Real Estate Standards

Challenges

  • Increasing transaction figures (rent, purchase, construction)
  • Inhomogeneous processes in case of expansion, relocation and location consolidations and consequently diverging real estate economic decisions
  • Missing consistent criteria for location selection
  • Requirements are determined situationally by the local management
  • Partly situationally of subjective decision criteria regarding real estate
  • Loss of time in location selection due to high effort for discussion and persuasion
  • Missing transparency and central management of brokers
  • Low acceptance of corporate real estate management – often viewed as servicer only

Project approach

  • Global real estate standards have to be defined from the perspective of the core business
  • Mutual definition of:
    • Location standards
    • Building standards
    • Cost and space standards
    • Lease contract standards
  • Underpinning of standards with processes
  • Preparation of documents and examination of developed standards based on current transactions
  • Translation of real estate standards into scoring and assessment tools
  • Achievement of communication and acceptance for the standards
  • Preparation of implementation plan (e.g. application of real estate standards only for transactions, not for existing properties)
  • The senior management has to legitimate the global real estate standards and to defend them internally, decisions of top management have to be initiated

Results

  • Co-ordinated globally consistent real estate standards with documented processes
  • Real estate standards with various levels of obligingness (in ascending order):
    • Directive: criteria have to be met (avoidance/non-compliance: top management decision required)
    • Guidelines: corridors of criteria create room for individual flexibility for the local business (avoidance/non-compliance: burden of proof on the side of local business)
    • Recommendations: operative support of core business via recommendations for contract negotiations and design (e.g. via checklists)
  • Mid-term portfolio-optimisation (space requirements, costs, quality) via implementation of standards (period 3 – 5 years)
  • Prerequisite for the achievement of a global portfolio responsibility