Ten Principles of Corporate Real Estate Management - Assignment Example

Property Management Success Property Company, Inc. Description Established in 1970, Success Property Company develops and manages residential communities, retail and commercial offices, and mixed-use developments in London. Success is currently one of the largest development and management companies in the UK. Mission Statement Our mission is to provide our clients with exemplary service in quality home and commercial environment, to provide employees’ unparalleled opportunities for personal and professional development, and to provide partners and clients with maximized real estate asset value. We are committed to helping our customers get a house that can become their dream home. We believe that through sound leadership, professionalism in the industry and commitment to service, we can offer the most quality homes and commercial properties in the country. Objectives The core objectives of our organization are to: Generate profit; grow at a challenging and manageable rate, and to live up to the ethical codes set by London’s Real Estate Commission. Take advantage of other real estate investment opportunities as they become available. Recruit and hire self-motivated, success-oriented, and hardworking personnel. Provide the best highest quality and most comprehensive services to our clients. Develop a solid, corporate identity in our specified targeted market area. To establish good working relationships and enhance team work. Become one of the top real estate companies in the country. Uphold integrity when serving our clients and in everything we do. Ensure that customer's best interests are always of the utmost importance. Maintain a full-time staff of well-trained real estate professionals who continually strive to provide top quality service for the clients and customers. The ongoing mission for Success Property Company Inc. is to continue to strengthen our position in the market by providing more residential and commercial properties. In so doing, the company has identified the Greater Manchester area for expansion which is in line with its objective of taking advantage of real estate investment opportunities as they become available. After a property market search the corporate real estate department recommend the development of a commercial village which shall comprise of various business units such as: Shopping malls Restaurants Entertainment joints Warehouses Strip centers Other retail units This plan projects a rapid growth as additional customers and clients join and high net profits over the next three years. We are enhancing our marketing and networking, responsiveness and quality of customer service and generating more customers as we understand that they are key to our success. Our strategy is the guiding force in growing our company. The ability to direct the company through challenges toward a bright future is essential for the strong, profitable business we are proud to have. It is these strategies that have established the business’ short term plan as well as laying the foundation for strong business plan for the long-term (Edward & Ellison 2004). We have focused our attention on innovation strategies. Our current and potential customers’ needs have made us realize the need to develop this commercial property. We believe that our fully furnished apartments will satisfy our customers’ needs. Our continued analysis of the market has revealed that there are other potential customers out there who we can target by adapting incremental changes in our market trends. We recognize the technological capabilities and we are investing in breakthrough innovation and incremental changes so as to solve the unarticulated needs of our customers through technology. Our ability to get an insight into our customer needs has made us realize the potential relevance of emerging technologies and we recognize the capabilities that are critical to achieving sustained financial results and success. Our preferred location is in the outskirts of the Manchester high street because it is possible to acquire a large area for development of a commercial village. We intend to lease the Manchester area for the development of the commercial property and we are targeting one hundred customers to rent the developed property either as retailers or large scale commercials. On the retail side we have the malls, the strip centers and other retail units while on the commercial side we have restaurants, the warehouses and the entertainment joints. We are therefore targeting individual tenants or partners to rent the property because our market survey has revealed that this is a potential target group. . Our strategist team has made a number of considerations while coming up with the corporate real estate strategy. The strategic forces considered include: The property to offer –the focus is on how the property will be developed, how technology will be used to ensure that the property meets the currents technological demands by the customers and how promotion will be undertaken to secure potential clients. Support for the property development and all other support functions are essential. We understand that a range of types of buildings will be required to support the research and development and the necessity of production, sales, and delivery interface with customers. Geographical accessibility has also been factored in as well as the building designs and we note that the location of the property is central. Flexibility is also another factor which has been put into consideration as we move on to develop this property. In order to ensure that changes or improvements within the development process are accommodated within the real estate portfolio, flexibility is critical. Flexibility will make it possible, the potential for expansion and for other considerations in the future (Edward & Ellison 2004). Incase our clients intend to move out or change their business plan then it will be appropriate since the property will be flexible enough for operating a different type of business. In the event that in future we may need to change the property from a commercial one to a different type of a property then it would be possible since our initial strategy is flexible enough to facilitate the change. The main focus of the flexibility strategy is on occupation and use of this property which has been factored in. The team has also focused on the ability of the organization to survive in the industry bearing in mind the underpinnings that are as a result of the Manchester property. It has laid down the means to ensure that