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Multinationals face construction management, office issues

The head of Procter & Gamble's Global Facilities & Real Estate, who oversees the firm's 170 million square feet of owned and managed real estate, said there has been no shortage of challenges around the world.

Lydia Jacobs-Horton -- who recently addressed the Burnham-Moores Center’s Second Annual Women in Real Estate Conference at the University of San Diego -- is responsible for about $1 billion worth of annual expenditures in connection with P&G commercial real estate.

Jacobs-Horton explained that her firm oversees more than 1,000 properties around the world. Jones Lang LaSalle (NYSE: JLL) handles the sales and leasing for all this real estate.

Procter & Gamble is in the process of developing seven new overseas plants in places such as Brazil, Nigeria and Singapore, and Jacobs-Horton said getting construction management is her most difficult challenge.

“We can’t get it,” she added.

This lack of construction management has had its consequences.

“In Moscow we thought we were doing excellent due diligence when we were working with the developer and landlord, but the construction company gave us the 'B' team because we were in a suburban market,” Jacobs-Horton said.

Jacobs-Horton said the “A” construction teams go to projects in Moscow’s central business district.

Working in foreign countries has had other challenges -- not the least of which involved P&G worker in Cairo being denied the right to leave, because he had the same name as a man who was allegedly smuggling antiquities out of the country.

“It took 10 days to get him out (of the country),” she said.

With its brands in some 180 countries, and offices in many of them, P&G appears to be well-positioned to serve the estimated 1.4 billion in new potential middle-class customers it projects to be in developing markets by 2020.

Jacobs-Horton suggested that translates into the need for millions of square feet in new manufacturing, R&D and warehousing space within the next few years.

In terms of office space, Jacobs-Horton said whether the space is in her Cincinnati headquarters or on the other side of the globe, companies such as hers are opting for more collaborative, or open, spaces than corner offices.

She added her company is also saving millions of dollars, as the amount of leased office space used per person has shrunk in recent years.

Jacobs-Horton added that the collaborative spaces don’t only foster cooperation, but the company also saves millions of dollars each year on what might have been wasted space.

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