A Corporate RE Portfolio Model

Transcription

1 Presentation: Paris 28 th March 2014 A Corporate RE Portfolio Model Can it add value to a business by improving workplace decisions? Slide Number 2 28 March, 2014 Dr. Ashley Dabson [email protected]

2 Introduction The total portfolio comprises both workplace and space! Describing, predicting and estimating outcomes are difficult e.g. Describing the parts of it and the relationship between the parts Predicting what changes when the locus of production alters Estimating the portfolio implications when work and place split This matters because managing it as a totality enables: Portfolio agility to be planned Portfolio absorption to be assessed Hence a model is a useful tool, however: It raises a unitisation issue Place, space, heads and cost only partially work as units! So what should the unit be? But first, a model! Sull, D (2009)

3 The 1999 Gibson/Lizieri operational model 2 nd Periphery Portfolio (short-term flexibility) Pay as you use Required at short notice May be specialist space 1 st Periphery Portfolio (numerical flexibility) Short lease/licence Some services expected Ability to exit Core Portfolio (functional flexibility) Freehold/Long leasehold Control all aspects Ability to change use Gibson, V & Lizieri, C (1999)

4 This model is useful but! The property market has changed Distinctions have diminished People work from anywhere Leases are becoming shorter It is incomplete!

5 The total portfolio Operational Portfolio Corporate Real Estate Costs Low Core Portfolio (functional obsolescence risks) Corporate Real Estate Costs High Nonoperational Portfolio Dabson, A & McAllister, P. 2013

6 Benefit The dynamics of the total portfolio High In In The Core Portfolio Third Portfolio Operational RE portfolio The Peripheral Portfolio Alienated Portfolio Vacant Portfolio Low Low Out Cost Out High

7 What do the arrows represent? Costs yes, but it is not enough! Cost is an output not an input You can not control unattached costs Heads no, this is about supporting them Not managing them! They are also not: Workspace the third portfolio? Workplace the vacant portfolio? Arrows represent units but units of what? But why have portfolio unitisation? What are the characteristics of a unit?

8 Unit characteristics The unit - is a volume or bubble Designed for a specific locus of production It encloses an environment Acts as a focus for support Unitisation also includes those units within the: Vacant portfolio where there is no work in the space/place Third portfolio where work is split from the controlled space/place Units and portfolio unitisation The Σ the units = the total portfolio The Σ the unit costs = the total portfolio costs

9 Bubbles - A paradigm shift? External Social Internal Fitness for purpose Location Space Management Services etc. Environmental Economic Boundary Maintenance Transactions

10 Benefit Bubble division and dynamics High Third Portfolio The Core & Peripheral Portfolios Bubble cost = 2,000 (security & mobility etc.) Alienated Portfolio Bubble cost = 7,500 (occupancy cost) Vacant Portfolio Stage 1 = 25,500 Stage 2 = 27,500 Stage 3 = 24,500 Stage 4 = 21,000 Low Bubble cost = 1,000 (over rented) Low Cost Bubble cost = 4,500 (rent & carrying cost) High 28 March, 2014

11 Bubble management Security includes: Personal & PDA s, Physical boundary & contents Environment includes, Transactions, & change, Energy, water & waste The bubble may be: Occupied - Core Occupied - Peripheral Occupied - Third Vacant Alienated Services include: Occupant, Health & safety, Light, noise, air & temperature Communication includes: Face to face, Voice, video & data

12 Conclusions The model shows that the total portfolio: Is a dynamic interrelated system Can be shaped as needed There is a need to unitise unit services and unit costs Without units relationships and comparisons are unclear It is the unit support that drives cost E.g. if the locus of production and place split costs will rise as units increase The bubble as the unit is a useful analogy as it acts as: A focus for the support needed in different situations It distinguishes between the internal and external environments Bubble management may be a rewarding approach Does it support a need for joint business support centres? Is a wider spectrum of skills and competencies needed? References Dabson, A & McAllister, P. (2012) Flexible Real Estate Perception v/s Reality. MWB Business Exchange Gibson, V & Lizieri, C. (1999) Change and Flexibility The role of serviced office space in office markets and corporate portfolios. RICS Educational Trust Sull, D (2009) How to thrive in turbulent markets. Harvard Business Review