The Leader May June 2012

volume 1 1 , i ssue 3
corporate real estate & workplace
ma y / june
12
Work-Life Support:
Fostering Employee Productivity & Retention
(page 12)
Fidelitys chris Horblit

(page 48)
mastercards workplace transformation in ireland

(page 22)
FASTER FORWARD
Putting the pedal to the metal.

Some show up just to rev their engine. Were focused on pulling ahead as the first true alternative to real-estate-as-usual. Weve 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. Weve got the inside track on service to accelerate your success.
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Leadership
ediTorial sTaff Richard Kadzis ediTor Chelsie Butler ManaGinG ediTor Bailey Webb senior conTribUTinG ediTor David Heaton ediTorial associaTe Tim Venable senior ad adVisor Sonali Tare conTribUinG WriTer adVerTisinG and prodUcTion sTaff Bonnie Hofto creaTiVe direcTor Michael Mooney Tim Abrams Matt Dirks adVerTisinG ManaGers coreneT Global board of direcTors Your leadership makes the difference. Jim Scannell, Chair Senior Vice President, Administrative Services The Travelers Companies, Inc. Randy Smith, Chair-Elect Vice President, Real Estate and Facilities Oracle Steven Quick, Treasurer Vice President and General Manager EMEA Johnson Controls, Inc. Matthew J. Fanoe, Immediate Past Chair Vice President of Real Estate Coca-Cola Refreshments Erica Chapman, Esq. Vice President, Real Estate and Facilities inVentiv Health Micheal Creamer Partner and Head of EMEA Corporate Occupier and Investor Services Cushman and Wakefield Maureen Ehrenberg Global Director of Facilities Management, Global Corporate Services CBRE John Forrest CEO, Corporate Solutions Asia Pacific Jones Lang LaSalle Philip Grossberg, LEED AP Managing Director, Global Corporate Services CBRE Lydia Jacobs-Horton Director, Global Facilities and Real Estate Procter & Gamble Irene Masterton GM Retail Real Estate Shell International Petroleum Company Ltd. Denis McGowan Group Head CRES Business Alignment & Asset Management Standard Chartered Bank Sean Prasad Vice President, Real Estate and Facilities T-Mobile Christopher L. Staal, MCR Vice President and Global Head, Real Estate and Facility Management Thomson Reuters Lee R. Utke, MCR Senior Director, Global Corporate Real Estate Whirlpool Corp. coMponenT leaders coUncil represenTaTiVe TBA
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associaTe direcTors Jessica Beers, MCR Senior Director, Business Development UGL Services T. Patrick Donnelly Principal, BHDP Architecture Gina Rizzo Global Client Relations, Herman Miller Robin Ronne Managing Director, CEO Council Greater Fort Lauderdale Alliance leGal coUnsel To coreneT Global David Goch Webster, Chamberlain and Bean ediTorial adVisory coMMiTTee George Bouri, MCR, SLCR Consultant, New York Del Boyette Principal, Boyette Strategic Advisors Ian Cameron Managing Partner, Intresinc Barbara Donaldson, CFM, MCR Vice President, Global Real Estate and Facilities Synopsys Larry Ebert Head of Corporate Project Management Cushman & Wakefield Scott Foster, MCR Senior Vice President, Corporate Workplace Bank of America Roger G. Gaudette Director, Asset Management, Ford Land Thomas Glatte Corporate Real Estate Management, BASF Group David Kontra Manager, Real Estate Operations, General Electric Rick Kriva Vice President, Global Real Estate Honeywell Richard M. McBlaine Chief Executive, Strategic Consulting Jones Lang LaSalle Keith Perske Principal, eBusiness Strategies Robin Ronne Managing Director, CEO Council Greater Fort Lauderdale Alliance Jim Scannell Senior Vice President, Administrative Services The Travelers Companies Tony Shou Fat Wong, MCR Director, Workplace Resources, APJ Corporate Real Estate Cisco Systems
THE LEADER, CoreNet Globals 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 404589-3241 or nwilliams@corenetglobal.org. 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 cbutler@corenetglobal.org. POSTMASTER: Send address changes to: THE LEADER; 2500 Broadway St, Ste 200; Boulder, CO 80304 or leader@corenetglobal.org. ediTorial offices CoreNet Global 133 Peachtree Street, NE, Suite 3000 Atlanta, GA 30303 Phone: +1.404.589.3219 Fax: +1.404.589.3202 Web: www.corenetglobal.org adVerTisinG and prodUcTion offices CoreNet Global 2430 Broadway, Suite 200 Boulder, CO 80304 Toll Free: 866.362.4181 Phone: +1.303.565.4023 Fax: +1.303.443.6943 E-mail: leader@corenetglobal.org
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12
may j une
volume 1 1 , issue 3
corporate real estate & workplace
m ay / j u n e
12
Work-Life Support:
Fostering Employee Productivity & Retention
(page 12)
THE LEADER Online!

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

(page 48)
mastercards workplace transformation in ireland

(page 22)
executive vieWPoints: Work-Life Supports = Organizational Results executive Profiles: david driver, northeast utilities chris horblit, fidelity the future of WorKsPace: Lessons from the Cloud
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Industry Tracker
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mastercard technology: Workplace Transformation in Ireland
navigating the lease accounting standards maze
Young Leader
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location strategies: Development of the College Park, Ga., Atlanta Airport Area
Dashboard
4th Quarter 2011
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more than the sum of our molecules: The Successful Merger of Two Biopharma Giants
Capital Corner
Benchmarking your delivery model
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the risKs and reWards of outsourcing: Transferring Technology from Internal to External Service Providers
dePartments: leadership message from the ceo real estate in the news members on the move
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customer relationshiP management: Making The Connections
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a look ahead In our Next Issue Calendar of Seminars Index of Advertisers
58
KeeP calm and carry on: Preparation for the NATO Summit in Chicago
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Message froM the ceo by angela cain, ceo
envisioned future
CoreNet Globals 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 competencies 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 accountability 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 members, a five-year forecast can be tricky enough, and looking out a decade is even more daunting. Still, its an essential exercise for us to map organizational strategy, where we want to be tomorrow and where we want to be in 2022. Weve 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 successful corporate real estate practitio-
ners, just as CRE is indispensable to the success of the practitioners enterprise. We will serve as CREs champion to further the industrys regard globally and help companies establish educational, experiential and credentialing requirements for executives engaged in CRE. We also will reach out to create effective partnerships across the corporate infrastructure (HR, IT, finance, procurement 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 decisions are made. We will lead CREs evolution and become the pipeline for trained, networked and credentialed tal-
ent as we broaden the reach and influence 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 development, whether at a Global Summit, Discovery Forum, MCR/SLCR seminar or local Chapter event. Ultimately, we cant achieve any of this without you.
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Sodexo Helps Patients & Staff Rest Easy With Mission Critical Upgrades
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.
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rea l esta te in th e n ew s
Global job market improving

According 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 Pennsylvania

According 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 plastics 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 Projects

