Archive for January, 2010
|From New Business Incentives to Hand to Hand Combat: How Smaller Cities Compete for Investment
Wednesday, January 27th, 2010
By Michelle Cammarata
When the going gets tough, how can economic developers in small cities compete for jobs and investment? For a recent research project, I learned how officials from Richmond to Boise are working harder and smarter. One local official described his work as “hand to hand combat,” reflecting the fierce battle for every project. In this war for new business, the weapons include low business costs, incentives, and a skilled workforce.
Low Costs + Diverse Economy = Stability
Omaha’s low costs and diverse economic base has helped to keep the unemployment rate at just 4.6%.1 With 10,000 jobs, the Air Force is the region’s largest employer. Other institutional employers include the University of Nebraska. Low rents and a skilled workforce support a strong financial services sector, while Omaha’s technology infrastructure and low power costs attract data centers. Nebraska is the nation’s only public power state, and generation and distribution of electricity are provided by a not for profit entity.
Innovations in Incentives
Innovative economic developers are changing business incentives programs to suit the times. Incentives for a New Kentucky (INK) offers tax benefits for companies that are often overlooked: existing businesses and those re-investing in facilities, even if they are not creating new jobs. Officials in Bowling Green believe they have a major advantage in business retention. Faced with the choice to close their local plant or a facility in another state, consolidating companies will choose to stay in Kentucky, they reason. When the economy improves, Bowling Green will capture the new jobs.
Investing in Workforce
Investments in human capital make a major impact as Kingsport, TN has shown with the “Educate and Grow” campaign, designed to reverse the region’s overreliance on heavy manufacturing, shrinking younger workforce, and sinking educational achievement. Local leaders launched a K to 14 program, the first in the country, to extend high school by an optional two years. Kingsport high school graduates are eligible for a scholarship at Northeast State Technical Community College. The community has invested in an “academic village” that includes regional training centers for advanced manufacturing and health professionals. The effort has paid off with new businesses, a growing young adult population, and an increase in residents earning college degrees.
Culture Matters
In headquarters site selection, quality of life plays a major role, and smaller cities with the right assets can win. To beat Atlanta for MeadWestvaco’s headquarters, leaders in Richmond showed that their hometown offers all the cultural amenities of a big city, with shorter commutes and lower housing costs. Greater Richmond boasts 10 colleges and universities, a fine arts museum, a science museum, and 400 years of history.
Small Cities Think Big
Whether their populations and budgets are large or small, the challenges facing economic developers will not disappear any time soon. Yet, no matter where we are in the business cycle, smaller cities can compete and win by thinking big, aiming high, and developing the business climates and cultural assets that employers value.
1 Bureau of Labor Statistics, Nov. 2009
Tags: business incentives, economic develoment, Site Selection
Posted in Workforce & Location Planning | 3 Comments »
Dawn of the Green Technology Decade
Wednesday, January 20th, 2010
By Mike Tobin
Welcome to 2010 and the dawning of the clean/green technology decade – or so we are led to believe! The current administration has ushered in the new decade with some very exciting steps towards embracing a more sustainable and environmentally focused strategy which has the potential to dramatically affect our real estate market. From the notable steps taken by the Supreme Court in the 2007 ruling that the EPA must regulate CO2 and other greenhouse gases to the recent December 7, 2009 announcement in which the EPA has formally determined that greenhouse gases threaten public health and welfare, it is inevitable that business as usual will no longer exist as it relates to greenhouse gas emissions. Congress will need to pass comprehensive greenhouse gas regulation soon otherwise the EPA will be required to regulate these emissions under rules that most experts consider inefficient. It was therefore more of a formality and favorable political opportunity for President Obama to finally, and confidently, put the United States in the middle of the discussions on global warming and limiting greenhouse gas emissions at the Climate Conference in Copenhagen this past month.
Regardless of politics, the winds of change are blowing harder than ever in relation to how businesses address greenhouse gas emissions and other sustainability issues. Leading companies have already put in place a strategic sustainability plan and begun to measure their carbon footprint, analyze their exposure to “dirty” fuels, and assess their capabilities to harness renewable energy sources (among other objectives). All companies could substantially benefit from developing a similar plan to position themselves for the cleaner/greener future.
Within this sustainability plan, the impact on real estate will be profound as companies struggle to adjust to the new regulations and stakeholder expectations, as well as the necessary efforts to take advantage of the myriad of incentives and initiatives surrounding them. This era of change brings with it opportunities for success but it also brings the potential for pitfalls. In order to capitalize on the future, leading companies are diligently working now at the forefront of change to identify both the opportunities and pitfalls.
For example, we all know the key in real estate is “location, location, location”. The new changes on the horizon will affect the playing field for finding the best sites. Site location criteria will begin to focus more on the mix of local fuel sources with an eye toward avoiding areas with “dirtier” fuels and areas with local utilities that have a higher cost to meet compliance. “Dirtier” fuels and higher conformance costs will translate into higher costs to consumers. Also, understanding the feasibility of local renewable energy sources will become more important as this will affect the prioritization of sites that allow a company to tap into the most efficient renewable energy systems that will provide clean, consistent power at relatively stable prices into the future.
As we begin 2010, how are you helping your company or your client prepare for – and capitalize on – the clean tech decade?
Disclaimer: The opinions expressed in CresaPartners’ Blog represent those of our bloggers, and not necessarily those of the firm.
Tags: green, renewable energy, sustainable
Posted in Sustainability | 1 Comment »
Project Management for a New Day
Wednesday, January 13th, 2010
By Phillip Infelise
Project Management. The term implies different things to different people. I want to offer a perspective of what it means in the context of the New Day Project Manager. In a perfect world, we would call it Process Management, since that is what we are really managing…an overall process…but that only confuses folks with vernacular, so we stick with Project Management. We whisper then that the New Day Project Manager manages the entire process that surrounds the more simplistic “project.” What is it that we actually manage is broken down into three buckets: Process. People. Projects.