the property is profitable enough to register a significant growth. We are acquiring this area on a permanent basis and thus the tenure of the property is indefinite. This is crucial to the company because it is within the company’s lists of assets. Security of tenure to the asset shall be obtained to give the company the mandate to operate freely within the area and to avoid any disputes that may arise. This is key in maintaining the customer’s confidence and to extend to them their security of tenure when necessary. Financial consideration has also been another area of focus. The team understands the financial constraint that the acquisition of this property will have on the organization. The cost of acquiring the area and developing the property is high and hence getting the support of the senior management and the board of directors may be hard. A strategic approach to delivery and ability to procure and manage effective and quality provision of a wide range of facilities services is also crucial. However there are alternative sources of capital which the management can use to procure the necessary capital to kick of the project and we are advising them to act appropriately to secure this valuable asset. Another consideration has been a market needs analysis in which our research and development team has focused on the particular market segments and identified potential customers and clients. The organization is geared towards needs analysis and the development of this new property will serve the identified needs. The strategist team through its creativity carried out a data collection to come up with the idea of developing a commercial property and we believe that this location will give access to the appropriate work force and ensure that the property will attract and retain clients. Technology application has been another focus area by the organization’s technological expertise. Research on the application of the organization’s technology capability in the development of this property has identified that it possible to apply technology in designing and developing this property. A technologically developed property is crucial in attracting and retaining customers and hence we are ready to support modern technology as deemed necessary in the present or in the future for the good of the company and its clients. The other consideration is the ability of the upcoming property to yield returns for the organization. The organization is geared towards maintaining its return rates and identifying opportunities that will yield a similar return (Edward & Ellison 2004). The main focus is on the ability of the property to yield return above a certain level. The real estate portfolio of the organization is mixed and caters for diverse clients and therefore the development of this property will exploit new opportunities that will yield more returns. It is possible that the capital committed to this project will generate more returns than when the capital is committed elsewhere (Osgood, 2004). The role that this property is going to play in the organization has also been another area of consideration. We recognize that this property will help in portraying the organization’s image to the external world and help in attracting more customers to the organization (Edward & Ellison 2004). Our strategy has been to understand the principles and practices underlying the structuring and financing of the corporate transactions with reference to the role of this property. The financial implication of acquiring this property, its role and the space it will use as well as the operational cost of running the property has been strategized on. We understand the key interaction of the property, the customers, the location and the financial effects in the context of this business. We have calculated and modeled the cost of capital and the regulatory framework within which the corporate finance operates. The strategic team’s industry analysis has identified some structural underpinnings of profitability on this project. However this is temporary since a look at the full business cycle then a one-to-two year horizon is appropriate (Edward & Ellison 2004). It is thus the average profitability over this period which shall be affected. After this time period then the business will be on its foot to profitability and its projected growth. The industry cannot therefore be declared unattractive since in the long run the company will be earning returns from the project. Another consideration that has been identified as a potential underpinning is competition in the industry. A quantitative analysis on the industry structure has revealed many elements of the five forces of competition which include; rivalry in the industry, new entrants in the industry, bargaining power of suppliers and buyers and the introduction of a similar property in the industry (Edward & Ellison, 2004). Our strategy is to strengthen our position in the market by being original, adapting strategic marketing trends and offering the best real estate property in the market in order to counter any potential competition. The ability of the business to develop is the key force we have identified with our principal focus being the development of our business and our strategy to understand what is happening on the development side and to identify viable projects to invest in such as the Manchester area. We understand that the strength of the competitive forces can affect the prices we charge for the property, the cost of developing the property and the investment required to compete and we have strategies in place to counter this. Our strategy formulation is aligned to the objectives of the organization in that this project of the Manchester area is an investment opportunity hence our taking advantage of it is essential in achieving our objectives. Investing in this project will see to it that the organization achieves its objective of growth and success in the industry. The strategy of identifying the role of this property is crucial in portraying the positive image of the organization and is in line with the organization’s goal of being among the top companies in the industry. Consequently the property is anticipated to yield more returns for the company thus being at the top in the industry. This will also ensure that the company develops a solid, corporate identity in its specified targeted market area by serving its customers diligently and with integrity (Ali et al, 2008). Though there are structural underpinnings of profitability as well as competition, the company through its strategy has identified means of countering