The American Institute of Architects (AIA) and its Committee on the Environment (COTE) have selected the
top 10 examples of sustainable architecture 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 civicfocused adaptive reuse of a 1986 office structure transformed into a living laboratory and educational tool for sustainable design. ASU Polytechnic Academic District, Mesa, Ariz., RSP Architects and Lake Flato Architects. The transformation 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 government complex that responds to the desert climate and provides for appropriate 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 features that are used as teaching tools for students. Music and Science Building, Hood River, Ore., Opsis Architecture. A public 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-education 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 clients 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, operations and approach to programming.
morgan stanley expands new york City space

According 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 building is now 85 percent occupied, including the 950,000 square feet of leases that would have expired in 2014.
Peugeot Plans to sell its Paris hQ

PSA Peugeot Citroen is selling its 48-year-old, 548,000-sq.-ft. (50,900-sq.m.) headquarters in Paris for $237 million (245.5 million euros) to Ivanhoe Cambridge. According to Bloomberg, the car manufacturer also recently completed a 1 billion-euro share sale where General Motors took a seven percent stake in the company.
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REAl ESTATE mAnAgEmEnT
C Ov E R
STORY
Executive Viewpoints: Work-Life Supports = Organizational Results

BY BY TRACY BROWER, PhD
enior executives representing 1.2 million employees believe that work environments matter 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 performance. Our real estate, our facilities and our work environments need to be accountable to both organizational outcomes and employees, and it is through work-life supports that they can be.
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
because of their visibility and influence. Together, their span of influence touches 1.2 million people.
Defining Work-life Supports

Traditionally, work-life supports have been defined as the benefits, policies and informal cultural practices that companies provide to support workers in navigating 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 environments are now a part of executives definitions of work-life supports is testament 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), flexibility in the work environment and alternative working options have become factors in work-life support. Companies are increasingly providing technology tools and programs for employees to
Accessing Senior Executives

Recently, I had the opportunity to explore senior executive opinions regarding the work-life supports provided by organizations. Specifically, my study asked senior executives about the worklife supports their organizations offer to employees, and it explored the variables that affect the provision of these work-life supports. The senior executive
1.2 million People
Fortune 100 and 500 Companies
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work anywhere. They are providing amenities such as relaxation rooms, lactation rooms, onsite daycare, dry cleaning and take-home dinners. They are providing for alternative working hours, compressed 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 variety of worker needs through multiple options that offer work-life support.
Responding to Challenges
Today, we are all faced with the challenge of successfully navigating and integrating 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, competition, complexity of work and rates of change. At the same time, we are seeking 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 critically 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 working 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 worklife 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 company cares about them. Another senior executive said, If you offer work-life supports, you increase engagement and retention, keeping costs down because
you have employees that are more productive. If you give employees flexibility youre 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 employees by ensuring their needs are met as well as the business needs. Youll 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.
four sets of lessons learned for those seeking 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, including multiple aspects of diversity. In other companies, programs are more focused on the particular needs of women. In either case, the companies focused on diversity and gender programs tend to have a broader array, as compared to other companies, of work-life supports. Nature of the Work. Senior executives 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, customerfacing time, significant work load or security regulations, it is more challenging to offer work flexibility.
What drives the Provision of Work-Life Support

Despite the panacea that work-life supports 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 worklife supports. Together they cluster into
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ExEcutivE viEwpoints: work-LifE supports = organizationaL rEsuLts
member viewpoints
By chELsiE ButLEr
some of corenet globals 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 customized 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 conscious about worker autonomy and the need to balance work and family.
what is your take on flexible work arrangements and alternative workplace 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 technology 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 opportunity for a better work-life-family balance, which is a key and critical objective. scannell: to a certain point. for some
employees it doesnt matter, as they legally cant 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 firms main office to Little rock from atlanta two years ago, it wasnt an issue and we have not had turnover. as long as the work gets done and the clients 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 companies 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 competitive advantage for organizations. perske: it is how we do business. our company would not exist without workanywhere 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 formal mobility program or not.
and their families and they know it. i am as flexible as i need to be, and between christmas and new years, 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 companies, its payroll and payroll-related items. so it would naturally flow that if employees are not content if they dont feel respected, appreciated and fairly compensated the cost of employee turnover or churn will negatively affect the companys profitability, lower the overall morale and detract from the overall mission statement. the companys 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 clich, a company 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. its like trying to define carpentry without talking about hammers. separating work and technology is no longer part of the discussion. ronne: to ensure that connectivity is available 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 companys ultimate success.
is it crucial for the success of your business to make your employees content?
perske: content is the wrong word. that is the employees 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
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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 executives 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 interaction. They believe that arrangements for working in alternative locations or working flexible hours should be developed 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 supports is work team leaders. There is a trend toward companies having less written policies to guide the implementation of work-life supports. As a result, an employees access to work-life supports is significantly influenced by his or her work team leader. A work team leaders attitude makes a difference in whether s/ he allows flexibility for employees. Some executives report that work team leaders who have to see the whites of peoples eyes in order to manage are less likely to provide work flexibility. One executive said, I can have the greatest policies in the world, but if I havent changed the mindset of the manager who is making the decision, there is potential that the employee isnt going to be approved for this flexible working arrangement. In
addition, while most companies have general training for work team leaders, very few companies have training or development specifically related to work-life supports. Those that do, see better adoption. Management to Performance Outcomes. Companies that have a greater emphasis on performance outcomes tend to offer more work-life supports. 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 moving away from a culture that manages eyeballs. You dont want to work more hours, you want to work better, smarter. Another executive said, I dont care if people are working upside down in the bathtub at home as long as theyre exceeding expectations. Most of the executives report that they are driving for an organization that sets expectations for deliverables and manages to those, evaluating performance based on
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results. 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 organizations have progressed further in providing multiple technologies to their employees, they are more likely to have work-life supports in place. One executive said, Technology is accelerating the breakdown of barriers of a traditional work schedule and a traditional office environment. 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 workers on staff are also more likely to have more work-life support options for all employees. They [younger workers] dont view their workplace as a place anymore, they view it as the technology they have at their disposal. Theyll 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 Culture Of course the sum total of these factors is organizational culture. An organizations culture the norms and unwritten rules of an organization affects the factors and in turn are affected by them.
factors affecting work-Life supports
panies that arent familiar with working this way will become obsolete. Another executive said, I think its really an evolution, 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 dont give it to them.
about the author
Tracy Brower, PhD & MM, is Director of Performance Environments for Herman Miller.
make the case: work Environments matter

Ultimately, work-life supports matter. The executives in this study agree that work-life supports have a direct effect on organizational outcomes such as profitability, growth, brand, stock price shareholder 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 supports are one mechanism through which it is.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. Snap Session 8C: How the Working Environment Can Impact Social Capital in the Workplace http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12433717 Is Place Relevant? http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12100458
anticipating the future

Senior 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. Its reality now. Its the way work is done. Those individuals and com-
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R eAl estAte MAnA geMent
The Future of Workspace: Lessons from the Cloud

