Journal of Corporate Real Estate

The valuation of sustainable freehold property: a CRE perspective : Table of Contents

John R. Mansfield — Sun May 31 14:15:05 BST 2009

Abstract:
Purpose – In the increasingly hostile operating environment, corporate real estate (CRE) executives are beginning to recognise the importance of sustainability within their freehold property portfolios. To assist in decision-making, external valuations are regularly commissioned. The purpose of this paper is to examine the practical difficulties associated with incorporating sustainability criteria in the valuation methodology as valuation outcomes inform CRE decision-making at strategic and tactical levels. Design/methodology/approach – This paper takes the form of a detailed and critical literature review. Findings – It is widely acknowledged that sustainability has become a key driver of many business decisions. Corporate entities can achieve a considerable range of tangible and intangible benefits from sustainable real estate in their freehold portfolios. While substantial progress has been made toward understanding the dynamics of the sustainable real estate market, the valuation of such assets is rather hampered by the comparative difficulties in achieving consensus regarding the sustainable criteria and how they should be objectively assessed. Originality/value – The paper contributes to the broader appreciation of the theoretical and practical difficulties associated with identifying and assessing appropriate sustainable criteria. Importantly, the paper highlights the need for greater understanding of the criteria in the evolving valuation methodology framework.

Performance measurement in corporate real estate : Table of Contents

Michael Jordan, Thomas McCarty, Brian Velo — Sun May 31 14:15:05 BST 2009

Abstract:
Purpose – Most performance measurement systems and scorecards fall short of communicating strategic value because they do not relate the metrics of real estate to the larger objectives of an organization. This paper aims to show that choosing the right business metrics and monitoring them through effective scorecards identifies and amplifies the competitive value that corporate real estate (CRE) creates for its host company. Design/methodology/approach – This paper identifies the common failures in performance measurement systems and presents a six-step process for effective scorecarding that is formulated solely on strategic business objectives. Findings – The paper finds that good performance measurement systems create a direct line of sight between CRE goals and stakeholder interests founded on open, strategic dialogue; refinement to a narrow set of metrics; and commitment to consistent process governance. Practical implications – The business transparency of a well-designed performance measurement system helps to prioritize work and clarifies investment and disinvestment decisions. Originality/value – Leading businesses are increasingly refining the quality of their analytics as the source of competitive advantage. CRE executives who adopt the perspective and process described in this paper can elevate real estate as an integral part of the vision and success of their organizations.

FM dashboard: A facility management monitoring tool for planning, design and construction to optimize function and cost in operations : Table of Contents

Daniel von Felten, Christian Coenen, Irene Arnold Moos — Sun May 31 14:15:05 BST 2009

Abstract:
Purpose – The purpose of this paper is to create a deeper understanding of the importance of monitoring key aspects of facility management (FM), right from the planning stage of a building's lifecycle. Design/methodology/approach – This paper is based on literature review and qualitative research. Empirical interviews were conducted with various executives and academics to identify FM-related aspects that should be considered during the planning, design and construction of buildings. These insights are the foundation of a newly developed monitoring tool which can be applied to different settings. Findings – When analyzing relevant aspects of FM, ten main categories were identified, together with corresponding sub-categories. These were used as input for a quality assurance tool designed to analyze the degree to which FM is taken into consideration in the early stages of planning. Respondents fill out an item battery, using a five-point scale. The questions refer to the completeness and plausibility of the respective (sub-)category. This newly developed monitoring-tool has been applied to a construction project in the city center of Zurich/Switzerland. Research limitations/implications – The monitoring tool presented here is only a first attempt to structure and analyze important aspects of FM during the early stages of building construction. It will be further developed over time to include various building types and more project phases within the life cycle of buildings. Practical implications – FM dashboard can be used as an analytical tool to support the structured monitoring of FM relevant aspects during planning, design and construction. Originality/value – Corporate facility managers need better methods and tools for demonstrating the importance of early consideration of FM-relevant aspects to various parties involved in construction (e.g. architectural and planning offices, owners, construction companies, etc.). This paper provides an insight into a tool designed for this purpose and offers practical assistance and guidance for its use.

Value creation and the impact of corporate real estate assets: An empirical investigation with French listed companies : Table of Contents

Ingrid Nappi-Choulet, Franck Missonier-Piera, Marion Cancel — Sun May 31 14:15:05 BST 2009

Abstract:
Purpose – The purpose of this paper is to investigate the impact of corporate real estate (CRE) ownership on value creation for non-financial French listed companies. Design/methodology/approach – Using a pool sample composed of SBF 250 companies over the period 1999-2004, this paper investigates the association between economic value added (EVA) and market value added (MVA) as proxies for the value generated by French listed companies and the proportion of real estate in their asset portfolio. Findings – The empirical results show that an increase in the proportion of real estate assets (over total assets) is negatively associated with EVA, but only for firms in service industries exhibiting low real estate intensity. The regression on MVA shows a negative association with the increase in the proportion of real estate for firms outside the service industries. Research limitations/implications – Recent trends show that many large companies have sold a significant portion of their CRE assets. The underlying motives for such behaviour are yet to be examined (at least for the French context). If real estate has any influence, an association should be observable between proxies of value creation and the change in the proportion of real estate assets, owned by a company. The results suggest that sales of CRE assets may be driven by value maximizing behaviour. Practical implications – In order to maximize the value of their firm, managers should apparently take value creation into consideration in their decisions to invest in or dispose of real estate assets. Originality/value – The paper suggests that in a French context, CRE disposals may generate value added in certain industries with specific CRE intensity.