Business, Profits and Strategy

What really drives a company's real estate decisions? Is it lease expirations, the need for more space, a desire to reduce rental costs? Is that really it? These are the three deadly sins of an outdated and often short-sighted approach to real estate. A focus on the company's real estate only months before the lease will expire or only before the mortgage becomes due will likely cause a company to miss significant opportunities to achieve value, create greater flexibility, enhance corporate profitability, and more.

CFOs are a busy bunch, to say the least. In fact, today's CFO is no longer the green eyeshade clerk of yesteryear. The CFO of this millennium oversees or influences a considerably wider swath of the corporation, including operations, finance, human resources, information technology, real estate, purchasing, sales, and more. The corporate CFO has become the defacto COO.

Andrew B. Zezas, SIOR
Relationship Manager,
Strategist, President
(908) 245-5999 x11
andrew.zezas@realstrat.com

A corporation's real estate, whether owned or leased, can provide a tremendous opportunity to support the company's operational and financial objectives, reduce risk, create greater flexibility, increase corporate profitability, and enhance stakeholder value. So, why do some CFOs still address real estate as if it possesses a huge burden? Very often, it’s because they mistakenly focus on real estate for real estate's sake.

Your company's real estate is merely a catalyst for achieving another objective...that of generating profits. Truth be told, that unless your company is in the business of real estate, including leasing, property management, construction, or investing, the only reason your company needs real estate is to support its true business objectives. So, why not address your company's real estate the same way you run your business...in search of profit-making opportunities!

Let's face facts:

If real estate is just a tool for your company to achieve some other more important goal, then why not use that tool to its fullest profit generating capacity, and recognize when it can help accomplish your mission.

So, what really drives real estate decisions? The answer is: Business Needs! For example, when a company decides to acquire more space, does it do so just because? Of course not! There's a business need behind the decision to lease or purchase additional real estate. In all cases, the decision to acquire, dispose of, or change real estate is driven by an operational or financial requirement, not a real estate need. The true drivers of a company's real estate decisions present opportunities to enhance, not only the real estate itself, but also the company as a whole. Some of those drivers include changes in:

Financing
Ownership
Investor exit strategies
Management change / Succession
M&A
Mission
Risk
Sales
Costs or cost structure
Headcount or availability of qualified and cost-effective labor
Geography
Products or service lines
Business processes
Economic or political dynamics
Competition
Customer habits, demographics, or requirements
Regulatory or compliance requirements

So, the next time a real estate broker or landlord asks you what your real estate needs are, stop the conversation. Then, find a professional who understands that what your company really has are business needs that require the application of creative and profitable real estate solutions to solve those business challenges. Engage a service provider who has the expertise and experience to apply business and real estate solutions to your company's financial and operational challenges.

Andrew B. Zezas, SIOR, is Relationship Manager, Strategist, and President & CEO of Real Estate Strategies Corporation, Publisher of "Business, Profits and Strategy", a monthly online publication read by thousands of business, financial, and real estate executives nationally, and, is the author of two new real estate books, The CFO's Guide to Understanding Corporate Real Estate Transactions and The CFO's Guide to Hiring the "Right" Real Estate Service Provider, both of which will be available shortly at www.thecfosguide.com.

Mr. Zezas is well-known for his ease and informative style of public speaking, and has given talks, presentations, and has lead educational programs for business, professional, government, and trade associations, including the Building Owners and Managers Association, American Management Association, the U.S. Postal Service, RealComm, Society of Industrial and Office Realtors (SIOR), and others. Andrew is National Chairman of the SIOR Tenant Representation Specialty Practice Board, and is a licensed real estate instructor in Texas and Indiana. He can be reached at 908 245 5999 or via email.

Real Estate Strategies Corporation, located in Kenilworth, New Jersey, and serving clients throughout the country, helps companies create and execute Business DRIVEN Real Estate Solutions...and Opportunities, faster and with less risk. Visit www.realstrat.com.

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