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Topic 1:
Introduction to Corporate Real Estate
Management

AP Sr Dr Abdul Jalil Omar

Department of Property Management
2 0 0 8 R and
Faculty of Technology Management E S EBusiness
AR C H CAN D I DATU R E

Universiti Tun Hussein Onn Malaysia (UTHM)

Lecture Outlines
• What is CRE? CRE vs CREM?
• Why study CREM?
• Corporate real estate management
• Evolution of CREM
• Roles of CREM managers
• CREM’s challenges

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 What is CRE?
• Corporate real estate (CRE)

– CRE means physical assets that are either

owned or leased by firms not primarily in the
real estate business to achieve corporate
objectives
– Second highest cost (20-30%) after staff
cost
– Eg. HR vs HRM

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Corporate real estate (cont.)

• real estate (land and building) is developing as a new

resource for the companies’ strategy.
• Which is also known as 5th resource of a company after
work; capital; technology and information
• These includes:
• Spaces – workplaces
• Building, warehouses, outlets
• Locational – demographic

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Why study corporate real estate management?

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Why study corporate real estate management?
• Greater understanding the relationship between
property and its use to support organisations’ core
business.
• Bridge the GAP between the supply-side and the
demand side within property industry.
– Supply-side: building owners, developers, property
practitioners, construction managers, architects, quantity
surveyors, estate agent etc.
– Demand-side: Clients and customers of the supply-side.
• Ability to advice clients of the strategic importance of
property.
• Help to understand the implication of property
decisions. 7
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Corporate real estate management (CREM)
• CREM can be defined as:
“The management of real estate by an organisation that incidentally
holds, owns, or leases real estate to support its corporate
mission. The primary value to the organisation is not the
investment value of the property, but rather its contribution to the
way the organisation does business. The focus in CRE
management is on the strategic management of property toward
maximising the corporate bottom line. (Kenley, et al. 2000, p5)
• CREM is the management of CRE or the optimum use of
all real estate assets utilised by a corporation in pursuit
of its primary business mission
• Objective of the CREM is:
– Maximise return – profit
– Reduce cost
– Support organisation’s core and non-core business 10
 Corporate real estate management (cont.)
• Strategies and methods of CREM should make contribution to supportthe company’s objectives. Strategies and methods of
CREM should make contribution to support the company’s objectives. Strategies and methods of CREM should make
contribution to support the company’s objectives. Strategies and methods of CREM should make contribution to support
the company’s objectives. Strategies and methods of CREM should make contribution to support the company’s
objectives. Strategies and methods of CREM should make contribution to support the company’s objectives. Strategies
and methods of CREM should make contribution to support the company’s objectives. Strategies and methods of CREM should
make contribution to support the company’s objectives. Strategies and methods of CREM should make contribution to
support the company’s objectives. Strategies and methods of CREM should make contribution to support the
company’s objectives. Strategies and methods of CREM should make contribution to support the company’s
objectives. Strategies and methods of CREM should make contribution to support the company’s objectives. Strategies
and methods of CREM should make contribution to support the company’s objectives. Strategies and methods of CREM should
make contribution to support the company’s objectives. Strategies and methods of CREM should make contribution to
support the company’s objectives. Strategies and methods of CREM should make contribution to support the
company’s objectives. Strategies and methods of CREM should make contribution to support the company’s
objectives. Strategies and methods of CREM should make contribution to support the company’s objectives. Strategies
and methods of CREM should make contribution to support the company’s objectives. Strategies and methods of CREM should
make contribution to support the company’s objectives.

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Corporate real estate management (cont.)

GAP

CREM CREM
Managers Customers
Ideal CREM

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Revision questions

• What is corporate real estate (CRE)?

• What is the corporate real estate management
(CREM)?
• List FIVE (5) benefit of learning CREM?
• List FIVE (5) companies involve with CREM?
• Explain what is meant by CREM come from demand
side?

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Corporate real estate management (cont.)

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Evolution of CREM

(Roulac, 2001)
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Evolution of CREM (Krumm,2001)

Multinational CREM
corporations

1900- Service Domestic orientation RE to support corporate

1940 sector Retail, mainly family-run expansion
firms Important role of family
members in retail firms

Production Early international Technical departments

sector mergers Link between research and
International expansion engineering
Establishment of local Centralised control of activities
subsidiaries due to RE departments to support
difficulties in control of expansion
corporations

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Evolution of CREM (cont.)

Multinational corporations CREM

1940- Service Domestic activities Centralised/concentrated
1980 sector Functional organisation REM
Growth strategy domestic National orientation
growth through take-overs Financial constructions
After 1970, focus on Corporate architecture
internationalisation Importance of site selection
Centralised organisation
Production International activities Central + local branches
sector Geographical orientation Engineering orientation
Division structure RE as means to production
Growth strategy RE organised within local
Expanding headquarters business-units

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Evolution of CREM (cont.)

Multinational corporations CREM

1980- Service Expansion through Centralised/concentrated RE

2000 sector mergers/acquisitions
International expansion
Product diversification
Geographical/market orientation
Centralised structure
Refocus on role of central RE
departments
Activities focused on mediation
and consulting

Production Divisionalised groups with Decentralisation plus

sector business-units outsourcing
Corporate restructuring New initiatives to coordinate
Rethinking of role of CREM
headquarters Activities focused on mediation
Product orientation and consulting
Regiocentric RE organised within business-
unit
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CREM’s challenges

• Corporations tend to view property as a liability

• Property is seen as a (large) operational cost rather than an
asset
• Property is seldom seen as a source of wealth creation and
commercial opportunity

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CREM’s challenges (cont.)

• Primary factors • Secondary factors

– Corporate attitudes to – The property
property management staff
– The structure of the – The reward system for
property unit performance
– The organisation of a
property inventory record

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CREM’s challenges (cont.)

• Possible solutions strategy:

– Gain knowledge and understanding of the business
• CREM’s impact to business
• Value added functions
– Provide options to achieve the overall business goals
– Solve business problems with property solutions
– Involves in the overall strategic planning of the
business
– Provide the property expertise to help corporation
achieve its long term-term goals.

• Which strategy is the best?

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Questions for next meeting

• What are the differences between PM, FM and

CREM
• Which one has better branding? PM, FM or CREM?
• How corporate real estate able to help organisation?
• Who suppose to be incharge for managing
corporate real estate in companies?

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Summary

• CREM focus in bridging the gap between supply

and demand of property industry
• CREM support the organisations’ core business

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