IFMA Fellow Ed Rondeau breaks down the current state of corporate real estate and how to deal with organizations both big and small in the digital age.
As the world of corporate real estate continues to transform to keep in line with new technologies and ways of working, the fundamentals of the industry have never been more important. FM and CRE specialists are expected to deliver more dynamic workspaces than ever before and neglecting the nitty-gritty of the industry can have a damaging effect on the quality of work.
Ed Rondeau has 30-plus years of experience in FM and CRE and has seen this shift in workplace mentality over time. As a CRE consultant and educator from the 1992 class of IFMA Fellows, Ed has helped everyone from large organizations to small startups build their real estate portfolios and knows that in order to stay ahead in the industry — you never leave home without a plan.
To start off, when it comes to assessing an organization’s CRE needs, what are the most important initial steps to take in that process?
Rondeau: I’ve always been interested in seeing if an organization has a corporate strategy. The real estate must follow the corporate strategy, we don’t just go out and rent space and buy buildings — we have to follow some kind of strategy and plan. Are they going to grow, shrink, move, not move? How many people are we talking about? How many properties are in their portfolio? All those things are sort of secondary, but if they don’t have strategy then it makes it very difficult and many organizations don’t have a strategy.
Rondeau: I’ve always been interested in seeing if an organization has a corporate strategy. The real estate must follow the corporate strategy, we don’t just go out and rent space and buy buildings — we have to follow some kind of strategy and plan.
Are they going to grow, shrink, move, not move? How many people are we talking about? How many properties are in their portfolio? All those things are sort of secondary, but if they don’t have strategy then it makes it very difficult and many organizations don’t have a strategy.
What are some of the biggest challenges that you’ve faced with clients who have complicated CRE demands?
Rondeau: Some of it boils down to: do they really know what they have in their portfolio? They may or may not. They might just have a listing of locations, they know how many square feet they have, how many people they have in those locations or they don’t really know. In some cases, the client might know a lot or nothing. In a few cases, the client really didn’t tell me the whole truth. You’ve got 200 people here, but I see 400 sitting. Where did the other 200 come from? Well, they’re consultants. As a corporate real estate person, you have to make sure you’ve done your own work and that you understand what’s going on behind-the-scenes because not everyone communicates all the relevant details.
Rondeau: Some of it boils down to: do they really know what they have in their portfolio? They may or may not. They might just have a listing of locations, they know how many square feet they have, how many people they have in those locations or they don’t really know. In some cases, the client might know a lot or nothing.
In a few cases, the client really didn’t tell me the whole truth. You’ve got 200 people here, but I see 400 sitting. Where did the other 200 come from? Well, they’re consultants. As a corporate real estate person, you have to make sure you’ve done your own work and that you understand what’s going on behind-the-scenes because not everyone communicates all the relevant details.
Can you suggest any steps or tips that FM and CRE specialists can use to overcome some of these challenges?
Rondeau: The biggest thing is, does the organization have a database of what they own or lease? That’s the 99-dollar question right there. If they don’t, it makes it very difficult to properly plan. The second question is, do they have a facilities budget for each building? If they don’t, they have a large problem. Do they know how many people are in each building or each location? Do they have the actual lease or purchase deed document? If they’re in a lease, are they planning to move?
How different is your approach to the real estate needs of a small startup with a few dozen employees and one location versus a large organization with hundreds of employees dispersed over multiple locations and branches?