BY BRADY MICK
ur minds cannot imagine 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 tomorrows business will impacted by it. Cloud computing represents the latest technological development in a long-standing and accelerating revolution 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 consequences. With the adoption of cloud computing into todays work environment 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 location. With the cloud, work can be done from any location with the requisite device and permissions.
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 something 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.
laboration with advantages in agility, reliability and performance. By storing software and data virtually on the networked cloud, tools and resources are scalable and can be shared, which creates an open domain for all behaviors of connectivity.
the Imprint of the Cloud

The 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 accomplished 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
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 vehicle that fosters corporate digital col-
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precipitated a cultural shift in the understanding of when, how and with whom work is created.
Because of the portability of data in the cloud, choosing work locations requires decisions to be made intentionThe Imprint of the ally about when and where face-to-face Cloud on Organizations interaction is beneficial to people. Technological advances are being made There are still many reasons for which faster than imaginable. Flash-based in-person meetings are necessary. The thumb drives, recently the best method nuances of human interaction cannot of sharing data, have been obscured be fully replicated digitally yet, so the into antiquity by cloud computing. workplace remains an effective way The next iteration of development to draw teams together for collaborawill likely relegate the cloud-enabled tion, innovation and creativity that devices to similar status, perhaps come from groups building affording users access to off of one anothers ideas. their data on animate and The greatest gains in team inanimate objects, alike. building, group cohesion and Companies are subject to mentoring all are made dura constant state of flux in ing in-person interaction. developing procedures and As the proportion of the protocol around changing mobile work force continues technologies. Users and to rise, less office space is desorganizations are forced ignated for individual employinto a posture of constant ees, in favor of open-plan adaptation to technology, When it comes to commercial property, ExUrban Ohio workspaces to foster collaborabegging the question which offers the best of both worldscity proximity with tion. No longer is workspace is and which should be rural savings. And now, you can search quickly and something owned by the the driver of adaptation: the efficiently at BuckeyePowerSites.com. We maintain the employee as a place to store people and their behaviors only online search tool, powered by Xceligent, giving belongings, similar to a bedor automated tools? While you real-time, third party-verified details on available room in ones home, but security, legality and intelproperty in ExUrban Ohio. rather something shared and lectual property are weighty used for collaboration and considerations in any orgaFor more information, call 1-800-282-6962, email innovation, as parallel to a livnization, behavior is the Dennis Mingyar at dmingyar@buckeyepower.com or ing room. Just as computing primary factor on which to visit www.BuckeyePowerSites.com. and software have become serbase decisions around techvices provided to employees nological-adaptation. through the cloud rather than products owned, so too workThe Imprint of space has become a service. a Cloud on People With this in mind, it is Cloud computing is irreimportant to design workvocably impacting human space to elicit the profitable, behavior. Like no other time innovative gains made from in history, people have the face-to-face work interacchoice to instantaneously tion. It must compel users to connect to and communibe present and open to honor, evoke and toward synthesizing the vast amounts cate with copious volumes of informaof information available. Memory del- support creative levels of work among tion and with others around the globe team members. Individual cubes, whether egation requires the brain to develop through cloud-enabled devices like the assigned or agile for mobile workers critical thinking skills to evaluate iPhone. Interpersonal relationships are who move through the office, simply information presented and not merely forever changed as a result. Technology cannot facilitate the interactive process has bridged the distance between people sleuth out data that validates a positodays work culture requires for competition already held. Ultimately, the and the information each person valtive advantage. The venue for independent brain has been freed to do what a ues and as a result enables high levels work can be left to individuals discretion machine cannot: CREATE. The result of collaboration in the workplace. But is tremendous potential for novel ideas to select according to where they are most has technology improved the quality productive in accomplishing their work. and ground-breaking innovation. 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 vessel to transmit and display them. Keith Perske, of eBusiness Strategies, suggests that another significantly 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
The Imprint of the Cloud on Workspace
Search ExUrban Ohio
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The FuTure oF Workspace: Lessons From The cLoud
Important Questions For Business Leaders To address

1. What technologies does your company anticipate will have the next big impact? how are those technologies being investigated? 2. What work behaviors does your company anticipate will have the greatest impact on business results? how will they impact business? 3. Where is your organization on the continuum of viewing space as a product 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?
service for success

Decisions regarding real estate and workspace shouldnt be predicated on ownership but instead on service, flowing from the mindset of fostering collaboration and innovation as a means of tapping into the changed behaviors to enhance the companys 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 workspace 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
Brady Mick is architect/ workplace strategist and client leader for BHDP Architecture.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. The Power of Cloud: Driving Business Model Innovation http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=13111087 Emerging Technologies Impact on Urbanization and the Workplace http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=10943901
2 0 1 2 T h e Leader
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CoreNet Global Summit 17-19 September 2012
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Todays 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!
REAL ESTATE MANAGEMENT
MasterCard Technology: Workplace Transformation in Ireland

