Top occupiers are failing to include property in their strategic business planning, reveals an international study.
Leading companies in Europe still do not know how much property they occupy, what it is costing them, or how much space they are likely to need in three years’ time, according to a report sponsored by management consultant Ernst & Young, Real estate resource management comparisons.
Researchers from Oxford Brookes University and the University of Reading in the UK questioned around 200 companies and public sector bodies in the UK, France and Spain about their approach to real estate. They found that at least 40% of organisations in all three countries did not include real estate in their strategic plans, while “a significant minority” did not undertake any kind of financial accounting in relation to property.
But the researchers found that collecting specific information “was extremely difficult”, particularly in France and Spain. “The reasons for this included the lack of availability of information within organisations, a high degree of secrecy and limited understanding of the issues being addressed,” says the report.
Around 150 UK organisations replied to a questionnaire, compared with between 20 and 30 in France and Spain. The respondents were broadly split between the public and private sectors, with an emphasis on indigenous rather than multinational companies. The research was supplemented by discussions with two panels of specialists.
“All three countries have yet to evolve sophisticated monitoring systems for real estate and its management,” concluded the report. Only one third of the private sector companies in France regularly assessed their long-term space requirements, for example, while only 29% of the UK companies said they accounted for their real estate on a property-by-property basis.
“If real estate is only accounted for in a broad way, either in a single pool or on a department-by-department basis, it is impossible to evaluate the costs and benefits of a particular building or property,” points out the report.
Generally the UK had “developed a more specialised professional and educational infrastructure relating to real estate resource management than either France or Spain”. But this meant that there tended to be more distance between the property professionals and the executives dealing with core business functions. “It is only recently that [UK] property professionals recognised their responsibility to understand the main business.”
UK and Spanish organisations were more likely than their French counterparts to have a full inventory of all the property they occupied. In Spain, 88% of private sector companies and 86% of public sector bodies had full inventories. However, the level of sophistication of their information was poor: only 14% of public sector organisations had details of the running costs of their property, while only 24% of private sector companies had considered other potential uses for their property.
The study concluded that the basic management structures, information base and skill sets were in place in each of the countries. “What seems to be needed is a change in attitude – real estate needs to be seen as a valuable resource which can have a direct impact on the organisation’s success.”
Leading companies in Europe still do not know how much property they occupy, what it is costing them, or how much space they are likely to need in three years’ time, according to a report sponsored by management consultant Ernst & Young, Real estate resource management comparisons.
Researchers from Oxford Brookes University and the University of Reading in the UK questioned around 200 companies and public sector bodies in the UK, France and Spain about their approach to real estate. They found that at least 40% of organisations in all three countries did not include real estate in their strategic plans, while “a significant minority” did not undertake any kind of financial accounting in relation to property.
But the researchers found that collecting specific information “was extremely difficult”, particularly in France and Spain. “The reasons for this included the lack of availability of information within organisations, a high degree of secrecy and limited understanding of the issues being addressed,” says the report.
Around 150 UK organisations replied to a questionnaire, compared with between 20 and 30 in France and Spain. The respondents were broadly split between the public and private sectors, with an emphasis on indigenous rather than multinational companies. The research was supplemented by discussions with two panels of specialists.
“All three countries have yet to evolve sophisticated monitoring systems for real estate and its management,” concluded the report. Only one third of the private sector companies in France regularly assessed their long-term space requirements, for example, while only 29% of the UK companies said they accounted for their real estate on a property-by-property basis.
“If real estate is only accounted for in a broad way, either in a single pool or on a department-by-department basis, it is impossible to evaluate the costs and benefits of a particular building or property,” points out the report.
Generally the UK had “developed a more specialised professional and educational infrastructure relating to real estate resource management than either France or Spain”. But this meant that there tended to be more distance between the property professionals and the executives dealing with core business functions. “It is only recently that [UK] property professionals recognised their responsibility to understand the main business.”
UK and Spanish organisations were more likely than their French counterparts to have a full inventory of all the property they occupied. In Spain, 88% of private sector companies and 86% of public sector bodies had full inventories. However, the level of sophistication of their information was poor: only 14% of public sector organisations had details of the running costs of their property, while only 24% of private sector companies had considered other potential uses for their property.
The study concluded that the basic management structures, information base and skill sets were in place in each of the countries. “What seems to be needed is a change in attitude – real estate needs to be seen as a valuable resource which can have a direct impact on the organisation’s success.”
Proportions of organisations collecting data
|
% |
UK private |
UK public |
France private |
France public |
Spain private |
Spain public |
|
Location |
90 |
90 |
83 |
76 |
100 |
100 |
|
Floor area |
83 |
83 |
67 |
71 |
100 |
93 |
|
Current occupier |
94 |
81 |
100 |
71 |
82 |
64 |
|
Current market value |
74 |
62 |
50 |
24 |
71 |
21 |
|
Total running cost |
42 |
56 |
33 |
53 |
59 |
14 |
|
Potential use |
45 |
45 |
17 |
35 |
24 |
7 |
