I’d like to introduce a new way of thinking to real estate: the Portfolio in a Box. What is a Portfolio in a Box you ask (or I pretend you ask)? It’s ignoring the four walls of real estate and focusing on the functions alone.
Think about it. What is real estate? It’s the physical address where you house your functions. That place your employees can call home and provides the operating constraints that everyone loves (well, maybe someone does). Your real estate is the reason you can’t just hire 100 people in Tallahassee whenever you want.
So why is this important for Headquarters? Your HQ is the single point in your portfolio where the greatest number of functions meet, mingle and interact. A HQ is a representation of your company as a whole. But again, if your HQ is in Manhattan do you really need all of your sales, marketing, and accounting there? What’s the purpose of having certain functions there? Real Estate Portfolio Analysis is all about aligning your operational functions with their ideal location nationally or globally.
Location is best decided by optimizing against a set of Location Criteria which are the factors that best describe “best in class performance.” Finding the location that is best aligned these factors involves understanding the trade-offs involved. What’s the value of finding qualified labor vs. finding low cost labor? How important is alignment with the community vs. receiving incentives?
In the headquarters you have so many decisions available in a single set of four walls. It’s your portfolio in summary. It sets the tone for what you are going to do throughout the rest of your real estate and operations. Because your headquarters is your real estate R&D. It’s where you get to try new ideas and figure out who you are and how you’re going to do it.
Hmmm….real estate R&D. That may be worth expanding on soon….