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Corporate Real Estate (CRE) Versus Facility Management (FM)

By October 27, 2016Lease Accounting

From time to time clients raise the question of the difference between corporate real estate and facilities management. In essence, they’re asking why we have two different professional designations since they both seem to have the same responsibilities. But the two professions have distinct differences and responsibilities. Here we explore these differences and attempt to bring clarity to the issue.

Facilities management is primarily an operational role. Facilities managers have the responsibility of managing the day to day operations of enterprise facilities including maintenance, repairs, utilities, energy management,  landscaping, furniture acquisition, and in some cases physical security. Facilities managers are typically members of professional organizations such as IFMA (International Facilities Management Association), which offers training and certification associated with facilities management disciplines.

Corporate Real Estate (CRE) is distinct from FM in that it is primarily a transactional responsibility with focus on leasing of facilities for the enterprise including office, warehouse, data centers, manufacturing, and research facilities. CRE professionals manage the life cycle of property, beginning with site location, building design, acquisition, disposition, and in most cases leasing versus owning company properties. Over time, CRE has become more strategic in its role as steward of the enterprise portfolio; developing long range plans to insure efficiency and cost effectiveness in the portfolio. In the last decade CRE has assumed the role of workplace manager and developed workplace strategies such as desk sharing, office hoteling, and various mobility strategies such as co-working and telecommuting.

CRE professionals tend to join associations which focus on real estate management versus facilities management. The most prominent CRE association is Corenet, an international association with tens of thousands of members worldwide. Corenet was formed from the merger of the International Development Research Council (IDRC) and the National Association of Corporate Real Estate (NACORE). Similar to IFMA, Corenet offers professional training and certification in subjects unique to CRE management.

In many cases, the CRE executive has the responsibility for facilities management and will have a separate FM staff as part of the CRE organization. In addition to leasing the CRE organization will have office design capabilities, engineering, environmental expertise, and IT management capability usually staffed from the IT organization.

For both CRE and Facilities Management responsibilities, it’s crucial that all staff members have a good knowledge and understanding of the new FASB lease standards. While these standards will be more relevant to the CRE managers, who are directly involved in property leasing, it’s important to recognize that the standard applies to all leasing including equipment leasing. FM managers lease various equipment such as vehicles, maintenance equipment, landscape equipment, etc so FM must be cognizant of the FASB standard as well.

Corporate Real Estate and Facilities Management are distinct managerial disciplines, but closely aligned. It’s important that the two disciplines collaborate since     FM should be involved in the property leasing operation to provide input on maintenance and repair issues with prospective properties, input on the energy efficiency of the prospective properties, and other building operational factors. It’s wise to have some degree of cross training between CRE and FM; to enhance the level of collaboration based on common knowledge and understanding of the critical success factors for both disciplines.


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