Mike Witko & Jerry Moore Discuss Corporate Services – Part 1 & 2
Natalie Dolce of GlobeSt.com recently chatted with Mike Witko, principal and Jerry Moore, executive managing director of the Garibaldi Group/CORFAC International, based here in Chatham, NJ, on corporate real estate requirements and services. The team discussed how the landscape has changed and shifted to more in-depth consultative services and how there is no substitute for market knowledge and data collection
GlobeSt.com: How has the corporate service landscape changed in recent years, and what are some of the services national and multi-national corporations are demanding that perhaps were not part of earlier programs?
Jerry Moore: Corporate real estate services have historically centered on transactional events such as tenant representation and asset acquisition via commission-based brokers. In the past decade there has been a shift to providing more in-depth consultative services such as lease administration, portfolio strategic planning, financial engineering, M&A due diligence, and governmental incentives. This evolution has been driven by the demand from corporations for continuous improvement from their vendors via formal supplier relationship management processes and ever evolving service level agreements.
Garibaldi provided consultative services for project management, state incentives, and financing of a 1.2 million SF manufacturing plant expansion in Troy, Ohio. This was a time intensive 12-month project that required multiple professional disciplines (construction, incentives, finance) that typically would not be provided by a traditional commercial broker. By servicing these needs via a consultative agreement we were able to serve as an adjunct to the CRE management team and help deliver comprehensive and integrated services that supported the project objectives.
GlobeSt.com: What are national and multi-national corporations looking for in outsourcing elements of their corporate real estate requirements?
Mike Witko: Corporations are looking for a comprehensive strategy to reduce operational costs while enhancing the culture, productivity and mission of the organization. Benchmarking, lease administration and transaction management are vital to portfolio optimization which we see as top priorities when considering outsourcing. There is no substitute for market knowledge and data collection and many corporations want to minimize the in-house costs to try and remain current in all facets of overseeing the portfolio. This in many cases includes limited investment in technology and personnel. Depending upon what in-house resources exist from a personnel perspective as well as the diversity and size of the portfolio (owned, leased, type of real estate – industrial, retail, headquarters etc.); the offering and implementation of services such as supply chain management, identifying government/community incentives, project and construction management, lease management and financial services to name a few. Communication is key to providing excellent service and it often means being in touch with different department heads. For example, a financial services client of ours that was growing rapidly and expanding its real estate footprint significantly required us to be in frequent communication with not just the real estate and facilities department but also HR and the CFO.
GlobeSt.com: Are there times when clients create a sense of urgency for corporate real estate services?
Witko: Frequently, though perhaps the best illustration of urgency is when a client has targeted another firm for acquisition. A thorough examination of the real estate assets and leasehold obligations of the company being acquired needs to be discovered and reported upon quickly to provide the client with a clear picture of the firm they are planning to buy. The required assessment can be compounded when the real estate is in multiple venues and especially if the portfolio of property types are diverse, such as a mix of office, manufacturing, and retail.
GlobeSt.com: There are numerous service specializations associated with “corporate services;” which are in greatest demand now, and why?
Moore: With the need to provide numerous service specialization the greatest demand is for an integrated portfolio approach to handling corporate real estate. We find transparency and real-time information aids cycle time and aligns performance goals. The constant demand for innovation and realized productivity benefits are evidenced by the increased demand for portfolio lease administration, benchmarking, and strategic planning.
Garibaldi oversees approximately 20 million SF of global CRE assets. Driven by the demand for cost savings and operating efficiencies CRE portfolios are reviewed and contrasted annually against short and long term business objectives. This starts with a review key dates/terms in Lease Administration and contrasted against market and industry benchmarks (i.e. market rates, space utilization, operating expenses, employee and labor demographics, logistics and thru-put). The process culminates into a portfolio strategic plan that provides a dashboard for CRE management to plan and implement real estate activities.
GlobeSt.com: Are the international requirements substantially different than domestic (U.S.) requirements?
Moore: International requirements can vary significantly and as such maintaining governance across the service spectrum can be challenging due to different customs, languages, legal and financial systems. We overcome this challenge by having strict governance guidelines for each market that we operate in across the globe combined with a trusted network of corporate services affiliates.
Garibaldi provided site selection services for a manufacturing Client needing 65,000 SF in Suzhou, China. The team needed to not only identify a suitable site but also understand the local politics that governed the ultimate delivery of the project. Given the multiple barriers to successfully executing this project (language, legal, construction, political) it was essential for us to have a trusted local partner combined with a defined CRE governance process.
GlobeSt.com: What are some of the trends we expect to play out this year and in 2017 among these big national and multi-national corporations as it relates to commercial real estate and what is driving these trends?
Witko: Presidential elections affect certain industries more than others and they often pose minor delays in major real estate decision making. Workplace strategy and sustainability will remain important to the corporation’s mission and as a result, continually impact real estate choices and decisions. Corporations will continue to work hard at understanding their employee base, their work habits and how the real estate portfolio can complement productivity and increase value across all disciplines. We’re seeing a significant change in the average age of the workforce and anticipate that the trend toward a reduced footprint per employee will continue. Transporting finished products from manufacturer to the consumer/ end user as cost effectively and quickly will remain paramount. Continuing to optimize technology and keep manufacturing costs down will be key in attracting manufacturing jobs. “Data collection” has always been there but corporations continue to look closer at the data associated with their real estate with the constant aim of lowering costs and maximizing productivity.
GlobeSt.com: What are some of the most important attributes for managing a successful corporate services business?
Witko: Accountability, transparency, communication, people talent and individual skills of the team members. Ultimately it is performance, being competitive in fee structures and consistently producing positive client results.
Globest.com: How do corporate real estate service providers like yourselves differentiate from its competition?
Moore: In the competitive corporate services arena, we differentiate ourselves by adhering to our “guiding principles” of being process oriented; having extensive CRE expertise; bringing the immersion factor to every assignment; providing service level reliability; and a commitment to continuous improvement that provides innovative ideas that improve productivity and generates quantitate and qualitative benefits to our clients.
Corporations have extensive options when it comes to procuring vendors to service their portfolios. The TGG Corporate Services team was recently selected after a lengthy vetting process to provide CRE services to a $100B market capitalization global organization. Our ability to service both large (global) and small portfolios (regional) as well as multiple sectors (defense, manufacturing, life science, and financial services) is a testament to our guiding principles that have resulted in maintaining many multi-decade long term CRE accounts.