BY MEG FORBES AND CHRISTIAN VON HALASZ
n early 2011, senior management from MasterCards 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. MasterCards 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 parallel, coming together for regular calls to exchange information impacting the team members. MasterCard is a technology company that happens to be in the payment space, said Rob Reeg, President, MasterCard Technologies. Our focus as a company is on offering innovative, game-changing technologies that offer
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 projects success. We are pleased to make this investment in Ireland, which builds on our existing presence, said Reeg. The calibre of highly qualified, talented people and the governments commitment to science, technology and innovation gave us confidence that this was the ideal setting for our new Global Technologies office. Were confident that this larger office in Dublin will help further our technology agenda and innovation vision. 2. The site-selection process was
intrinsically linked with government agency tax incentive initiatives and with the governments risk management of Irelands real estate market. MasterCards decision to locate a global office in Dublin, with the creation of approximately 130 new jobs, is most welcome news, said Barry OLeary, CEO of the Irish Development Agency (IDA) in Ireland. This announcement is in keeping with IDAs focus on targeting technological investments in the financial services sector, which is a key growth area. 3. The Dublin office, led by Garry Lyons, MasterCards Chief Innovation Officer, sought a non-cookie-cutter solution with a wow factor to support new product development while retaining existing staff and attracting new technology 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?
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the new location features ample masterCard branding.
Jones Lang LaSalle tenant representation was engaged to drive the siteselection process, initially introducing 28 options that were narrowed to four preferred offices. Jones Lang LaSalle project and development services, together with the design and build team lead by StructureTone, supported the decisionmaking process by preparing early feasibility studies and a site-scoring matrix. A sublease from Vodafone at the Mountainview building in Dublins Central Park provided the best answer to MasterCards 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, sufficient parking for staff and visitors, good highway and public transportation connections to citys Central Business District, suburban residential communities, green spaces (mountain and sea views) and an affordable commercial deal benefiting from Mountainviews shared amenities. When MasterCard advised they
were expanding their operations in Dublin, it was an exciting prospect for all parties involved and for the Irish economy, said Fionnuala OBuachalla, Director of Tenant Representation at Jones Lang LaSalle. The timing of the requirement in a tenant-friendly market with a vacancy rate of 20 percent was excellent and allowed us to secure very favorable leasing terms
for MasterCard in a fully fitted building 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 aggressive relocation target dates to support business-development commitments
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
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MasterCard teChnology: WorkplaCe transforMation in ireland
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.
an overview of MasterCards new global technologies location in dublin, 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 government agency-related business negotiations and with the existing early lease termination deadline. The legal process for (detailed) business-as-usual reviews
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 completion deadline of April 2012. As program dependencies changed, flexibility, adaptability and good humor were critical to dealing with changes outside the teams control. The project has had its challenges, chief amongst them being the coordination of client-related third parties, sometimes on different continents, and ensuring that the clients 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?
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and undertook the construction works Our Strategy. MasterCard selected a breakthroughs are incorporated into local architect with technical project open-plan elevations. The interior design according to sustainability principles. design experience. Early in the design is complemented with a fine art program Next to the environmental and economic aspects of sustainability, the development, the business owner was of two- and three-dimensional works by social aspect of sustainability was the interviewed for his vision and feedback Irish artists, connecting creativity and focal point in the design development on various design elements. Design devel- Irish identity with the global theme. phase. Economic opment proceeded with aspects became evident a mix of classic design, when Mountainview playful elements and was chosen: Occupying colors, collaborative space in a multi-tenspaces and MasterCard anted building offering branding. In support a variety of high-qualof the overall project ity, on-site facilities goals, several project led to less dedicated team members particispace needed/leased for pated in a workshop at MasterCard. Steelcases WorkLife One of the highlights Center in Rosenheim, of the environmental Germany, to focus on aspects was reusing workplace strategy and existing services and furniture solutions. facilities within the We developed the space such as patch use of geographical and rooms and potable water brand identity to differstations, as well as the entiate neighborhoods reuse of installations within the fit-out, such as raised floors, said Conor MacCabe, suspended ceilings, foldDirector at Henry ing walls and existing J. Lyons Architects. furniture. Therefore, We found that this Aroports de Montral firmly believes that when it comes purchasing new equipwas particularly necto the environment, its important to walk the talk. Thats why weve already implemented programs to increase energy ment and construction essary when dealing efficiency and reduce greenhouse gas emissions both within materials was sigwith a very large floor and beyond our facilities. For example, weve improved our nificantly reduced complate such as that in HVAC efficiency by 70%, and were also concentrating on pared to starting with Mountainview, and we better lighting management. In terms of ground transportation, a building in core and have developed in conwere actively working towards the implementation of an shell condition. Another junction with the client airport shuttle, and our vehicle fleet is more eco-friendly. sustainable achievement a strategy for separating And in recent developments, our ongoing involvement in promoting green spaces near our site will contribute to the was the use of a new the plan into neighreproduction of monarch butterflies that migrate to Mexico. way of installing carpet borhoods, which are Thats a lot more than just talk. tiles without the need informed by the regions To find out more, visit www.admtl.com. for glue. in which MasterCard With regard to the operates. Graphics and social aspects of susbranding material drawn tainability, the overall from MasterCards WH E RE M O N T R AL M E E T S T H E WO RL D objective was to crelibrary of advertising www.admtl.com ate a comfortable and and promotional images safe work space that are used to get this would be perceived across and are applied to by all employees as a home away from columns and walls throughout. Challenge 3 Achievable SustainADM12014_Enviro_4_325x6_75_Ad_v2.indd 1 Sustainability was a hot topic 3/23/12 1:48:04 PM home. The design team achieved this In line with the theme of innovation, ability. feel-good factor through the diversity meeting rooms are named after innovafrom the start. However, it was not the in design and use of graphics reflecting tors, enhanced with related supergraphaim to achieve a sustainability certithe multicultural background of the ics and quotes. Additional inspirational fication of the interior fit-out project; staff, as well as through the integration supergraphics representing innovative rather, the team developed the design
Where going further meets going greener
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Meeting rooms are named after innovators, enhanced with related supergraphics and quotes.
of local art on permanent exhibition in the open-plan space and meeting rooms. The integrated communication and collaboration 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 partially built environment.
owner and we hope the finished project 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 environment to a more funky, cool place to work we wanted the wow factor, said Ann Marie Clyne, MasterCards 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 company to work for will be its work environment. 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

Meg Forbes is a Director of Global Real Estate for MasterCard in Europe and beyond. She has degrees in mechanical engineering and anthropology 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 particular interest in strategic sustainability and corporate social responsibility. For more information on this topic, please visit CoreNet Globals Knowledge Center Online. MasterCard Technology: Expanding the Euro-Foothold in Ireland http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12751565 Quality Content and World-Class Talent: The BBCs New Hub in Northern England http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=13179559
Mountain View with sea View

The collaborative nature of the project team and MasterCards direct suppliers have been critical to the development of this project, as has the engagement of many others from MasterCards Chief Innovation Officer to the building
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CoreNet Global Summit 7-9 October 2012
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Todays 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!
REAl EstAtE mAnAgEmE nt
Location Strategies: Development of the College Park, Ga., Atlanta Airport Area
BY BARBRA COFFEE
ach year we find ourselves thinking about whats in and whats out whats fashionable and what isnt. For the development community, its not about choosing between bell bottoms or straight-leg jeans, rather its 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 audience 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 paramount in this global economy. Communities are responding by creating development opportunities surrounding major international airports, and Atlanta is no different. And in a lot
of respects, we have everything it takes to compete. Atlanta is home to Hartsfield-Jackson Atlanta International Airport, the worlds 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, restaurants, 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 doesnt 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 Georgias fourth-largest historic district, but it has morphed over time. With the growth of the airport and runway expansions, whole residential
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 transitioning to commercial uses such as Class A office and hospitality. The city successfully demonstrated this in the development of the Gateway Center that surrounds the city-owned and operated Georgia International Convention Center (GICC), the states secondlargest 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 building opened in 2009-2010 as a public/ private partnership with Atlanta-based developer Grove Street Partners. The hotels are experiencing close to 70 percent 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.
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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 industry and community in a once-perceived industrial area, College Park made an investment. Participating in the financing 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 development of a station that would allow people the ability to access the Gateway Center/GICC and adjacent hotels and office. These facilities are now transitconnected to the worlds 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 development; 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 citys 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 property along this corridor is ideally suited for mixed-use office and retail with immediate access to the convention center on the south side of the street. The city anticipates finding a master developer to assist with the build out of this prime real estate. From Shanghai to Paris to Denver, airport cities around the globe are promoting the competitive advantage of growing businesses near their international airport. And residential and entertainment complexes are following, as the advantage of accessing jobs, customers and opportunities comes more critically 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
Springhill Suites atlanta airport.
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.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. Sea, Air and Land: Bill Dobbs Leads Georgias Aerospace, Defense and Advanced Manufacturing Economic Development Team http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12126085 Breakout Session 23: Economic Development Roundtable http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12489241
about the author

