The CoreNet Global Summit is a forum for discussion of the most important ideas, strategies and tactics that leading Corporate Real Estate teams employ to meet goals and increase their value to the organization. In case you missed it, or weren’t able to get to all the sessions you wanted to, here are 4 key takeaways you can put into action to elevate your level of support, agility and value to the company.
CoreNet Global mandate #1: Actively collaborate with Finance
In decades past, Corporate Real Estate was tasked with providing a desk for every employee, keeping the lights on and HVAC working, and little more. That has changed exponentially in recent years. Real Estate teams are increasingly expected to deliver more value to the organization, by reducing property expenses, providing workplaces that meet the complex needs of today’s workforce, and actively contributing to corporate goals.
At the same time, companies are realizing that working in silos is a major impediment to maintaining and improving their position in highly competitive global markets. Collaboration is essential for driving innovation while controlling costs and speeding up delivery of key initiatives.
That’s why Real Estate must actively collaborate with the Finance team on initiatives to reduce costs and meet other financial goals. Here’s an important example. Upcoming changes to lease accounting standards have Accounting teams scrambling to pull together data about property leases. In this situation Corporate Real Estate can not only provide the needed expertise to understand complex lease terms, but also provide assistance in locating and collecting data.
What’s in it for Real Estate? To comply with the new lease accounting regulations, most companies must invest in technology for managing and reporting on lease data. That means Real Estate has the opportunity to influence selection of software that can support their operational and strategic planning needs as well.
The need for strategic property portfolio planning guided by data is the second mandate discussed at CoreNet Global 2017.
CoreNet Global mandate #2: Improve decisions with data-driven strategic planning
Data has become a critical component impacting overall corporate strategy, and Real Estate is jumping on the bandwagon. By turning to property data for insight, leaders can improve processes, tweak policies to drive down expenses, and even make better site selection decisions. This was a common theme in many presentations at CoreNet Global. Judging by the packed rooms for these sessions, it’s clearly a concern for many Real Estate professionals.
Corporate Real Estate teams often have a variety of repositories for operational data that can provide the intelligence needed to improve strategic property decisions. These can include databases for facilities staff, space planners and lease administrators. In many cases, data is tracked manually in spreadsheets. When these disparate sources don’t talk to one another, you’re losing out on the opportunity to deliver more value to the company, both from a financial perspective and from a productivity perspective.
We are definitely seeing a trend toward integrating & consolidating data from companies seeking lease accounting solutions for compliance with the new FASB and IFRS lease accounting standards. It’s not enough for them to track only the data needed for lease accounting and reporting; leading global companies also want the ability to track operational data. They want the analytics tools to use that data to inform their processes, policies and decisions. The best practice is to implement a single source of truth.
Find out what Real Estate and Accounting must know about lease accounting and administration technology: 7 things to consider before choosing a lease accounting system.
CoreNet Global mandate #3: Embrace innovative technology that improves productivity
Just as strategic use of data is a prevalent topic of discussion for global companies, growing productivity is a common goal across many disciplines, including Corporate Real Estate. Everyone needs to produce more with less, and faster than ever before.
How is that possible? A common strategy discussed at this year’s CoreNet Global Summit is implementing innovative technology that automates tasks to improve efficiency.
For Real Estate teams involved in the process of preparing to comply with new FASB/IFRS lease accounting standards, it’s critical to embrace the right technology to meet compliance deadlines (in just a year’s time for public companies).
Doing so means speeding up the process, including:
- abstracting data points from lease documents
- collecting and importing data from multiple sources
- integrating with existing GL (General Ledger) & ERP systems
- producing the required calculations and disclosure reports
Technology that helps achieve these goals quickly and easily may make all the difference between meeting deadlines and falling short. A great example is the use of Artificial Intelligence (AI) for abstracting lease data (another topic discussed at length at CoreNet Global). Real estate organizations need to fully understand how and when this technology can improve productivity and speed delivery.
While AI has the potential to significantly reduce the time to abstract lease documents, it can take a long time to implement due to the time needed to achieve machine learning. There’s also the expense to consider; it may only be feasible for large global companies, who must also be vigilant about data security. However, demonstrating a commitment to innovation and keeping up with competitors may also be a factor in the decision.
Learn more: Can You Trust AI for Lease Abstraction?
CoreNet Global mandate #4: Consider alternative workplace strategies such as co-working
The corporate property portfolio makeup is rapidly shifting to more flexible models, including the use of co-working spaces. This was another common thread in many CoreNet Global sessions. A flexible strategy has many benefits for the bottom line and enables the company to make strategic changes without being saddled with continuing lease expenses. Or worse, being unable to implement a desirable business change because of long-term property commitments.
From an accounting perspective, however, the new lease accounting standards make it tricky to implement a shift to co-working spaces. Under the new rules from U.S. GAAP and IFRS, almost all leases are brought onto the balance sheet and capitalized. Potentially that could include rental situations such as co-working spaces taken on for periods longer than 12 months.
Experts at CoreNet Global discussed a potential way around this problem: giving up exclusive right to a specific space in the building and allowing landlords to substitute a different space when they would benefit financially from doing so. In some situations, allowing that might mean your co-working agreement is not considered a lease and won’t impact your balance sheet. However, the prospect of having to move around might be impractical in others. But this is a strategy you may want to take into account when considering a move to co-working.
As always, we all have a lot to think about following the CoreNet Global Summit. Hopefully you found it as valuable as we did!
Did you miss Visual Lease at CoreNet Global? Not to worry, it’s easy to see our cloud-based lease accounting & administration technology online. Request a demo at your convenience.