and part business development. During his time with Newmark Knight Frank, he has worked with Avon Products, Avaya, Interpublic Group and Nixon Peabody.

In a job that requires navigating transactions around the world, he has excelled at ensuring all parties are work-ing together smoothly and seamlessly. This has required finesse, oversight of numerous moving parts and maintaining his language skills.

“To solve problems with clients over-seas and guide them through the process to ensure they get the desired result, you have to make sure that everyone is on the same page at all times,” said Vlasto.

Making that happen across language barriers, time zones and cultural and legal variances is what makes his job interest-ing. With projects that span the world, from New York to Shanghai to Slovakia, anticipating problems, being frank and ensuring all involved understand one another is imperative.

enjoying the Challenges and Successes“I really enjoy the challenge of man-aging transactions for clients,” said Vlasto. “Managing a local business unit’s expectation is vital, since this may not always align with what the head office mandates.”

For example, a project based in a small town in France required his tactful manner and fluent French to communicate with the local town hall, to source information on local brokers and to form relationships with the people on the ground. Similarly, in a recent transaction involving an account manager in the U.S. and a landlord in Medellin, Colombia, Vlasto’s profi-ciency in Spanish helped ensure all parties understood each other.

What next?With the continual globalization of busi-ness, having that global business man-agement background will add value as he continues to build his career.

When asked what straightforward but powerful advice he would give to those who are just starting out their careers, Vlasto said, “Don’t be afraid to take an opportunity, get out of your comfort zone, push yourself.”

He added that asking questions and making sure you understand what is being asked of you is important to execute suc-cessfully and meet client expectations.

An example of risk taking and getting out of one’s comfort zone was Vlasto’s decision to move to New York from London. The move was a risk but one that paid off. Apart from his professional suc-cess, he also met his wife in the Big Apple.

Shape of the industryVlasto foresees increased consolidation within the real estate industry, whether

among traditional brokerage firms, furni-ture vendors or architecture firms.

“Every industry is becoming more global, and a firm like ours continues to evolve to meet the rapidly changing needs of clients around the world,” he said. “One cannot afford to remain stagnant.”

He also sees a strong need for specializa-tion and knowledge on local, regional and national levels.

“The heart of real estate is still very much the local business, and one must not lose sight of that,” he said. “A balance and seamless integrated global corporate services in every location is ideal.”

Why Corenet global?Vlasto, who serves as the Chapter Liaison Chair of CoreNet Global’s Young Leaders Committee, has been a member since 2006. He has gained considerable educa-tional and networking perspective through his association with CoreNet Global.

As part of the Global Young Leaders Committee, Vlasto has worked hard to involve Young Leaders from around the world via monthly global chapter liaison calls. One recent success was the col-laboration between the CoreNet Global U.K. Young Leaders Committee and University College, London, resulting in the Young Leaders’ first joint, virtual learning program in October 2011. With the CoreNet Global membership becom-ing more international, Vlasto sees the Global Young Leaders Committee as a resource for those in the early stages of their career.

“CoreNet Global is committed to sup-porting and fostering the growth of the leaders of tomorrow,” he said. “The oppor-tunities to continue to learn, collaborate and build relationships within our indus-try will undoubtedly prove invaluable to anyone pursuing a career in CRE.”

joey Vlasto: global navigator joey Vlasto,

newmark Knight Frank

by sonali tare

real estate

dashboard3rd Quarter 2011


source: Cbre Global research and Consulting * defined as net absorption over occupied square footage in previous period

**office lease rates are prime; exception is north america (average asking)

• Office lease rates are gross; industrial lease rates are NNN

north america industrial sites reflect availability (not vacancy) rates

all stats reflect overall market (Cbd and suburban) unless otherwise noted:

• New York office includes Midtown, Midtown South and Downtown

• New York industrial reflects New Jersey Northern stats

(no industrial market in nyC)

• Washington, D.C., industrial reflects Maryland Suburban and Virginia

Northern markets; Washington, DC, office reflects Downtown, Maryland

Suburban and Virginia Northern.

• Mumbai office rent and vacancy rate reflects Nariman Point CBD

• Hong Kong vacancy rate, net absorption reflect Central CBD

• Singapore vacancy rate and net absorption reflect Core CBD, fringe CBD

and decentralized markets

• Australia vacancy is total for all grades; vacancy and absorption data is

estimate only

• Auckland office stats reflect CBD only and Auckland industrial rents reflect

Grade A, industrial vacancy and net absorption rates reflect overall market

• Paris, Hong Kong, Beijing, Shanghai and Australia industrial data reflects

Grade a warehouse

• Tokyo industrial rents reflect mid to large distribution center

• Singapore industrial rents reflect the average rent of warehouse facilities

note: analysis provided reflects complexity of data requirements and divergent

country standards/customs and is not standardized within the industry.

Please consult with your local real estate services provider for further

interpretation/recommendations.

capital

corner


As many organizations are reaching into the business to identify opportunities to reduce expenses and improve the bottom line in light of the continuing recession, corporate real estate (CRE) costs continue to face tremendous downward pres-sure. CRE leaders are constantly faced with the question: How can you further reduce cost while maintaining or possibly improving service levels?

