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What Is A Real Estate Strategy?

Michael McDermott, Consulting Manager, Strategic Consulting


What is Strategy?

A key ingredient of successful leadership is the ability to develop and communicate a strategy.  Simply put, strategy is an integrated, externally-oriented plan that guides how a business will achieve its objectives.  When properly developed, strategy sets enterprise objectives, reveals the actions required to achieve those objectives, and aligns employees and resources against those actions.

The best corporate leaders spend an inordinate amount of time on strategy since it ensures the execution of a particular vision. Without strategy, companies would:

  • Waste time and money on the wrong activities
  • Make decisions that do not align with the enterprise’s core mission and goals (and potentially damage delivery against the mission and goals)
  • Face difficulty motivating employees

In most industries, a core challenge is aligning the long-term nature of real estate assets with the short-term nature of business events. A real estate strategy is essential for getting this right. Unfortunately, actual strategies for managing corporate real estate are shockingly rare.

Most Companies Do Not Have A Real Estate Strategy

A company’s corporate real estate portfolio requires a carefully developed strategy because it can make meaningful contributions to top corporate concerns including human capital, operational excellence, innovation, customer relationships, corporate brand and sustainability.  When properly developed, a real estate strategy can also provide operating flexibility – a key requirement in the ever-shrinking business life cycle.  Absence of a strategy will typically result in a quagmire of poorly-suited real estate commitments that can inhibit growth, create company-wide inefficiencies, jeopardize hiring, taint the company brand and ultimately hurt the bottom line.

After reading this, executives anxious about not having a real estate strategy may take some comfort in knowing they are not alone.  When the Real Estate Executive Board surveyed a cross-section of companies on this topic, they found that only 18% possessed a long-term real estate strategic plan that aligned real estate with overall business goals. This misstep has resulted in unnecessary costs, operational inefficiencies and increased risk, all of which can harm other business initiatives.

The above is an excerpt from our So You Think You Have A Strategy? guide. To gain additional commercial real estate strategy insights, download the full report here.

McDermott_Mike-150x150Michael McDermott is a Consulting Manager, Strategic Consulting for Cushman & Wakefield. 

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