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Fund Accounting for Leases

By | Lease Accounting

In the complex accounting landscape, fund accounting is a specialized area that demands meticulous attention, especially for non-profits, universities, hospitals, and governmental entities. Fund accounting is essential for these organizations,…

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Organizational Structures In CRE

By | Lease Accounting

How do you organize your CRE department? The structure of the CRE organization should directly correspond to key processes such as leasing, construction, design and facilities management. Organizational structure varies by the size of the real estate portfolio, the type of industry, the level of outsourcing and the geographic dispersion of the real estate portfolio.

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Searching for the “Vireos”

By | Lease Accounting

In the latest issue of the LEADER, the official publication of CoreNet, two of my former colleagues, Mike Joroff and Frank Becker, co-authored an article entitled, “Exploit Change and Uncertainty to Drive Corporate Value.” Becker and Joroff collaborated with me on several projects, including Office 88 (Becker-1983) and the Agile Workplace (Joroff- 2003) The authors make the case that many of the assumptions about the office, technology, and work need to be updated and revised to reflect the new trends visible in the global workplace.

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CRE and Business Networking

By | Lease Accounting

In 1972, when I first took on a real estate management job at Xerox in Chicago, one of my most important tools was my Rolodex. For the younger reader of this blog, I should explain that the Rolodex was a simple filing of business cards or small index cards, arranged in alphabetical order, and containing names, phone numbers, and mailing addresses of service firms, colleagues, and other contacts. I would use the Rolodex at least 2-3 times a day to look up service people who I might need in an assignment or project, or check in with contacts who might help as a reference.

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Selecting a Design Service

By | Lease Accounting

         In an earlier blog post I addressed the subject of outsourcing corporate real estate services. One of the key services that is central to the real estate process is the need for design services, typically interior design services. Maintaining a design team internally is expensive and unnecessary. For some organizations having a design professional as a member of the CRE staff is advisable for the purposes of supervising the  design contract firm and evaluating designs in various stages of development.

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

By | Lease 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.

 

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Charging Back Occupancy Costs: Why It’s a Good Idea

By | Lease Accounting

There’s always a dispute within the organization aboutthe issue of chargebacks, particularly facility occupancy costs. Department heads typically question the need for charging back occupancy costs, since they don ‘t feel they have any direct control over these overhead costs. But occupancy costs are directly linked to staffing, so it’s logical to burden a department with its share of occupancy costs relative to staffing levels. The argument for chargebacks centers on the need for reinforcing cost containment, as well as maintaining a level of fairness in the organization.

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Sodexo Study: Understanding the Image of CRE as a Profession and Career Path

By | Lease Accounting

In March of this year, Sodexo released a study of the corporate real estate profession, focusing on its image and value as a viable career path. Having practiced in the profession for over twenty-five  years, I experienced first  hand the challenges and rewards of corporate real estate as a junior manager, a senior executive and as a broker and consultant . For many years, corporate real estate didn’t enjoy the cache or prestige of other corporate functions such as marketing, finance, and even Information Technology. But this is changing with the advent of new leasing standards and workplace strategies.  So it was with this personal back ground I took a special interest in the Sodexo survey and report.

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The Future of Corporate Real Estate – An Alternate View

By | Lease Accounting

        In June of this year, Corenet Global published a report entitled, “The Future of Corporate Real Estate.” The report covered several major trends which would influence the corporate real estate function. Such trends as sustainability, advanced information technology, globalization, the “gig economy”, urban development, workplace changes, etc. would all have a major impact of the future of corporate real estate.

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Some Thoughts Regarding Workplace Security

By | Lease Accounting

Security and safety is now high in the minds of CRE managers, because of the eruption of violent terrorist attacks worldwide. It seems a day doesn’t go by when some violent outbreak takes the lives of multiple victims. In many companies the CRE executive is responsible for physical security and thus, must develop a plan for insuring the safety of people and assets in the workplace. Typically the IT department has responsibility for information security, but it’s wise for the CRE executive to coordinate with the CIO on security. So what are the key priorities that need to be addressed in a workplace security plan?

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CRE Organizational Models

By | Lease Accounting

In the last several Blog posts, I’ve explored the various steps in becoming a CRE executive.  Today I want to address the question of CRE organization. There is no one organizational model that is ideal. But there are various structures thatfit the needs of most business entities.

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The Making of a Corporate Real Estate Executive – Part 2

By | Lease Accounting

Entering a career in Corporate Real Estate can take many paths. During my career I met countless CRE executives with myriad backgrounds. Some moved from real estate services such as brokerage or consulting. Others came into the profession as architects or engineers. A popular avenue is facility management, since the disciplines of property and maintenance management are a natural stepping stone to real estate management.

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Metrics to Manage Portfolio Performance

By | Lease Accounting

Performance management in corporate real estate has matured rapidly over the last ten years due primarily to the evolution of sophisticated real estate management systems. With the advent of integrated workplace management systems(IWMS), and now cloud based point systems (like Visual Lease), CRE organizations have a wide range of options in the type and utility of portfolio management systems.