Rondeau: Most of the small startups will have an administrative person, it might be a director of personnel or purchasing, or small firms that pick someone in accounting or finance to keep track of documentation and make sure the bills get paid. Many of those people, five or ten years later, actually end up doing FM. For larger organizations, with 200-plus people in multiple locations, the budgets become so much more important because you’re spending real dollars and you understand the magnitude of what you’ve got. You need to have more contact with senior leadership because the decisions become more strategic to the business. You also need to report to the financial side because they’re giving you fixed assets and that’s the responsibility of the chief financial officer. Where are you growing into? Is it a good location or bad location? You might want to do business in that location, but there’s no talent there. Then you have to start working with HR to make sure you can hire people wherever you go. There are organizations where you need to make sure you’re covering all the bases, you need to have a team that you can call upon or have someone in senior leadership that understands enough of what you’re trying to do so they can support you. It hurts everyone when you have to have big surprises, then you start losing credibility. You have to have trust as the company grows and FMs need to have that access to help them when those tough decisions need to be made.
Rondeau: Most of the small startups will have an administrative person, it might be a director of personnel or purchasing, or small firms that pick someone in accounting or finance to keep track of documentation and make sure the bills get paid. Many of those people, five or ten years later, actually end up doing FM.
For larger organizations, with 200-plus people in multiple locations, the budgets become so much more important because you’re spending real dollars and you understand the magnitude of what you’ve got. You need to have more contact with senior leadership because the decisions become more strategic to the business. You also need to report to the financial side because they’re giving you fixed assets and that’s the responsibility of the chief financial officer.
Where are you growing into? Is it a good location or bad location? You might want to do business in that location, but there’s no talent there. Then you have to start working with HR to make sure you can hire people wherever you go. There are organizations where you need to make sure you’re covering all the bases, you need to have a team that you can call upon or have someone in senior leadership that understands enough of what you’re trying to do so they can support you.
It hurts everyone when you have to have big surprises, then you start losing credibility. You have to have trust as the company grows and FMs need to have that access to help them when those tough decisions need to be made.
How much does corporate culture, whether it’s a smaller startup or a larger organization, factor into an organization’s CRE needs?
Rondeau: It can be huge. You can take some of the startups today, they’re not as interested in the traditional office space environment. They’re more interested in if the workspace has windows or a lounge where they can think about things. They want amenities like a frappe machine or whatever is important to the age group you’re looking to employ. What is the culture of leadership? What do they expect? Some companies are very secretive, others are very open and share what’s going on with their employees. That will change how you think about corporate real estate within the organization.
Rondeau: It can be huge. You can take some of the startups today, they’re not as interested in the traditional office space environment. They’re more interested in if the workspace has windows or a lounge where they can think about things. They want amenities like a frappe machine or whatever is important to the age group you’re looking to employ.
What is the culture of leadership? What do they expect? Some companies are very secretive, others are very open and share what’s going on with their employees. That will change how you think about corporate real estate within the organization.
With so many new ways of working, how has your career in CRE been affected by modern workplace technology and how have you been able to adjust?
Rondeau: As changes come along, there are two things that remain constant. One: I have to have a feel for the culture, which means I have to go see it, sit with it and understand it. Two: I have to listen to people, they can send me e-mails and RFPs, but being face-to-face with them tells me so much more than I could ever write on a piece of paper. It’s just like when you’re looking to do something with a group of friends, you know who they are and they know who are and you can tell just by looking at them that someone isn’t feeling good or something like that. If I walk in a workspace, I can tell the same thing — even if I don’t know the company. Whether it’s hot desking or hotelling, people still eventually have to come into the office. They can do a lot of things online, but occasionally they’ll have to come in and hopefully when they do come in, it’s an event where they want to come in. If you’ve got 200-400 people, they want to feel at home where they are. I had staff in Europe, Hong Kong and Sydney and they would come to the U.S. once or twice a year and I’d go over there once or twice a year, we’d have to do a face-to-face to make sure they understood me, I understood them and they could see me and ask questions.
Rondeau: As changes come along, there are two things that remain constant. One: I have to have a feel for the culture, which means I have to go see it, sit with it and understand it. Two: I have to listen to people, they can send me e-mails and RFPs, but being face-to-face with them tells me so much more than I could ever write on a piece of paper. It’s just like when you’re looking to do something with a group of friends, you know who they are and they know who are and you can tell just by looking at them that someone isn’t feeling good or something like that. If I walk in a workspace, I can tell the same thing — even if I don’t know the company.