Barbra Coffee is the Economic Development Director for the City of College Park. She directs the business attraction, retention and redevelopment programs for this city in the heart of metro-Atlanta.
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REAl EstAtE MANAGEMENt
More than the Sum of Our Molecules: The Successful Merger of Two Biopharma Giants
BY ROGER HUMPHREY AND BOB BOVEE
erck and ScheringPlough sold to the same customers, competed for top researchers and raced to bring drugs to market. As fierce competitors, we also shared industry-wide challenges from patent-loss bulge, rising 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 created a milestone opportunity for the corporate real estate (CRE) function to play a leadership role in realizing the $3.5-billion overall merger synergy targets. Our goal: achieve $200 million in occupancy cost savings within three years, while creating a highly effective workplace 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
transactional results or property sale proceeds, but rather from operational run-rate savings achieved on an actualized basis during the three-year execution period.
the Road to the Most Effective Workplace

Prior to the merger, Merck and ScheringPlough 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 opportunity 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 established daily cooperation with the integration management office (IMO) and began to work with the M&A execution framework developed by McKinsey and
Company to create a path toward valuecreation goals. The guiding principles we established for the real estate function set big-picture parameters that would serve as filters 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 alignment was reinforced, and we committed that all our recommendations would be consistent with established Merck real estate and business strategies.
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From Principle to Execution

Living 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 consolidated two offices across the street from one another and relocated an R&D function to New Jersey, achieving cost savings 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 largest sites offer the most immediate and impactful opportunities for value creation.
What Red Tape?

Envision a typical consolidation of multiple multi-function facilities with all its affiliated required approvals and meetings, 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 framework that would integrate occupancy information sourced from external market 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 function began to play out, and the crossfunctional IMO model began to prove its relevance. The IMO provided a multifunctional group of senior functional
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).
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More than the SuM of our MoleculeS: the SucceSSful Merger of two BiopharMa giantS
the working environment at Mercks Shared Business Services centre (SBS centre) facility in dublin, ireland, fosters and encourages team work and interaction.
leaders empowered to make decisions with the backing of senior management, and we were able to make recommendations structured to support rapid yet disciplined 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 consolidation 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
each of our business units, human health (sales), R&D and manufacturing.
working without a data net

What made such rapid movement on consolidations and other value-creation strategies 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 its important to realize that in M&A situations, youll never have all the information you would like. To fill in some of those gaps, the external alliance relationship proved its value, as local market teams were able to provide real-time market intelligence that was not available through internal channels, 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-encompassing foundation.
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.
youll never please everyone: leading with confidence

Yet 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 execution details that directly impact specific businesses that benefit the company as a whole but displease a number of individuals sometimes high-ranking execu-
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More than the SuM of our MoleculeS: the SucceSSful Merger of two BiopharMa giantS
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 backing 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 didnt advance our goal in specific situations, we simply went back to the drawing board and looked elsewhere for more opportunities to merge the real estate portfolios in the most effective manner.
a tale of two cities: tokyo and london

All these factors combined helped identity more than $200 million in costsaving opportunities and the creation of workplaces that increased effectiveness. Through close IMO team collaboration, particularly with the HR and IT representatives, we were able to put solutions in place that supported not just our costsavings 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 standard, disciplined analytical process. In the Tokyo market, we identified a total of four original locations in the metropolitan 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, occupied-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 collaboration and provide value capture savings of greater than $8 million. In London, we conducted the same structured analysis and also found significant 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 complex human resources and business-unit factors at play. The real estate achievements could not have been possible without internal alignment with the IMO cross-functional team, coupled with external market insights.
confidence is Key
By establishing clear guiding principles early, then empowering our global real estate partners to execute in-market strategies 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 function playing a change-agent role, making a material financial impact to the Merck bottom line and improving overall workplace productivity and effectiveness.
informed partners, informed real estate Strategies

External and internal teams must share an understanding of an organizations corporate culture and business objectives 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 relationship 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 ScheringPlough sites. Additionally, merger-specific best practices were brought to the table during 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 tenant rights. Access to a global team with local resources meant we were able to advance-manage those situations.
about the authors
Roger Humphrey is the Executive Director, Global Real Estate and IFM Governance, for Merck.
Bob Bovee is Senior Vice President, Jones Lang LaSalle, and worked with Merck throughout the merger process.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. Mergers & Acquisitions: Real Estates Role in Successful Planning and Execution http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=11227390 M&A and Divestiture Bulletin http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=11279033
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The Risks and Rewards of Outsourcing: Transferring Technology from Internal to External Service Providers
BY PHIL WALES
ver the past few decades, the role and operational model of corporate real estate (CRE) has undergone 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 better 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, assumptions. Outsourcing is not simply moving service from internal resources to external partners. Rather, an entire shift in organizational philosophy must be addressed to be successful in the technology arena. Unfortunately, far too many organizations have found themselves trying to
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 relationship. Technology seldom gets the right level of emphasis during the selection of a partner, thus ironically giving it entirely too much emphasis during the relationships dissolution in a variation of a Catch-22. In todays technological world, lets examine what outsourcing is all about and how organizations can more consistently emerge as winners.
Background
CRE organizations are being forced to adapt their operating model to address the changing landscape of todays business reality, which includes the proper use of outsourcing and partnering. By partnering with outside service providers
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 organizations 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 organizations 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.
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Transferring Technology to Service Partners: A Cautionary Tale

Implementation 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 efficiency 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 opportunity to make better decisions in a much more proactive fashion. However, with the growth in outsourcing of CRE services, the direction of solution automation 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 provider is typically selected because of
its industry expertise. Yet, forcing the provider to utilize an internal solution either requires an organization to replicate the providers work practices into the organizations internal system or to eliminate active management of the providers service area from the internal solution. If the service provider is required to utilize the internal system, the desired practices and efficiencies that lead to the selection may be negatively 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 information 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 delivery, buyers often think they are getting it for free. In reality, most major service providers have cobbled together dispersant, low-cost systems and wrapped an
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 seldom commercially available, or if they are, the service provider has so customized the solution that it is for all practical purposes proprietary. Intentional or not, this makes terminating a providers 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 providers 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 frustratingly makes transfer of that data (including portfolio history and performance) to another provider almost impossible.
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The Risks and RewaRds of ouTsouRcing: TRansfeRRing Technology fRom inTeRnal To exTeRnal seRvice PRovideRs
outsourcing can literally be a trigger for transforming the way work is done delivering more effective processes and higher customer satisfaction.
Before engaging in discussions with potential service providers, the importance 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 providers 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 coming

Until 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 taxonomy that will, over time, eliminate some concerns expressed in this discussion. 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 organizations 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 servicelevel agreements. There must be effort exerted toward defining where hand-offs take place. Determine how much of the service must be initiated to the organization 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 fullyoperable solution if the partner is no longer in the picture.
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 organizations portfolio 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 properly executed, partnering will provide significant benefits for the long term.
about the author
Phil Wales is CEO of Houston-based eBusiness Strategies.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. From Concept to Execution: How to Make IWMS a Reality http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12563568 Building the Foundation: A Successful Client/Provider Relationship http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=12125728
Taking it all in
Outsourcing is an important tool in driving more effective and efficient operations. However, never get lazy. Just as an organization would carefully vet provider capabilities and their market penetration, also understand how the organization
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CONNECT.
LEA R N.
GROW.
BELONG.
REaL ESTaTE managEmEnT
Customer Relationship Management: Making The Connections