Process is an expanded set of activities in our world – dream it, find it, design it, build it, occupy it. Most traditional PMs focus solely on the design and construction phase. If we have engaged the right partners on our project teams, that’s the easy part. Surrounding the sticks and bricks are the true hazards and pitfalls. The New Day PM is involved in the Strategic Planning and real estate on one end and Relocation Planning & Management on the other, effectively bookending the traditional PM mindset. We manage both physical and intellectual process, distinct activities as well as overall planning and communications.
People. The majority of the New Day PM’s effort is spent in managing the myriad of people on a project, including the internal team (client management, staff) and the external team (architects/engineers; contractors; cable, phone, security, and furniture vendors; specialty vendors like sound-masking, audio/visual, signage, graphics, and right down to the art consultant). In a large project, we can easily be talking 50 people or more. One classic, large law firm project included a total of 34 companies represented at an all vendor meeting. We practice a lesson taught early in pre-school – learn to play well in the sandbox; teach others to do the same.
More than anything, the New Day PM is tasked with managing the very client that hires him/her to manage everyone else. We are not shy about saying this, but managing the client expectations, their internal organization, and their spending to achieve their stated output is where we spend our time and efforts since that’s where we can add significant hidden value. We are “people people” that manage process.
Project. The projects we manage are diverse. We oversee the “dream it, find it, design it, build it, occupy it” effort to build a user’s space, be it in a standard office, a build-to-suit headquarters, a technical space in a flex-tech environment, a laboratory, or a special use building like a recreation center, sports facility, studio, church, school, what have you. Whatever the project, the process remains the same.
New Day PMs, thus, require a much broader set of skills than the old world PM. Beyond the sticks and bricks expertise, the new day requires strategic, financial, diplomacy, and communications skills only learned after years on the job. Building it is easy; managing the process and the people to get it built is the real challenge.
Tags: PM, process management
Posted in Project Management | Comments Off
Towards Optimal Efficiency
Wednesday, January 6th, 2010
B
y Vik Bangia
For the past twenty years, the mantra in the real estate service provider world has been “cost savings.” Most service provider firms in this industry say they’re experts on delivering real estate solutions that result in bottom line savings. Whether the savings is related to occupancy expenses, energy, or operating expenses, their stated goal is to reduce real estate spending. However, with any line of thinking, what starts small often goes to extremes, and what has transpired in this industry has damaged both client corporate real estate (CRE) organizations and service providers alike.
In the zeal to cut costs, CRE organizations made several missteps over the years. In the 90s they over-outsourced their real estate departments and dramatically reduced headcount; often losing institutional knowledge along with the layoffs. Service providers, in a similarly zealous effort, made recommendations that reduced short-term spending but neglected long-term implications especially in the changing economic times and challenges such as the 1990s recession, turn of the century dot-com era, and our recent (and continuing) economic crisis. The result was a glut of office space, scope creep on outsourcing engagements, and a push by corporations to compress service provider fees. This has commoditized the real estate services industry and made it more difficult for corporations to get what they needed all along, sound advice.
Instead of looking back at what could have been done differently, I’d like the industry to look forward about how to think differently about what cost savings really means. And as usual, I don’t turn to the readily available commercial real estate publications. Instead, I go back to the basics and open up my college physics book.
In physics, the optimal performance of any system is a range in which the system performs best. In corporate real estate, for simplicity, if you define this range as a line, the optimal efficiency of a corporate real estate department is achieved by bringing the organization closer to the line (see graphic below). Working against optimal efficiency are certain internal and external factors. External factors, among others, may include: the economy, competition, politics, regulatory issues, and public perception. Internal factors, among others, may include: vacancy, demand for space, attrition, asset value, and the company’s own business strategy.
In traditional real estate brokerage, an assumption tends to be that every optimal transaction creates an optimal portfolio. But a true real estate advisory approach considers the real estate portfolio as a “system” in which the optimal efficiency of the whole is paramount, and individual decisions are made with the system efficiency goal in mind.
This system framework is created by recommending and implementing the right combination of outsourced support services, CRE organizational design, internal processes and workflow, best practices, communication, internal customer relationship management, and both internal and external benchmarking.
The system then looks to define the optimal framework for decisions by developing space standards, communication and reporting protocols, financial and business controls, and performance measures.
In 2010, consider your real estate portfolio as a system which should be managed with a system view to efficiency. If you’re thinking about a new real estate service provider relationship, be sure to ask questions of your service provider candidates that go beyond the traditional day-to-day or deal-by-deal approach. If you’re looking for questions to ask, write me at vbangia@cresapartners.com.
Tags: cost savings, optimal efficiency, real estate portfolio
Posted in National Accounts | 1 Comment »
Welcome to the CresaPartners Blog
Saturday, January 2nd, 2010
Happy New Year and welcome to the CresaPartners blog! We will have a rotation of eight dedicated bloggers posting about their respective areas of expertise, including Project Management, National Accounts, Sustainability, Workforce & Location Planning, Capital Markets, Lease Administration, Supply Chain, and Facilities Management. Visit the “Our Bloggers” tab to learn more about our bloggers and their experience in corporate real estate. As the largest tenant representation firm in North America, we believe our bloggers will provide unique perspectives on what’s in store for the corporate real estate world in 2010. Stay tuned later this week for a post from Vik Bangia.
We are excited to begin 2010 with our new blog as well as a redesigned Web site, a Facebook fan page, and a Twitter account. Check out these sites to learn more about CresaPartners.
Posted in Uncategorized | Comments Off
