19 September 2016 | Herpreet Kaur Grewal
Corporate real estate (CRE) needs to better assess how to talk about risks with the businesses it serves, says a report by CoreNet into the future of the sector.
The report also adds that the sector also needs to have a better understanding of its ability to prioritise capital investments related to mitigating risks to the physical assets.
It states that CRE has a finite pool of capital that needs to be allocated across different functions or areas, such as space acquisition and disposition, capital improvements and facilities management.
Michael Jordan, managing director of JLL, one of the contributors to the report, said: "To a certain extent, CRE has to understand which risks are more important to the organisation so they know where to allocate capital, and how to make the business case to their C-suite colleagues for doing so."
How much CRE is brought into the conversation about risk mitigation varies depending on the company, says the report.
But it is evident that CRE executives are increasingly involved in risk management issues. In addition, professionals are facing risks that weren't even on their radar 10 to 15 years ago.
The report adds: "Viewing CRE in terms of finding the right building in the right place for the right price and keeping the lights on and the carpets clean, that is old school. You have to do that as the price of entry into CRE. The excellence in CRE is managing risk appropriately."