Corporate real estate is the second highest cost component of the typical corporation's budget, typically representing at least 25 percent of the company balance sheet and ranking just behind personnel.
Beyond its cost, corporate real estate also directly impacts a company's overall employee productivity, retention and recruitment -- not to mention the company's basic ability to successfully compete in an increasingly complex business environment.
Planning and effectively managing successful corporate campuses is a specialized area of expertise that is increasingly sought and relied upon by top corporate executives as they strategically plan for their company's future.
The role of facilities management extends far beyond basic site management where landscaping, maintenance and operations are the order of the day, and into long-term real estate and business planning. The facilities manager guides corporations through complex real estate decisions that will have a far-reaching impact, not only on the company's current and future operations, but on the real estate's ability to maintain value and flexibility for decades to come.
An inherent dichotomy exists: Where the corporate business environment is dynamic and dictated by product innovation, speed, market cycles and competitive pressures, the facility world is inflexible and illiquid, characterized by long land development and construction lead times, code compliance and high costs of operation. Where a company's business products can progress through an entire life cycle in a matter of months, a facility's life cycle is measured in decades.
With facilities management, the challenge is to successfully mesh a dynamic, competitive, high-speed business environment with an expensive and slow-to-respond base of operations that has direct impact on the key to the new economy -- personnel and personnel productivity.
Accordingly, corporate real estate must be considered a strategic asset of the corporation if it is to be deployed to its maximum effect. This requires linking the corporate real estate and corporate business plan to achieve and maximize overall business synergy. Specific considerations include:
* The campus must be designed and laid out, at an organic level, far into the future. This is particularly daunting for many corporations since often the products which are generating significant revenues today did not even exist two or three years ago. The corporation must have sufficient vision and the requisite business fortitude to commit current resources to the speculative development of future income streams and resources. Those who do so will enjoy a significant business advantage.
* The built campus environment must be flexible -- able to quickly and cost-effectively adapt to innovations, new product development and new production technologies -- while still supporting the current business practice in a "state-of-the-art" manner. A qualified facilities manager can help a corporation make sure that improvements installed to support the company's current activity are not so specific as to completely preclude future disparate uses, as well as ensure that the retrofitting of existing "shell" facilities is not so expensive that complete new facilities are required to support new processes.
* Because it is a campus and home to large numbers of personnel, certain retail-service amenities must be conveniently provided on the campus itself. These include eating facilities, recreation facilities, dry cleaning and shoe repair and other similar services. Day-care services should be given strong consideration given the dual-income nature of today's work environment. Employers benefit from offering these services on-site: Not only is traffic mitigated, but employees spend more time on campus and run into each other facilitating networking and a sense of belonging.
* The campus should project the corporation's image in terms of its design and execution. This is critical where personnel recruitment and retention is concerned. Studies show that 40 percent of personnel attribute satisfaction with the facility as the reason they choose to work for a particular corporation, and that 50 percent of the personnel who elect to leave a corporation do so because of dissatisfaction with the facility.
* The campus should provide significant connectivity -- not only of the wired or wireless variety, but also through places where personnel can network, socialize, collaborate and share ideas. These places should also support quiet reflection. Most corporate campuses today support multiple products, each of which is likely to be in a different phase of the product life cycle. For example, products in the initial R&D phase typically require facility support of both small group collaboration and individual quiet reflection. On the other hand, products that are in the mature phase typically require facility support of highly mechanized production systems such as heavy and clean power, robust mechanical systems, etc. The corporate campus needs to accommodate these diverse needs while still fostering an integrated environment where personnel feel connected.
Specific management issues that must be carefully addressed with today's campus environments include:
* Security and personnel safety, not only in light of post-Sept. 11 but also from the perspective of industrial and corporate espionage. With multiple buildings on large sites with extensive landscaping -- and easy ingress and egress from outsiders -- there is increased concern for employee safety during and after work hours. Many corporate campuses operate 24/7, thereby requiring additional considerations for safety and security. The open nature of these campus environments also increases the risk for breaches in confidentiality and trademark rights and espionage. The corporation's management must be committed to mitigating these risks for the protection of the company's competitive edge as the policies and security measures taken must encompass contractors and vendors as well.
* Landscaping must not only take security considerations into account, but also create a synergistic yet reflective work environment with ample areas in which employees can gather, exercise or eat. Landscaping should be carefully planned for ease of maintenance. With water an increasingly costly commodity, irrigation methods and plant and ground cover selection are also critical. Many corporate campuses are phased over long periods of time, and a landscaped environment for the areas not yet built upon are a good way to put this land to use. For example, land set aside for future development can be used to provide employees with yet another benefit or perk, such as on-site jogging trails or fitness parcourses.
With San Diego a recognized center in the biotechnology, high technology, software and wireless telecommunications industries, corporate campus requirements are more sophisticated than ever before. Companies recognize that their campus must be able to accommodate their business today as well as tomorrow.
Retaining good employees, and providing an environment that maximizes productivity and the ability to compete, is a vital component to the corporation's overall success. As a result, facilities managers are playing an increasingly vital role in corporate relocation and design and planning decisions -- an investment that corporations are now realizing they cannot afford to go without.
Beary is managing director of corporate advisory services at Burnham Real Estate Services.