Some answers come immediately to mind; and the most obvious is to reduce the amount of space you occupy. Realistically, pursuit of this Holy Grail often takes time. Whether it’s through implementation of alternative workspace strategies, or reducing the footprint by increasing the density, any savings are likely to accrue only after additional investment.

One viable and potentially more immediate option is to identify the opportunities to reduce costs inherent in your delivery model. An effective strategy is to utilize benchmarking to determine how your costs of delivery compare to your competitors, and other best-of-breed organizations.

Benchmarking is not a panacea. Much of the publicly available benchmark-ing data through organizations such as BOMA and IFMA is derived through voluntary contribution by participants. There are few, if any, quality controls in place to ensure the information reported accurately reflects true costs, and there is little opportunity to understand the core drivers of these costs. However, use of benchmark information can be very powerful if it is derived from valid and accurate sources and you have confidence in the applicability of the information.

As you look to analyze your cost of delivery, recognize that there is a

broad variety of metrics that can and should be applied across your organiza-tion. Whether you choose to deliver the services through use of internal employees, a mix of internal staff and external vendors or through use of a fully integrated outsource partner, you can use benchmarks to assess how well your particular delivery model stacks up against the competition. The figure below delineates the types of metrics you may wish to utilize to assess each of the key functions within an inte-grated operating model.

It doesn’t matter how you deliver the service or even how that delivery is priced. If you add up the total cost of the service provided, you can assess the components and derive accurate benchmarks. Once you select and compute the relevant met-rics, you can use the data to measure your internal performance year over year or compare it to industry benchmarks.

While BOMA and IFMA provide access to annual benchmarking data that may be adequate for traditional FM services, often the best benchmarks lie within peer indus-

try groups or with advisors who specialize in tracking the industry.

Benchmarking is powerful because it provides a foundation from which to build your cost-saving strategies. If you see that your current service delivery model results in operating norms that are less efficient or more costly than your peers and you don’t have a reason-able justification for that difference, you know that through reengineering of your processes or rebid of your provider con-tracts, you can bring your costs into line relatively quickly.

If your metrics demonstrate that your operating model places you at the top of the heap relative to market, you will be able to use the data to justify your existing cost base and perhaps support your request for additional investment in strategies that will enable a step change in your delivery strategy (such as imple-menting alternative workplace strategies). Management is always more likely to support investment when you can demon-strate that your day-to-day blocking and tackling is effective and efficient.

Benchmarking your delivery model

Kurt ochalla, director, expense management

by kurt ochalla

Function unit coSt metricS operatinG metricS other

Facilitiesmanagement

call center: $/Wo by typeinterior plants: $/plantutility payment: $/invoiceeh&S: $/test for iaQ, water, etc.

$/rSF by operating expense category (cleaning, r&m etc.) SF managed per Fm

% of fee at risk

projectmanagement

pm: $/SF by tier (project size)cm: $/project cost by tiermac: $/headcount by tier

construction $/rSF by type# projects/pm$ managed/pm

% of fee at riskavg. duration/projectcycle time/phase

occupancymanagement

$/uSF/year periodicity of updatesSF/pp$/pp

leaseadministration

$/lease/year $/abstract u.S. $/abstract int’l.

leases managed/pp% recovery/desktop audits% of holdover costs

% of fee at risk# or % of mtm leases

transactionmanagement

tm $ cost/rSFtm $/lease $discount % vs. market

# deals/tm$ of deal volume/tmlease rate vs. market rate

% of fee at risk

members

on the

move


• Stiles recently won the TOBY Earth Award for 2011-2012 for achieving superior performance in all aspects of the 800 Brickell build-ing’s management and preserving and enhancing the internal and external envi-ronment through sustainable programs. Stiles invested in efficient energy sys-tems for the Miami-based, LEED Silver, ENERGY STAR-rated property.

• Jones Lang LaSalle has named Michael Casolo Lead of Client Services for the firms’ Corporate Solutions division in the Northwest. Casolo is a Managing Director in the firm’s Palo Alto, Calif., office, and has provided cost, performance and effi-

ciency solutions to mid-sized corporate clients and will broaden his role to provide similar real estate-based solu-tions to some of the firm’s largest multinational clients.

• Tandus Flooring was honored with a first place Georgia Association of Manufacturers Safety and Performance Award for the company’s tufting facility. The award recognizes manufacturing facil-ities with 100-299 employees and is one of six awards Tandus Flooring received dur-ing the GAM Annual Safety Conference earlier this year, which included five awards for No Lost Time Accidents.

• OptumRx, a pharmacy benefits management organization and one of the Optum companies of UnitedHealth Group, will create at least 400 new jobs in Tucson, Ariz., over the next 12-18 months. The company also welcomes a new office in the University of Arizona Science and Technology Park, which is under renovation and will be ready mid-year.

