I was delighted to see the November 2009 issue of Harvard Business Review tackle about the importance of real estate as a second largest asset of almost every company. As they point out it should be viewed not merely as an operating necessity – wich it obviously is in the Nordic winter – but as a strategic resource to boost productivity and encourage innovation, if managed professionally.
What senior management needs to do, HBR points out, is a high-level view of their real estate situation, which they won’t get from the site-by-site analysis that is generally the focus of internal staffs and systems. Executives need a "snapshot" of the company’s footprint: the locations, the land and building types, the utilization, the lease terms, the operating costs, and the financial and environmental risks. In short, they need to think of real estate holdings as a portfolio – not a set of discrete properties.
The portfolio approach is especially important when a company is going through a major change, such as a merger, an acquisition, or a divestment. Rationalizing an organization’s real estate – matching space and facilities to strategic and operational needs – can be as important as rationalizing the workforce. Portfolio analysis can also inform leaders about a property’s costs and uses over time.
The most efficient organizations often do the least to operate their business real estate. Instead, they team with firms offering the full range of real estate functions and services. According to HBR, such partnerships succeed, if both parties agree on two conditions. First, the organization must be willing to share some control over its properties. Second, the real estate firm must agree not to focus solely on transactions but to work toward long-term goals such as strategic advantage, occupancy-cost reduction and employee satisfaction – and do this all in a sustainable way.
Therefore HBR encourages all leaders to embrace sustainability – it is here to stay. Companies of all types are beginning to transform the buildings they use to reduce emissions, and many leaders are making it clear that environmental concern is not a fad or a PR gimmick. As WPP CEO Sir Martin Sorrell said, "Our green approach is not altruism; it’s good, responsible business. CEOs ignore this issue at their own peril".

Arttu Ruismäki