Rapid global change is being driven by a multitude of factors that are altering the way business is done. Companies are seeking ways to streamline operations and, at the same time, they’re responding to workforce demographics that are having a profound impact on how they plan, manage and invest for the future.
The concept of Corporate Real Estate (CRE) contributing more strategically to the business has gained undeniable momentum.
CRE is now playing a key role in strategic business initiatives including talent management, cost containment, workplace design, and corporate branding and culture.
When Cushman & Wakefield acquired Cousins Property Service in the fall of 2012, we acquired a property management portfolio of high-profile properties in Atlanta, GA and Dallas, TX.
More importantly, more than 100 highly respected professionals in property management, agency leasing and construction management joined our firm, burnishing our brand and reputation in two key U.S. markets. The acquisition brought seven properties in Atlanta and 17 in Dallas under the Cushman & Wakefield banner, greatly expanding our market share in both cities.
Winning Occupancy Strategies
Leading companies are taking steps to centralize or streamline CRE functions so they can better adapt to continuous shifts in the business landscape. Priorities include aligning real estate with company business units, centralizing decision-making and processes through corporate governance programs and focusing on the employee experience.
Advanced technology offers some occupiers the ability to move certain functions to less expensive non-central submarkets, while maintaining a cohesive flow of information and communication between head and satellite offices.
An effective real estate strategy must take into account long-term business growth or contraction and office relocation contingencies.
Occupiers should consider how many new employees they intend to hire and also what business functions they foresee expanding or contracting. Planning must be viewed from the prism of how business forecasts may require workforce adjustments and therefore real estate needs.
As demographics change, the challenge is to design the right environment that supports different generations with different work habits. Flexibility has never been more important. Technology will continue to be the ultimate driver of change, influencing how and where we work.
Many firms are exploring different types of outsourcing models and using the expertise of their outsource service providers more efficiently. Increasingly, companies are alleviating themselves of tactical real estate responsibility altogether and focusing on better serving their core customers.
Ericsson Telecom S.A. de C.V.
Services Used: Corporate Occupier & Investor Services
Mexico Locations Meet Business Objectives
Ericsson selected Cushman & Wakefield to provide Project Management and Facilities Management Services after deciding to locate its Global Network Operation Center (GNOC) in Mexico. As part of their commercial strategy, Ericsson decided to centralize their operations in strategic countries within the region that offer low operational costs and highly trained technical staff; hence, Mexico was chosen for their GNOC in the Americas.
"More and more, our clients are looking for a partner that can deliver services for their networks from end to end while keeping low operational costs. With this new center, we are investing in increasing our capacities to satisfy these new demands with remote services.”
– ORVAR HUNTING
Service Delivery Chief, Ericsson
Currently, Cushman & Wakefield’s Facilities Management team delivers services for Ericsson in six different sites (four transitioned and two new), covering 436,000 square feet.
The complexity of Ericsson’s operation includes 24/7 critical services at the GNOC sites, as well as coordinated processes with North America (U.S. and Canada) and South America (Brazil, Argentina, Colombia and Chile).
Cushman & Wakefield assigned an experienced regional team to coordinate efforts between countries, implemented an “Integrated Workplace Management System” (Big Center), and relocated our professionals from other accounts to Ericsson as part of the strategy to ensure the successful delivery of services.
Toronto, ON, Canada
Services Used: Corporate Occupier & Investor Services, Leasing
Consolidation Launches Office Tower and Transforms Toronto's Financial Core
Deloitte, a leading professional services firm in Canada and around the world, provides audit, tax, consulting, and financial advisory services. Faced with logistical challenges due to employees being dispersed across multiple locations throughout the Greater Toronto Area, Deloitte recognized that the time had come to refresh its business model in order to remain on the cutting edge of changing business dynamics.
Deloitte engaged Cushman & Wakefield to conduct a comprehensive review of Deloitte's Toronto office requirements. After analyzing numerous scenarios and options, it was determined that the best solution to achieve the greatest occupancy value was to consolidate the firm’s business into one holding.
With more than 3,500 employees to consolidate across multiple offices, Deloitte required over 400,000 square feet of office space in a downtown core location.
In June of 2012, Deloitte announced plans to consolidate its GTA offices under one roof – namely the proposed East Tower of Bay Adelaide Centre owned by Brookfield Office Properties. By agreeing to lease 419,000 square feet – about 43% of the building – the project was able to proceed.
