What Every Leader Should Know about Real Estate

Although real estate is the largest, or second-largest, asset for most companies, it rarely captures senior management's attention. And real estate decisions, many of which are made within business units and driven by short-term needs, don't usually reflect a company's broader strategy. Apgar presents five maxims that will help executives make the most of this critical resource. Manage the portfolio. Instead of making site-by-site analyses, executives need to cultivate an overall understanding of their holdings, including a snapshot of the company's existing footprint and a view of its future needs. Build in flexibility. Companies that prize flexibility own less and lease more. They favor space that can be subdivided and converted from one use to another, and they decrease their real estate costs by offering such workplace options as telecommuting. Cultivate intelligence. In order to connect real estate decisions to corporate strategy, executives need accurate data. And they must pay more attention to internal measures than to fluctuations in the real estate market. Team with professionals. Companies that maintain the most efficient and flexible real estate portfolios often do so by enlisting partners that offer expertise and efficiencies. Embrace sustainability. Companies of all types are transforming the buildings they use in order to reduce harmful emissions. Green buildings can cost more up front, but they deliver high returns over the long term.