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Corporate Real Estate Management Practices in Sweden

Written by E. Holfert, M. Villamide

Paper category

Master Thesis

Subject

Architecture & Real Estate

Year

2011

Abstract

Master Thesis: 3. Management of corporate real estate—theoretical framework “Research shows that although corporate real estate is of great value, corporate real estate management is seriously inadequate” (Veale, 1989, p. 1). “Research in some countries shows that a considerable proportion of large The company has not even achieved the most basic level of prudent asset management..." (Warren, Simmons, & Trumble, 2007, p. 464) These two statements are 18 years apart. Weir issued a statement in 1989 when corporate real estate management (CREM) became the subject of scientific research, mainly in the United States. By 2007, despite a lot of research on the subject, this statement did not seem to have changed much. CREM is defined by Pittmann and Parker (1989) as the management of physical assets within a company, including facilities and land. Veale (1989) recognizes the importance of physical assets as a cost and value factor to any particular company. In his research, the author has been able to predict that a new management discipline will emerge in the next few years. The large amount of literature on CREM topics written in the past two decades proves that he is correct. Since the early 1990s, the definition of CREM has been redefined, updated and improved by various researchers. Nourse and Roulac (1993) were among the first to define CREM in a more strategic way. They believe that only by strategically using the company's actual assets to supplement the overall business strategy can the company achieve sustainable success and growth. They identified eight strategies for real estate. Another way to understand corporate real estate (CRE) is described by Joroff et al. (1993), as cited in Appel-Meulenbroek & Feijts (2007). He described CRE as part of an intertwined network based on four other resources: knowledge, employees, technology, and capital. These five resources are necessary within the organization to successfully transform inputs into measurable results. For the purposes of this research, CREM will be defined as the active management of the company’s actual assets in order to achieve maximum performance for overall business success, while creating a productive, effective, efficient, creative and healthy workplace, and maintaining universal flexibility Sex and sustainability. The scope of CREM also depends on the type of real estate and its purpose of use. Different types of CRE can be determined according to use: commercial, retail, industrial storage and office (Wills, 2008). Another classification of CRE is found in Gibson (2001). She divides CRE into core and peripheral real estate (primary and secondary) based on flexibility requirements. 3.1. Main research issues in CRE After a general overview of the CREM literature, it can be considered that the main research areas covered include: CRE goals and strategies, CRE organization and operation issues, and information availability issues. Each of these areas will be presented separately in the following literature review, the purpose is to outline the main aspects considered in this study. 3.1.1. Research on CRE goals and strategies has extensively discussed the importance of clearly defining CREM goals and objectives (Carn et al., 1999; Gibler et al., 2002; Ilsjan, 2007; Lindholm, 2008). Most of them try to determine the main goals of CRE from a management perspective. According to the document, the operational goals of CRE are: to promote any problems related to the core business, to optimize real estate resources and to align with the company's goals (Carn, Black, and Rabianski, 1999). According to a survey by Gibler, Black, and Moon (2002), CRE managers listed them as three major goals: meeting workplace needs, meeting specific needs of business operations, and minimizing portfolio operating expenses. These results are consistent with the results of previous studies, but also emphasize the fact that CREM goals are mainly viewed from the traditional perspective of adapting operations at the lowest possible cost, rather than focusing on issues such as productivity and flexibility (Gibler, Black and Moon, 2002) More recently, an exploratory survey conducted among the 17 largest organizations in Estonia showed that the main goal of CRE is to optimize occupancy costs and increase customer satisfaction (Ilsjan, 2007). According to Ilsjan's (2007) research, most of the companies participating in her research still view real estate as an operational asset rather than a financial asset. Many of these companies expressed their desire to focus on their core business rather than dealing with real estate-related issues. Lindholm (2008) pointed out that the original goal of CREM was to continue to provide accommodation, but now its main focus is on outsourcing CRE services and reducing the impact of real estate on the balance sheet. She also mentioned that it has changed from treating CRE as a tangible asset to an intangible asset that can provide related benefits (Lindholm, Identifying and Measuring the Success of Corporate Real Estate Management, 2008, Masterarbeit). Read Less