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Space Management and Allocations

By | Lease Accounting

Space (square footage) is the universal unit in corporate real estate management. It defines the basis for rental, allocation of costs to different occupant groups, is the primary factor in developing space requirements for different utilizations such as offices, work stations, conference rooms, storage spaces, etc.  Most companies develop a set of space standards as a means to design office layouts, allocate space to various functions, and use to forecast space demand over time.

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The Impact of Millenials on Real Estate

By | Lease Accounting

Back in November of last year I cited a study by CBRE that seemed to debunk several myths about the Millennial generation and the office environment. The essence of the study was that while Millenials had certain preferences and attitudes about the workplace, in general there was little difference between the generations about their desire for workplace flexibility, preferences for urban settings, more collaboration, and more autonomy.  However, in a recent article about Millenials in the March 15 issue of Fortune magazine, the theme of the article is about how to attract and retain the Millennial generation. 

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Co-Working Revisited: What are the Drawbacks?

By | Lease Accounting

In my last Blog posting I covered the subject of co-working; an office concept which entails using office space on a shared basis. Unlike executive suite operations such as Regus serviced offices; co-working is less formal, collaborative and aimed at the millennial generation. Co-working is growing rapidly in most major urban areas, particularly in central business districts. The outlook for growth is stunning, with nearly 2000 locations anticipated within five years. One of the most successful operators, Wework,  now has a market cap of over $5 billion, with no slowing in growth expected.

But co-working is not without its drawbacks. 

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Co-Working: Alternative to Telecommuting??

By | Lease Accounting

The primary driver of this growth is the rise of the contingent worker, which represents about one third of the US workforce according to government estimates. With the advent of mobile technology and cloud computing, millennials, those between the ages of 20-35, seek non-traditional work environments as well as a sense of community. Co-working meets these needs by offering informal and edgy workplaces, and a spectrum of services that might include WiFi, marketing training, social events, and even conferences aimed at the young, independent entrepreneurs.

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Expanding the CRE Charter?

By | Lease Accounting

For some large companies, the charter of CRE has expanded to include physical security, sustainability, and now even the charter may include company wellness programs. In an open online survey conducted by CoreNet Global, a strong majority of respondents – 80 percent — said that corporate wellness initiatives represent a “significant trend,” while only 20 percent said that they were a “passing fad.”

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A Closer Look at IOT (Internet of Things)

By | Lease Accounting

         In my last Blog entry I wrote that IOT would be a megatrend that would revolutionize building operations by imbedding machine addressable technology in every aspect of the built environment. IOT is not new. In fact the technology has been around since the late 1990s. Gartner estimates that there will be nearly 26 billion devices on the Internet of Things by 2020.

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A Correction to the White Paper: “The Lease Accounting Tsunami; Are You Prepared to Weather the Storm?”

By | Lease Accounting

In a earlier white paper, The Lease Accounting Tsunami; Are You Prepared to Weather the Storm?, I wrote that users should evaluate the effects of the new FASB/IASB on a company’sdebt structure, debt to equity, and other factors that would be affected by the new standard, assuming lease liabilities would be considered as debt. In point of fact, the FASB explicitly decided that Type B lease liabilities should not be considered as “debt.” However, the IASB which treats all leases as Type A leases or capital leases, does consider these liabilities as “debt-like liabilities.” (Their exact words) As one of my accounting friends advised “The accounting for Type A leases requires IASB companies to record interest expense, and segregates payments on the lease liability into operations and financing outflows per the cashflow statement, which is consistent with debt.”

Thus, US companies will experience less impact from the new standard, particularly as it relates to debt covenants, debt to equity metrics, and capital structures. But US companies with significant international lease portfolios subject to the IASB standard, will see their debt levels increase.

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Clicks and Bricks

By | Lease Accounting

Virtually the entire infrastructure of the enterprise combines traditional facilities assets: buildings, land, furnishings, and lease contracts and IT assets: servers, storage, networks, mainframes, and applications. In the last half century these distinct asset classes have become ever more intertwined, interdependent, and fused to create work platforms.

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A Leasing Strategy to End All Leasing Strategies

By | Lease Accounting

At the time I was the Corporate Real Estate Director of a major multinational corporation with a headquarters in New York City. It was the mid 1990s, and the real estate market in midtown Manhattan was a bit soft. Senior management wanted to move out of New York to an owned (and relatively vacant) office building in suburban Connecticut.

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Collaborating with Your Tenant Rep via the Lease Management System

By | Lease Accounting

Many companies today use tenant representatives to handle various leasing actions such as leasehold relocations, renewals, expansions, and extensions.  Tenant representatives are commercial brokers who typically operate exclusively as tenant advocates, while collecting commissions from building owners. This may seem like a conflict of interest, but the industry has self-regulating practices to avoid most abusive behavior. 

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IWMS – A Historical Perspective

By | Lease Accounting

As a Gartner analyst some years ago, I focused on the real estate/ facilities management software space. I had spent nearly thirty years in corporate real estate, and was perhaps the only analyst at Gartner who had a broad and varied background in corporate real estate. I wrote one of my first research notes, in April of 2003 on the corporate real estate and facilities management space when I identified the key components of what I later named IWMS.. a lot has changed since then.

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