BY ERIC H. THORPE, BCCR, SLCR
his article concludes a series of three that describes the key role performed 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 discussed 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 functional, product, geographic, customer
or network structures are adopted. As a consequence, both communication and effectiveness suffer while complexity 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 connections such as those provided by the CRM function.
plexity and its close cohort ambiguity conditions that impede communication, alignment and the achievement of organizational goals. Managing these conditions is one of the more time-consuming organizational challenges and must be achieved for a firm to deliver results successfully. Management has two formal design elements to use in conquering complexity and ambiguity: 1) processes to effectively link work end-to-end across functional boundaries and 2) lateral conStrategy and then structure Designing a modern organization involves nections such as CRM, which provide a structural bridge to connect functional shaping the structure, people, space, syssilos. Both elements are present in welltems, processes and rewards to support achievement of the desired business strat- functioning organizations. Complementing those formal eleegy. Once an organizations design is set, it ments are informal structures of netthen shapes how well that firm is able to works that arise in organizations as a achieve its strategy and how effectively it method of further improving communiinnovates and evolves in pursuit of future opportunities. Getting organization design cation and alignment. These networks function among individuals across the right is critically important to a firms firm through influence and collaboration ongoing success. rather than formal authority and control. Structure establishes formal authorWhen used to their full potential, infority and control within the organization, mal structures fill organizational voids which in turn determine how power is and enable a higher level of performance distributed. Two unavoidable byproducts than would be otherwise possible. created by any sizable structure are com-
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Therefore, a firms ability to deliver results its total impact is the sum of the effectiveness of its formal and informal 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.
able within CRE to drive tighter integration of the CRM function and minimize performance gaps. These connections parallel those used within the broader organization and provide the corre-
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
FIgure 1: the OrgAnIzAtIOnAl IMPACt equAtIOn
Managing Internal Ambiguity

As practiced today within the CRE profession, CRM roles are typically given limited organizational authority in their work of connecting with business unit customers. Therefore, to function successfully, 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 accountability. 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, feedback and customer strategies throughout CRE. This creates learning and performance gaps that reduce CREs effectiveness, which is a situation that is both unfortunate and clearly avoidable. Figure 2 illustrates the spectrum of five lateral connection approaches avail-
FIgure 2: SPeCtruM OF COnneCtIOn APPrOACheS
lateral Connection Approach

1. direct Management: Integrated control of CrM and a major function such as projects/programs or transactions
Primary Strength
Provides embedded opportunities for high-impact customer interactions Supports teamwork and collaboration in
Primary Weakness
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
organizations where both qualities are well established
Organizational complexity
3. Standing Committee: typically a forum for periodic business updates or project/program reviews 4. Cross-Functional team: typically used to manage major projects or programs that impact customers 5. liaison Function: ranges from serving as a dual advocate (customer and Cre), the voice of the customer or solely a planning function
Brings CrMs into direct contact with the broader Cre team on a regular basis
Maintains power conflicts among functions
Provides interaction among the functional groups and individual CrMs
does not provide regular, ongoing integration and alignment nor does it typically involve the entire CrM team typically lacks integration processes with the Cre functional groups
Organizational simplicity
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Customer relationship management: making the ConneCtions
which must be managed proactively by the CRE leadership team. Although ambiguity is minimized where organizational structure is strongest, 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 organizations culture and practices after weighing the strengths and weaknesses of each. Ideally, this selection is one of the fundamental decisions made during the process of developing and launching a CRM function, thereby ensuring that effective communication and strong alignment are promoted within the broader CRE organization. Managing internal ambiguity by connecting 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 Connections

External ambiguity arises from the challenge confronting each CRM in identifying the most appropriate business unit customers, establishing relationships with those customers and then maintaining 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 firms growth trajectory 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 position their organizations for success? The direct path is to broaden the CRM teams 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 awareness of issues, challenges and opportunities that wouldnt 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, information technology, finance, procurement, legal etc. Success here will create opportunities for the CRE organization to partner in developing solutions to corporate challenges 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 individual 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 training 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 essential 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 integrating their CRM team into the CRE organization while broadening the teams 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

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.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. Customer Relationship Management: Using Dialogs that Matter http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=11700473 Customer Relationship Management Its More than Just the Relationship http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=9663900
Figure 3: Crm sphere oF inFluenCe
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the bbcs ne w london Hub
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The Globalization t of Managemen Structures

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REA l ESTATE MANAGEMENT
Keep Calm and Carry On: Preparation for the NATO Summit in Chicago
BY R.J. BRENNAN, MARGIE KURKOWSKI AND TONY SMANIOTTO
hen 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 perspective? What will be the short- and longterm 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 planning and hosting an Executive Briefing. President Obamas 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
panel of top law enforcement agency and intelligence representatives with 25 years of G8/NATO event experience was gathered to brief the CRE community in preparation for this monumental event. Held at the Federal Reserve Bank of Chicago conference center, former Chicago Police Department (CPD) Superintendent Terry Hillards 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-
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 suggesting your business needs to be concerned, 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 including before, during and after the event. The Secret Service utilizes a unified command model to integrate many different agencies 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
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downtown Chicago welcomed the natO Summit in may
Participating Organizations
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 Mayors Office
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 dignitaries 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 science, 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
Participating Speakers
Speakers: Current and Past Special-Agents-inCharge 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
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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 cant travel with a minimal amount of inconvenience, the NSSE team hasnt been fully successful, said Benedetto. One example of coordination is the securing of the McCormick Place convention center and the adjacent Soldier Field football stadium along Lake Michigan. During a May weekend, people 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, without charge and minimal inconvenience to the boat owners. How is car traffic adjacent to McCormick Place on Lake Shore Drive and Monday rush-hour commuter 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. Thats 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 precaution is the presence of high-profile overseas 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 resident agencies all connected to each other, all connected to intelligence agencies and all connected to law enforcement agencies. 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 prepared 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 businesss Emergency Preparedness Plan? Established a plan to secure property and maintain the safety of employees? Established the ability to continue business 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
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.
about the authors

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. 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 responsible for investment sales activity in the Greater Midwest market.
For more information on this topic, please visit CoreNet Globals Knowledge Center Online. Building Security - Effective and Visible Measures are Key To Protecting Commercial Properties Against Terrorist Attacks http://www2.corenetglobal.org/dotCMS/ kcoAsset?assetInode=3322343
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Connect. Learn. Grow. Belong.
executive profile
David Driver: Happy as a Clam in His New England State of Mind

BY cHelSie Butler
ortheast Utilities (NU) operates New Englands largest utility 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 regions 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-million deal that formed a utility that now serves 2.5 million customers across the multi-state region. Driver explains that NUs focus on economic 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-
nizations, NU has helped stretch the regions 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 capitalize on the New England brand in a high-level way, and then the individual states market themselves under that umbrella brand, added Driver. Its a group of state-level economic developers working together for the greater good of the region.
new englands economic drivers