• Biggins Lacy Shapiro & Company is opening its first Chicago office and has recruited Tracey Hyatt Bosman, formerly with Grubb & Ellis, to lead

its Midwestern operations. In her new role, she will develop and execute incen-tives and economic devel-opment strategies for the company’s corporate and

public-sector clients and will also advise clients on location decisions.

• Johnson Controls Global WorkPlace Solutions has extended its global rela-tionship with Shell International to provide workplace projects and facili-ties management services at four loca-tions in the Netherlands, including the energy and petrochemicals company’s corporate headquarters in The Hague. The new two-year agreement also cov-ers Shell’s portfolio of sites in Assen, Rijswijk and Amsterdam and includes a variety of buildings.

• BCCI Construction Company has renewed the lease of its Palo Alto, Calif., office as part of its commitment to the region and in anticipation of continued market growth. The company, celebrat-ing its 25th year, established its Palo Alto office in 2007 and has been doing business throughout Silicon Valley for more than a decade.

• U.S.-based Capstan Advisors and U.K.-based Property and Change

Solutions formed an alliance to provide clients with:

- Outsourcing process and contract negotiation support for facilities, projects and transaction management services

- Integrated workplace management software designed to improve operating performance and contract governance

- Operational excellence and innovation in CRE/FM processes.

• Copaken Brooks and Hickey &

Associates have signed an international alliance to support both companies’ continued growth in global corporate real estate services and help real estate managers reduce occupancy costs, speed up real estate transactions and provide non-biased research and reporting on a global scale.

• Jessica Beers, Senior Director of Business Development for UGL Services, was recently featured in Commercial Property Executive’s Stars to Watch section. She discussed her memorable achievements, goals, greatest challenges, secrets to success and best advice she has received during her career. Beers will also be featured in the November/December issue of The LEADER magazine in the Service Provider profile.

• Randall Knox, formerly Senior Director of Global Workplace Solutions at Adobe Systems, has accepted the position as Senior Director, Worldwide Facilities and Real Estate, for Lam Research in Fremont, Calif.

• Cassidy Turley has been named a “Leader” on the International Association of Outsourcing Professional’s “2012 Global Outsourcing 100 service provid-ers list.” The list recognizes the top 75 outsourcing service providers across all industries that provide the full spectrum of services.

800 brickell

hyatt bosman

Casolo

bCCI’s location in Palo alto, Calif.

a look

ahead


In Our Next Issue: allsteel’s netWork: the Future Workplace

CBre’s Global Innovator’s award-Winning Global laborView application

Singapore’s marina Bay Financial Centre Project

are Water Considerations affecting real estate Site Selection and Portfolios?

Cresa’s multi-Generational Workplace

end-user Profile: Bob Bull, air new Zealand

Service Provider Profile: leigh Stringer, hok

Calendar oF SemInarS

The following seminars can be taken individually for

credit toward the Master of Corporate Real Estate (MCR)

designation or the Senior Leader of Corporate Real Estate

(SLCR) certificate:

honG konG: 31 may - 1 june

MCR Seminar

• Corporate Real Estate Finance

BoSton – PoSt eaStern

reGIonal SymPoSIum: 6-7 june

MCR Seminar

• Real Estate Outsourcing: Trends & Models for Service Delivery

tokyo: 7-8 june

MCR Seminar

• Enterprise Alignment

auCkland: 19-21 june

MCR Capstone

• Leadership & Strategy: CRE Management in Today’s Economy

St. Paul, mn: 19-20 june

MCR Seminar


21-22 june

MCR Seminar

• Real Estate Transactions: Impact on Corporate Financial Statements

munICh: 3-4 july

MCR Seminar


atlanta reGIonal: 23-24 july

• Enterprise Alignment (MCR)

• Advanced Lease Analysis (MCR)

• Financial Leadership & Decision Making (SLCR)

• CRE Finance Workshop (3:30 – 6:30 pm)

25-26 july

• Corporate Real Estate Finance (MCR)

• Project Finance & Capital Markets (SLCR)

25-27 july

• Leadership & Strategy: CRE Management in

Today’s Economy (MCR Capstone)

Index oF adVertISerS aeroport de montreal 25

Buckeye Power 39

Collier’s International 2

Corenet Global (Communities) 41

Corenet Global (london Summit) 21

Corenet Global (membership) 41

Corenet Global (orlando Summit) 27

Corenet Global (thank you Pages) 52-53

Corenet Global (the leader online) 45

Curinde 15

Fischer 60

GP desarrollos 11

Greater Ft. lauderdale 17

johnson Controls, Inc. 7

knoxville oak ridge 4

Pasco edC 59

raffles Quay/mBFC/CBdPl 3

Sodexo 9

GloBal SummItS Every CoreNet Global Summit offers

opportunities to network, learn and be

recognized for your achievements. Case

study presentations, interactive learning

sessions, industry tours of the host city,

smaller interest group activities, executive

development training and continuing

education – all in one place and in one week.

london, 17-19 SePtemBer 2012

The Ritz-Carlton, Millenia Singapore

http://www.corenetglobal.org/Events/

SingaporeSummit2012/

orlando, 7 - 9 oCtoBer 2012

the leader may june 2012

Documents