Whether it’s hot desking or hotelling, people still eventually have to come into the office. They can do a lot of things online, but occasionally they’ll have to come in and hopefully when they do come in, it’s an event where they want to come in. If you’ve got 200-400 people, they want to feel at home where they are. I had staff in Europe, Hong Kong and Sydney and they would come to the U.S. once or twice a year and I’d go over there once or twice a year, we’d have to do a face-to-face to make sure they understood me, I understood them and they could see me and ask questions.
What are organizations now looking for from their CRE portfolio that perhaps weren’t priorities in the past?
Rondeau: I think you’re seeing a lot of companies looking at amenities. Parking, not charging for a cup of coffee or Coke, making things more convenient for employees. They’re providing things through their purchasing department where they can go to an auto showroom and they’ve got a company discount they can apply to a car. They can go to the movies, that kind of thing. It’s the workplace too, that it has the technology. In so many years that I was in corporate real estate, we almost had the leftovers of technology. Today, very few companies don’t have the latest and the greatest. They have more IT support and it’s a lot better than it used to be, hardware and software that makes your life easier. Your ways to work as well. It’s about how people want to work now versus how they were told to work, I think that’s so important. How they use time, it’s been a long time since my boss asked me what I was doing today, he just expected me to do what I was going to do — I haven’t seen a timesheet in ages.
Rondeau: I think you’re seeing a lot of companies looking at amenities. Parking, not charging for a cup of coffee or Coke, making things more convenient for employees. They’re providing things through their purchasing department where they can go to an auto showroom and they’ve got a company discount they can apply to a car. They can go to the movies, that kind of thing.
It’s the workplace too, that it has the technology. In so many years that I was in corporate real estate, we almost had the leftovers of technology. Today, very few companies don’t have the latest and the greatest. They have more IT support and it’s a lot better than it used to be, hardware and software that makes your life easier.
Your ways to work as well. It’s about how people want to work now versus how they were told to work, I think that’s so important. How they use time, it’s been a long time since my boss asked me what I was doing today, he just expected me to do what I was going to do — I haven’t seen a timesheet in ages.
What are your predictions for the future of CRE? Do you see any trends that are going to rise over the next 5-10 years?
Rondeau: I think we’re seeing, especially with larger companies, the outsourcing of many roles in corporate real estate. The vendors are becoming the keepers of the database and becoming the real estate representatives for the organization. All the strategic issues are still maintained by an in-house corporate real estate leader, and their in-house staff might be significantly smaller than it was in the past. Many of the big outsourcing vendors — Jones Lang LaSalle, CBRE, Cushman & Wakefield and others — now have fewer corporate people out there for what they do. These outsourcing consultants represent themselves as a person who is representing the client and they may wear an in-house nametag on their shirt, but they work for an outsourced vendor. I think that’s going to continue to happen but, other than some senior people who are doing the big deals, negotiating will never be handled by an outsourced vendor as far as I’m concerned. That will be retained by the senior real estate person and the vendor will support them.
Rondeau: I think we’re seeing, especially with larger companies, the outsourcing of many roles in corporate real estate. The vendors are becoming the keepers of the database and becoming the real estate representatives for the organization. All the strategic issues are still maintained by an in-house corporate real estate leader, and their in-house staff might be significantly smaller than it was in the past.
Many of the big outsourcing vendors — Jones Lang LaSalle, CBRE, Cushman & Wakefield and others — now have fewer corporate people out there for what they do. These outsourcing consultants represent themselves as a person who is representing the client and they may wear an in-house nametag on their shirt, but they work for an outsourced vendor. I think that’s going to continue to happen but, other than some senior people who are doing the big deals, negotiating will never be handled by an outsourced vendor as far as I’m concerned. That will be retained by the senior real estate person and the vendor will support them.
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