New England, which includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, is well known as a prime vacation 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
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 were a very highly educated and skilled population that has cut teeth on major industries like aerospace and defense. The region is also home to major companies, including ESPN, which plans to add 450 people to its headquarters in Bristol, Conn. NBC Sports is also moving 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
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a new 300-person plant in Rochester, N.H., which is close to Boston. Smith & Wesson is planning a $60million expansion with 250 jobs in Springfield, Mass., and Green Mountain Coffee is expanding its Essex, Vt., operations by 550,000 square feet (and adding 450 new jobs). Thats 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 headaches 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 machining, 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.
david driver, northeast utilities System
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. Weve been scrambling to get our economy rolling again, and weve seen a lot of the recent success with company expansions. There also has been a lot of initiative 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 dont 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 industrial market, he said. Were 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 Global

NU has been involved with CoreNet Global since 2002, when the organization hosted the New England Summit. Ive 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. Its starting to come on again, and I am glad to be a part of that.
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executive profile
Chris Horblit: Fidelitys Cutting-Edge Strategist

BY cHelSie Butler
s 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 responsible for providing the full range of corporate 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 administration, are divided geographically between Jones Lang LaSalle and CBRE. Horblit, who has been with the $1.6-trillion (managed assets) global financial
services company (managed assets) since 1997 and with FREC since 2005, holds three degrees and is the current President of CoreNet Globals 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 thats exactly how he wants it. We are operating in an environment thats ever more challenging in terms of competitiveness, so being a strategic thinker and realizing the importance of speed to market are imperative for putting 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 initiatives

FRECs strategy is to provide the best service and experience for its customers, and it drives everything the team does. Under Horblits purview are all of the global real estate management functions.
Currently the team is working on consolidation and growth initiatives. Were 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 everywhere from North Carolina to India. Part of that goal involves strategies 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
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Chris horblit, Fidelity real estate Company
Fidelitys GoWork Center at the 245 Summer St., Boston location.
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.
formance and landscaping with native plants, for example, said Horblit. Obtaining LEED certification reinforces and validates this commitment.
looking Forward
Horblit is committed to keeping his organization at the cutting edge. His plans for 2012 include a greater focus on innovation in products and services, such as workspaces that support increasingly collaborative and mobile workstyles and new real estate technology capabilities. He also challenges his staff to focus on continuous process improvement as a way of delivering superior service to clients. His organization is in the second year of a One FREC initiative that focuses on creating a stronger collaborative culture and streamlining work processes. Challenging ourselves to constantly improve our work will benefit our clients tremendously, he said. But it also creates 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.
Sustainability Strategy
Horblits organization also coordinates the firms 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 firms green building program over the years. Fidelitys 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 companys 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-
Were really trying to maximize the portfolio in terms of space utilization and optimization and consolidate where we need to.
link to Corenet Global

Horblit 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
leadership and is the new President of the New England Chapter. He initially became involved because of the learning 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.
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industry tracker by richard kadzis
navigating the Lease accounting standards Maze:

How corenet GLobaLs sPP coMMunity is infLuencinG a LonG-runninG work in ProGress
Call it the long and winding road if youd care to cop a lyric from the Paul McCartney Beatles classic, but to the experts inside CoreNet Globals Strategy and Portfolio Planning (SPP) Community, the specter of new global lease accounting standards has been more like trying to find the right pathway 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 awareness
CoreNet Global published a whitepaper 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 members set into motion an intensive, continuous 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 letters 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 corporate real estate members to coordinate with their financial accounting policy teams to communicate the same with both FASB and IASB. Certainly, the worst economic downturn in modern memory was challenging enough, but the thought of adding at least $1-trillion in lease liabilities and new regulatory burdens to corporate bottom 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-onassets numbers will suffer temporarily, according to the survey analysis.
richard Podos
Growing urgency
Theres an even higher level of concern 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 considerable difficulty in agreeing on the details, and with the original implementation date of 2013 pushed back several times, its become a hurry up and wait scenario for CFOs and their CRE teams. Assuming the Boards get their act together, the earliest effective date wed be talking about is 2016, SPP member Russ Howell, Managing Director from Seattle for Jones Lang LaSalle, predicted. Decisions need to be made on important 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 sometime around the end of Q1 or early Q2, but it now looks like it wont happen until Q3, further delaying the issuance of the new standard and having any prospect for a reasonable effective date. Howell describes the new standards as a major migraine akin to Sarbanes-
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industry tracker
about the sPP
the devil is in the details

industry tracker asked lease accounting standards expert russ howell of jones lang lasalle some key questions about FasB 13 to get as complete 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 obligation-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 version of an effective interest, or financing, method. in the first executive draft, the proposed method resulted in significant frontloading of expense, with negative P&l consequences in the early lease years. this issue is currently a stumbling 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 straightline method for reporting expense is adopted) Possible technical default of debt covenants (e.g. leverage and coverage ratios) Substantial administrative burden to comply with the new standard.
russ howell
strategy and Portfolio Planning (sPP) is a multidisciplinary endeavor that is growing in importance to firms worldwide. 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
it: What should cre people be most concerned about? howell: Implementation costs and resources and administrative 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 managements sensitivity to P&l impacts) shorter lease terms, more ownership
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 industrys 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 closure
Resolution of the details is still in the offing, and the Boards have begun yet another round of outreach seeking additional comments. At this point, FASB and IASB cant 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 theres no Minotaur waiting at the end of the maze. With SPPs dogged oversight, the chances that will happen are lower, as Howell concluded, 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.
editors note
The communications strategy behind the sustained effort to advice and guide FASB and IASB earned the SPP a Chapter and Components Best Practice Award.
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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
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thank you
2012 Corenet global Community sponsors
workplace (bronze)
strategy & portfolio planning (gold) workplace (gold) manufacturing & industrial (gold)
workplace (silver)
workplace (bronze)
2012 Corenet global strategiC partners

gold
silver
bronze
ECONOMIC DEVELOPMENT AGENCY
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Young l eader
by sonali tare
joey Vlasto: global navigator

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.
joey Vlasto, newmark Knight Frank
enjoying the Challenges and Successes

I really enjoy the challenge of managing transactions for clients, said Vlasto. Managing a local business units 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, Vlastos proficiency in Spanish helped ensure all parties understood each other.
among traditional brokerage firms, furniture 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 specialization 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.
So, What Is It that You do?

In addition to being the liaison between Newmark Knight Frank and its Londonbased partner Knight Frank, Vlastos 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 working together smoothly and seamlessly. This has required finesse, oversight of numerous moving parts and maintaining his language skills. To solve problems with clients overseas 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 interesting. 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.
Why Corenet global?

