Corporate Real Estate Outsourcing – The Next Generation
This article describes the evolution of corporate real estate outsourcing and how leading corporations will
drive the next generation of innovation and performance of the major service providers.
The Early Days
Outsourcing of corporate real estate functions began in the early 1990s, when Trammell Crow, Koll and
other developers turned to property management as an avenue to redeploy talented resources during the
real estate depression that followed the S&L crisis. The service provider industry has grown steadily since
then, accelerated by growing demand from corporations looking to reduce staff in non-core functions.
And many corporate real estate departments have also matured, adding leaders from within their
businesses that could speak the language of the C-suite.
But up until about 2005, most of our consulting clients had just one concern when selecting a new service
provider: Can they deliver the services we need? This seems like a simple question, but there were two
problems. Most service providers did not yet have the depth of resources and processes that the clients
wanted. And to be fair, the clients’ definition of “deliver the services” kept expanding. In those days,
service delivery was defined as:
1. Coverage- Facility, project, and transaction management expertise and staff in all major
geographic markets, and lease administration and finance from a central location
2. Market Knowledge -In depth knowledge of transactions and players in each market, and
free market intelligence to “keep us ahead of the game”
3. Organization -A delivery model and organization structure that met service level
requirements and saved costs
4. Operations -A help desk to handle facility work orders and ability to use technology to
5. Management Support -Business savvy account leaders who "could see the big picture",
recognize issues on the account and get support from service provider executives and
subject matter experts when required.