Portfolio Planning and Investment – Rationalizing U.S. Property Portfolios

Steven Bernstein
Continuing economic hesitancy is forcing corporate America to take a closer look at its property portfolios. Few organizations can afford to carry excess property weight at this time.

Property represents the second highest expense after payroll for most organizations and each asset must therefore earn its place. Efficient management of corporately-owned property assets is just as important as the management of other in-house principal resources. However, some corporate real estate divisions are not fully aware of the total extent of their property holdings, and are ill-equipped to rationalize the property asset base to best advantage.

Whether the property is owned or leased, a definitive asset register is the first step toward a rational property audit.

Whether the property is owned or leased, a definitive asset register is the first step toward a rational property audit. Larger portfolios may already have suffered from a fragmented planning approach, and a mismatch of property may have resulted from legacy issues such as mergers and acquisitions. A footprint reduction program may make sense, together with maximizing the efficiency of buildings, improving workplace strategies, preparing buildings and sites for disposal or lease, and reducing operating costs.

When considering the future of a facility, utilization and suitability criteria can be explored. Changing work patterns mean that space efficiency measures are even more applicable if a company’s space is deemed under-utilized or unsuited to the organization’s current operating solutions. A greater percentage of today’s employees are spending more time away from their office workplaces and the non-utilization of this valuable space can be accurately quantified, often with alarming results. Redesign, re-engineering or reconfiguration of space may produce significant savings in capital and operating costs. Ongoing, space which can be easily reconfigured to meet future needs will be more cost effective in the long run.

Faithful+Gould’s global Portfolio Planning and Investment service has been developed for major corporate organizations with large property portfolios. Portfolio Planning and Investment addresses the challenges arising from changing business needs.

The focus is often redundant buildings and land. We adopt a holistic approach to these redundant assets, enabling clients to treat them as valuable opportunities and producing maximum business efficiency. For instance, several discrete land parcels may be amalgamated to create a more valuable and efficient business-focused land bank. This can free additional vacant land which can then be prepared for profitable disposal.

Clearly the current economic situation favors rationalization from a cost-saving perspective, but recovery also brings the challenges of making the portfolio fit for purpose during potential expansion. Companies seeking capital investment approval need to demonstrate an active asset management strategy.

The Portfolio Planning and Investment service supports both expansion and contraction of corporate activities and associated property holdings. Clearly the current economic situation favors rationalization from a cost-saving perspective, but recovery also brings the challenges of making the portfolio fit for purpose during potential expansion. Companies seeking capital investment approval need to demonstrate an active asset management strategy.

We have a global team of multi-disciplinary property and facilities management professionals, with comprehensive experience of asset maximization in a variety of countries. Here in the U.S., we can advise on how best to align the property portfolio to meet the organization’s needs, and how to reduce both capital and operating costs of the estate. The strength of this service lies in the holistic interpretation of the facilities assessment, allowing clients to efficiently manage the total cost of ownership. We help our clients to make sense of the changing shapes of their business, to deal with the current tensions and to plan for recovery in the future.

Services are tailored to individual needs and to complement in-house property expertise. We take the lead if required, or, alternatively, we work alongside client’s estates and facilities departments where appropriate. The response has been very positive in a variety of sectors including pharmaceutical, chemical and financial.