Vlasto, who serves as the Chapter Liaison Chair of CoreNet Globals Young Leaders Committee, has been a member since 2006. He has gained considerable educational 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 collaboration 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 becoming 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 supporting and fostering the growth of the leaders of tomorrow, he said. The opportunities to continue to learn, collaborate and build relationships within our industry will undoubtedly prove invaluable to anyone pursuing a career in CRE.
What next?
With the continual globalization of business, having that global business management 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, Dont 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 successfully and meet client expectations. An example of risk taking and getting out of ones comfort zone was Vlastos decision to move to New York from London. The move was a risk but one that paid off. Apart from his professional success, he also met his wife in the Big Apple.
Shape of the industry

Vlasto foresees increased consolidation within the real estate industry, whether
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3rd Quarter 2011
real estate dashboard
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 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. 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
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c apital c orner
by kurt ochalla
Kurt ochalla, director, expense management
Benchmarking your delivery model

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 pressure. 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 its 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 benchmarking 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 organization. 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 integrated operating model. It doesnt 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 metrics, 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 indusFunction
Facilities management
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 dont have a reasonable justification for that difference, you know that through reengineering of your processes or rebid of your provider contracts, 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 implementing alternative workplace strategies). Management is always more likely to support investment when you can demonstrate that your day-to-day blocking and tackling is effective and efficient.
operatinG metricS
$/rSF by operating expense category (cleaning, r&m etc.) SF managed per Fm construction $/rSF by type # projects/pm $ managed/pm periodicity of updates leases managed/pp % recovery/desktop audits % of holdover costs # deals/tm $ of deal volume/tm lease rate vs. market rate
unit coSt metricS

call center: $/Wo by type interior plants: $/plant utility payment: $/invoice eh&S: $/test for iaQ, water, etc. pm: $/SF by tier (project size) cm: $/project cost by tier mac: $/headcount by tier $/uSF/year $/lease/year $/abstract u.S. $/abstract intl. tm $ cost/rSF tm $/lease $ discount % vs. market
other
% of fee at risk
project management occupancy management lease administration
% of fee at risk avg. duration/project cycle time/phase SF/pp $/pp % of fee at risk # or % of mtm leases
transaction management
% of fee at risk
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members on the move
Stiles recently 800 brickell won the TOBY Earth Award for 2011-2012 for achieving superior performance in all aspects of the 800 Brickell buildings management and preserving and enhancing the internal and external environment through sustainable programs. Stiles invested in efficient energy systems 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 firms Palo Alto, Calif., office, and has provided cost, performance and efficiency solutions to mid-sized corporate clients and will broaden his role to provide similar real estate-based solutions to some of the firms Casolo largest multinational clients. Tandus Flooring was honored with a first place Georgia Association of Manufacturers Safety and Performance Award for the companys tufting facility. The award recognizes manufacturing facilities with 100-299 employees and is one of six awards Tandus Flooring received during 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 incentives and economic development strategies for the hyatt bosman companys corporate and public-sector clients and will also advise clients on location decisions. Johnson Controls Global WorkPlace Solutions has extended its global relationship with Shell International to provide workplace projects and facilities management services at four locations in the Netherlands, including the energy and petrochemicals companys corporate headquarters in The Hague. The new two-year agreement also covers Shells 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, celebrating its 25th year, established its Palo Alto office in 2007 and has been doing business throughout Silicon Valley for more than a decade.
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 Executives 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 Professionals 2012 Global Outsourcing 100 service providers list. The list recognizes the top 75 outsourcing service providers across all industries that provide the full spectrum of services.
bCCIs location in Palo alto, Calif.
U.S.-based Capstan Advisors and U.K.-based Property and Change
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a look ahead
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
In Our Next Issue:

allsteels netWork: the Future Workplace CBres Global Innovators award-Winning Global laborView application Singapores marina Bay Financial Centre Project are Water Considerations affecting real estate Site Selection and Portfolios? Cresas multi-Generational Workplace end-user Profile: Bob Bull, air new Zealand
BoSton PoSt eaStern reGIonal SymPoSIum: 6-7 june MCR Seminar

Real Estate Outsourcing: Trends & Models for Service Delivery
Service Provider Profile: leigh Stringer, hok
tokyo: 7-8 june MCR Seminar

Enterprise Alignment
Index oF adVertISerS
aeroport de montreal Buckeye Power Colliers International Corenet Global (Communities) Corenet Global (london Summit) Corenet Global (membership) Corenet Global (orlando Summit) Corenet Global (thank you Pages) Corenet Global (the leader online) Curinde Fischer GP desarrollos Greater Ft. lauderdale johnson Controls, Inc. knoxville oak ridge Pasco edC raffles Quay/mBFC/CBdPl Sodexo 25 39 2 41 21 41 27 52-53 45 15 60 11 17 7 4 59 3 9
auCkland: 19-21 june MCR Capstone

Leadership & Strategy: CRE Management in Todays 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)
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/
25-26 july
Corporate Real Estate Finance (MCR) Project Finance & Capital Markets (SLCR)
25-27 july
Leadership & Strategy: CRE Management in Todays Economy (MCR Capstone)
orlando, 7 - 9 oCtoBer 2012
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The Leader May June 2012

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volume 1 1 , i ssue 3

corporate real estate & workplace

Fidelitys chris Horblit

mastercards workplace transformation in ireland

Putting the pedal to the metal.

The leader is prinTed on recycled paper

THE LEADER Online!

Fidelitys chris Horblit

mastercards workplace transformation in ireland

navigating the lease accounting standards maze

customer relationshiP management: Making The Connections

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

Message froM the ceo by angela cain, ceo

Global job market improving

shell to Build Plant in Pennsylvania

aia announced 2012 top 10 Green Projects

morgan stanley expands new york City space

Peugeot Plans to sell its Paris hQ

REAl ESTATE mAnAgEmEnT

Executive Viewpoints: Work-Life Supports = Organizational Results

Defining Work-life Supports

Accessing Senior Executives

1.2 million People

Fortune 100 and 500 Companies

Work-Life Supports + Work Environments Positively Contribute to Organizational Outcomes

What drives the Provision of Work-Life Support

ExEcutivE viEwpoints: work-LifE supports = organizationaL rEsuLts

ExEcutivE viEwpoints: work-LifE supports = organizationaL rEsuLts

Curaao: Your hub to the Caribbean and Latin America

ExEcutivE viEwpoints: work-LifE supports = organizationaL rEsuLts

factors affecting work-Life supports

about the author

make the case: work Environments matter

anticipating the future

R eAl estAte MAnA geMent

The Future of Workspace: Lessons from the Cloud

the Imprint of the Cloud

The Imprint of the Cloud on Workspace

Search ExUrban Ohio

The FuTure oF Workspace: Lessons From The cLoud

Important Questions For Business Leaders To address

service for success

about the author

CoreNet Global Summit 17-19 September 2012

REAL ESTATE MANAGEMENT

MasterCard Technology: Workplace Transformation in Ireland

the new location features ample masterCard branding.

thanks to the teams that made it happen

MasterCard teChnology: WorkplaCe transforMation in ireland

an overview of MasterCards new global technologies location in dublin, ireland.

MasterCard teChnology: WorkplaCe transforMation in ireland

Where going further meets going greener

MasterCard teChnology: WorkplaCe transforMation in ireland

about the authors

Mountain View with sea View

CoreNet Global Summit 7-9 October 2012

REAl EstAtE mAnAgEmE nt

marriott at Gateway Center

Springhill Suites atlanta airport.

about the author

REAl EstAtE MANAGEMENt

the Road to the Most Effective Workplace

From Principle to Execution