Located adjacent to the Bay Adelaide West tower in the heart of Toronto’s financial district, the 44-story, 980,000-square-foot office tower is expected to achieve the prestigious LEED Platinum distinction upon completion in 2015.
As the tower’s anchor tenant, Deloitte will gain a prestigious downtown address with naming rights to the tower and, most important, the opportunity to transform its workplace and culture by creating a visionary, collaborative office campus in one of Toronto’s most desirable locations.
Not only did the successful transaction kick off a new office development, it also became a “city-building” exercise, incorporating unique design features that will reimagine what had become a “tired” precinct into a vibrant downtown destination.
Cushman & Wakefield successfully negotiated lease terminations and/or extensions for existing locations to align with the timing of the consolidation and our Strategic Occupancy service worked in close partnership with Deloitte, Brookfield and the design team to deliver "out of the box" solutions. This remarkable collaborative effort enabled Deloitte to realize its vision to create a dynamic workplace in keeping with its commitment to its clients, its people and its corporate responsibility objectives – and, immeasurably, to downtown Toronto.
Fort Worth, TX, U.S.
Services Used: Capital Markets, Leasing
Negotiation Expertise Secures Broadcast Studio
Cushman & Wakefield was engaged by NBC Universal to evaluate the disposition of their 64-year-old, 66,000-square-foot, owned broadcast studio on 26.5 acres in Fort Worth. The expectation was to relocate into a new state-of-the-art broadcast facility that would be more efficient and position the firm to compete for the next several decades.
After performing due diligence on several existing buildings and land sites, NBC selected a master developer for Centreport, just south of DFW International Airport. NBC Universal was able to purchase 8.1 acres. Additionally, Cushman & Wakefield was able to negotiate and secure significant incentives, including tax abatements with the creative solution of deeding the owned facility to the City of Fort Worth in exchange for additional incentives.
The final lease concluded with a 75,000-square-foot build-to-suit including a Purchase and Sale Agreement. Construction commenced in July 2012 and is scheduled to be completed on time during the fourth quarter of 2013.
Reel FX, Inc.
Dallas, TX, U.S.
Services Used: Leasing
Urban Office Deal of the Year
Recognized as Dallas Business Journal's Urban Office Deal of the Year, Reel FX Inc., an award-winning creative studio specializing in animation and visual effects for feature films, commercials and live-venue projects, secured its footprint in Dallas’s Deep Ellum submarket in July 2012. After seven years in the building, Reel FX acquired the 73,200-square-foot property to serve as its corporate creative headquarters.
“We have called Dallas home for almost two decades, and our goal was to remain in Dallas and in Deep Ellum. We couldn’t be happier to stay in the building we consider an important part of our past, and now, our future.”
– KYLE CLARK
Reel FX Chief Operating Officer
Cushman & Wakefield was engaged to represent Reel FX with their requirement.The challenges involved addressing parking, company culture, neighborhood characteristics, and lease-versus-own potential, and accommodating the company's continued growth. From a transaction standpoint, this assignment required a sublease buyout, complex acquisition terms, significant municipal incentives and a parking solution.
The intense competition from the surrounding municipalities made relocating to another part of the city a viable alternative. There were two shortlist options, but, in the end, given the connection to Deep Ellum, the existing building and location – and that the City of Dallas showed its commitment to Reel FX and the creative industry by providing compelling incentives – Reel FX was convinced that remaining in their current location represented the very best solution.
Bracewell & Giuliani LLP
Services Used: Leasing
New HQ Balances Quality and Flexibility
Cushman & Wakefield advised Bracewell & Giuliani on establishing a London headquarters in 2013. The team was involved in all stages of the acquisition process, with advice on space requirements for their medium- and long-term requirements, capital required and also on alternative lease structures and their impact on the firm's P&L account. It was critical that the new HQ balanced the need for a high-quality space and flexible lease conditions.
"Bracewell & Giuliani LLP’s new launch into the London legal market was fully supported by Cushman & Wakefield from the outset. Their team demonstrated both an in-depth knowledge of the City market and a clear understanding of our business objectives. They are fast-moving, flexible and understand how law firms work, which enabled us to identify the best possible office space solution that perfectly balances location, image, quality, flexibility and cost."
