How to become a data-driven CRE organization

In today’s competitive financial services landscape, corporate real estate (CRE) has evolved beyond a cost of doing business to become a true value driver. Business leaders no longer view real estate performance only in terms of operational and financial efficiency. They’re asking how CRE supports their organization’s overall objectives and business strategy — and demanding a new level of CRE data maturity that supports optimizing overall spend, risk exposure, talent attraction, and even carbon footprint and employee productivity.

This intensifying focus on CRE means that leaders need to be able to articulate the value of real estate assets to a broader group of stakeholders. They also need to measure and report on a host of new performance standards including workplace agility and health; environmental responsibility and sustainability; organizational culture; and especially, as C-Suite leaders prioritize digital transformation, technology enablement. Put another way, traditional drivers of cost and efficiency are now merely table stakes. Financial services leaders demand a more innovative, deliberate, and data-driven approach to CRE that supports their broader business goals.

With data coming to the forefront of the CRE function — and with the buzzword “AI” spreading like wildfire throughout all business support functions — these new expectations demand a higher level of data maturity than most CRE organizations have prioritized to date. As a result, CRE leaders are realizing they don't have the data they need to measure increasingly complex and cross-functional areas of performance.

To close these gaps, CRE leaders need to understand their organization’s overall strategies and objectives, and how the organization measures performance against those goals. Then they need to ask (and answer) two critical questions about their data readiness: Do we have the data we need to understand our performance — and do we trust it?

Here are some initial considerations to help CRE leaders assess, and ultimately address, gaps in their business performance capabilities:

Step one is to adopt a CRE performance framework where the data you’re collecting reflects your overall business strategy. Key performance indicators, or KPIs (and therefore the data elements behind them), should trace directly back to the CRE strategy and organizational objectives they are meant to inform.

An example of a business strategy might be "rationalize the real estate portfolio to manage costs and optimize the space we occupy." Then, objectives to achieving this strategy might include "dispose or consolidate inefficient or underutilized locations," or even "employ alternative strategies and offer hybrid workplace options."

Your organization’s ability to define and calculate KPIs depends on metrics. Meaningful KPIs that reflect the above strategy and objectives might include "area utilization vs. target" or "cost of vacancy vs. target." Then, the metrics that matter most for achieving these objectives would be "badge-based occupancy rate" or "cost of vacancy."

Finally, once you’ve identified and defined meaningful metrics, you can determine which data you need to collect to evaluate them with consistency, quality and completeness. To continue our above example, calculating the "cost of vacancy" metric would require collecting several different data elements: seating capacity, total occupancy cost, total occupiable area, total vacant area, and cost of vacancy target, to name a few.

This framework demonstrates how data elements inform KPIs and metrics, which in turn inform performance measurement for overall business strategies and objectives. In addition, it's important for CRE leaders to keep in mind that data is much more than numbers on a spreadsheet. Each data element requires governance, quality control, and therefore investment — from its initial definition and purpose, to how it’s captured within a business process, to how it will eventually be applied and consumed for operational and analytical purposes.

As forward-thinking companies recognize the limits of traditional performance measures for capturing and effectively managing the overall value-add of CRE, they’re realizing that transformation means "out with the old" ways of operating (traditional, reactive, manual) and "in with the new" (data-driven, prescriptive, automated).

This shift doesn't happen overnight by way of defining a data strategy and applying a framework like the one above. It’s a cultural change to operations and employee performance standards, and making it happen takes process reengineering, performance governance, and ultimately the adoption of a new way of working that ensures the quality of critical data from the point of creation.

CRE leaders are under increasing pressure to be data-driven in their efforts to optimize real estate performance and support overall business strategy. Creating and applying a framework to help assess and address gaps in business performance capabilities is the first step toward embracing a data-driven approach that is directly linked to business success and a quantifiable ROI.

For more information and to hear more about how JLL can help kick-start your organization’s data journey, contact us.