this and it is expecting to grow by adapting incremental changes in its marketing trend and putting effort in solving the unarticulated needs of the customers (Martha, 1999). The company is able to affirm its position in the industry without the fear of new entrants, bargaining power of suppliers and customers and the introduction of new products in the market. This is in line with its core objective of generating profit and growing at a challenging and a manageable rate. An industrial analysis has identified the company’s need to embrace technology and through its strategy focus the company is working on its technology capabilities and how to improve it. This is in line with its core objectives of recruiting and hiring self-motivated, success-oriented, and hardworking personnel to provide the best highest quality and most comprehensive services to our clients. Since the company understands that customers are going by current trends in technology then it is working at it to ensure that customer's best interests are always of the utmost importance. In formulating the corporate strategy, the strategist team identified flexibility as crucial when developing this project. It focused on strategy as it will ensure that changes or improvements are accommodated if there is need and that the diverse needs of the clients are catered for. Flexibility in terms of occupation and use is a strategy factored in the initial stages of development of this property to cater for our customers diverse interests. This aligns to the company’s objective of upholding integrity when serving its clients and in everything it does as well as ensuring customers interest are taken care of. Security of tenure of the property is a strategy focused on as this shall see to it that there are no wrangles in developing and running this project. Acquiring a permanent area for development of the company’s property is in line with its objective of growing and being at the top in the industry. The fact that the property has an indefinite tenure is crucial in the marketing of this property to our clients. This will ensure clients and customer’s confidence in the company which is essential for success in the industry. The value of this asset and its anticipated future value is key in this business and it will ensure that the company remains a superior performer in the industry Gibson & Luck, 2006). Executive Summary. The corporate real estate department of success properties company Inc. has identified the great Manchester area as an essential area for the growth of the organization and is advising the board of directors to acquire this property the soonest possible because it has the potential of making this company achieve most of its objectives. An industrial analysis carried out by the strategist team has revealed that though there are certain underpinnings on investing in this project, the plan however projects a rapid growth for the organization and it is in line with the corporate strategies. Data collected in the market search conducted shows that demand is there for commercial properties and that there are potential customers. We advise the board of directors to acquire this property and develop commercial properties because the market is there and this is an asset to the company. Buying the great Manchester area for developing commercial property is crucial for the company because it will contribute in building the company’s image as well as promoting the marketing of the company’s other properties. An initial financial analysis of the viability of this venture shows outstanding promise and results. Several sources note that the commercial property project will be the most viable in this case. We encourage the management to establish a successful partnership with our clients, our staff members and our customers and to respect the interests and goals of each party. The strategist team has highlighted the advantages of acquiring this property as well as its potential limitations. Advantages: The property has the potential to generate high net profits once completed and the customers move in. The property projects a rapid growth over the next three years We anticipate more customers and clients hence there will be an increased number of customers for the company The property will be flexible in terms of occupation and use The property is expected to portray a positive image for the company through its potential to grow the company. The great Manchester area is geographically accessible and its location is central (Gibson, 2003). We expect the project to improve our operational efficiency and productivity. Limitations: It requires a large amount of Finances to acquire and develop this property There is anticipated competition in the industry from our current competitors as well as new entrants in the industry. There is a temporary underpinning in profitability within the initial stages. The problem of rent or lease review rates by the real estate commission. Structural changes in the corporate culture. The corporate real estate team recommends that the board of directors adopt this report and approve the acquisition of the Manchester area and the development of the commercial property within the area (Gibler, et al, 2002). This is because the area proves to be of reasonable benefit to the company and the development of the commercial property aligns appropriately to the company’s objectives (Ranko, 1994). References Ali, Z., S. McGreal, A. Adair and J. R. Webb (2008). "Corporate Real Estate Strategy: A Conceptual Overview." Journal of Real Estate Literature 16(1): 3-22. Edward V. & Ellison L. (2004). Corporate property management: Aligning real estate with business strategy. London: John Wileys and sons. Gibler, K. M., R. T. Black and K. P. Moon (2002). "Time, place, space, technology and corporate real estate strategy." Journal of Real Estate research 24(3): 235-262. Gibson, V. (2003). "Flexible working needs flexible space?: Towards an alternative workplace strategy." Journal of Property Investment & Finance 21(1): 12-22. Gibson, V. and R. Luck (2006). "Longitudinal analysis of corporate real estate practice: Changes in CRE strategy policies, functions and activities." Facilities 24(3/4): 74-89. Martha A. (1999). Strategy and place: managing corporate real estate and facilities for competitive advantage: Free Press. Osgood, R. T. (2004). "Translating organisational strategy into real estate action: The strategy alignment model." Journal of Corporate Real Estate 6(2): 106-117. Ranko B, (1994) "Ten Principles of Corporate Real Estate Management", Facilities, Vol. 12 Iss: 5, pp.9 – 10 Read More