– JULIAN NICHOL
Partner, Bracewell & Giuliani LLP
Tower 42 was identified as the most favourable option, offering Bracewell & Giuliani the legal fit-out required, within a building commensurate with their international headquarters and one that provided client-facing services. Cushman & Wakefield negotiated two separate leases with a one-third to two-third split, with full rights to sublet or assign, as well as the right to break either lease with no penalty after five years. Capital fit-out costs were minimized due to the existing legal fit-out in place. Furthermore, a turnkey solution was agreed, with rent-free rates and services charges not commencing until the landlord had completed all works to the detailed design submitted by Bracewell & Giuliani. A total of £483,034 (about US $741,360) in savings was achieved, including a reduction in rent and a 100% increase in the rent-free period originally offered by the landlord.
Green Mountain Coffee Roasters Inc.
Burlington, MA, U.S.
Services Used: Capital Markets, Leasing
New England's Largest Build to Suit
Cushman & Wakefield was engaged by GMCR to assist with the creation of a new Corporate Headquarters and R&D facility in Burlington, MA. The 17-year, three-phase LEED-certified, build-to-suit lease for a total of 590,000 square feet is the largest suburban build-to-suit lease development on record in New England. GMCR’s goal was to combine its three existing locations into a single campus setting.
Being a leader in product innovation and technology, GMCR required a location allowing them to continue to attract and retain the best employees in Greater Boston, along with highway access and a rich environment of neighboring amenities. Working closely with Cushman & Wakefield's Capital Markets and CIS Investor Services, our account team was able to help GMCR identify the right location, negotiate aggressive lease terms and rent, and assist the leadership team with the market and industry intelligence to validate the selected real estate solution.
IKEA Beijing Co., Ltd
Services Used: Corporate Occupier & Investor Services
Major IKEA Renovation Causes Minimum Business Disruption
In order to align with IKEA global development strategy, Cushman & Wakefield was appointed to renovate its 1,291,669-square-foot (120,000-square-meter) Beijing store and office. The retailer's basic goal was to provide a comfortable updated environment for its customers and employees through the use of advanced technology.
Several extensive changes were recommended and have been implemented. For example, our team replaced the air conditioning system to keep the indoor temperature and humidity constant through the year. To present a more efficient shopping experience, a new parking lot system that shows the available parking spaces was installed. As well, energy-saving lights were installed in the parking lot that automatically turn on only when cars pass by. Another challenge presented by this project was to ensure the normal operation of the store.To achieve this, all work was performed at night. The areas under renovation were all covered with advertisement board, and all the renovation odours were eliminated by deodorant.
San Francisco, CA, U.S.
Services Used: Leasing
Growth Requirements Spur Downtown Expansion
Cushman & Wakefield advised Salesforce.com through San Franciscoâ€™s most prolific office expansion on record for a non-governmental enterprise, transacting on over 1.3 million square feet to create a vibrant new urban campus in the heart of downtown San Francisco.
Facing an immediate need for space to accommodate substantial growth, Salesforce was responsible for the cityâ€™s two largest office leases (and three of the cityâ€™s five largest leases) in 2012. Through a series of complex transactions that included a brand new high-rise development that will accommodate projected growth requirements beyond 2015, the Salesforce.com footprint in downtown San Francisco grew to nearly two million square feet of leased space.
The deals were lauded throughout the city, including by Mayor Ed Lee, who said in a statement, â€œSalesforce.comâ€™s decision to continue their expansion in San Francisco is positive proof that our City and its workforce are perfect for growing technology and innovation companies.â€
Gaining CRE Strategic Results
Corporations are under pressure to operate better, faster, and more efficiently. As a partner to the enterprise, corporate real estate must support rapid change.
Below are five steps needed to develop the right CRE organizational structure to meet the changing corporate environment head-on:
STEP 1: Understand the Portfolio
To offer strategic value to the business, the CRE gains a comprehensive understanding of the portfolio, its financial risks and obligations, and where current opportunities exist.
STEP 2: Identify Business Goals
Is it the goal to align total location costs to a percentage of revenue? Is it to secure space through design or other options that provide 20% expansion capacity over two years? Or is it to drive collaboration and innovation across its business units and global markets?
STEP 3: Develop the "Right" Organization
The CRE identifies the proper structure and resources needed to support an expanded role within the organization. Identifying who will liaise with business units and how the communication will occur is critical.
STEP 4: Create a Governance Model
Changing a CRE's operational focus requires a Corporate Governance model that identifies the methodologies and guidelines for decision-making.
STEP 5: Leverage Service Providers
Partnership models are explored, allowing the CRE to transition some, or all, of its responsibilities for the physical real estate to free resources to focus internally on how the combination of real estate strategy, workplace design, and controlling costs assists the business.