C-suite executives see real estate as a strategic opportunity that can help companies achieve business objectives, according to CBRE’s inaugural C-Suite survey.
Nearly all executives surveyed indicated real estate is important to achieving business objectives, and half said real estate will become even more important during the next three years. Executives in the financial, professional and legal services sectors as well as technology firms are more likely to view real estate as highly important than their counterparts in the manufacturing and distribution sectors, according to the report. Sixty-one percent of financial, professional and legal services executives see real estate as highly important compared with 14% of manufacturing executives.
Eighty-three percent of those surveyed said real estate has a critical or very important role to play in signaling culture. Among the goals C-suite leaders have for their real estate assets is to enable business resilience while balancing cost management. Their priorities include increasing flexibility and efficiency, cost-saving opportunities, retaining talent and tackling sustainability goals, and using real estate performance data and metrics to drive better decision-making.
C-suite executives said they want their CRE teams to offer the best spaces and locations to enable business resilience, indicating the need for improved value metrics, said CBRE. Executives indicated a need for lease flexibility to adapt to the speed of business change. They also are interested in using real estate to support cost-saving opportunities or to raise cash through sale and leasebacks.
Executives want to be more involved with their company’s real estate decisions to drive more effective engagement, the survey found. Sixty percent of executives surveyed said they have direct reporting lines to real estate functions, and more want to establish them in the future. About 68% of those with direct reporting lines have established them in the wake of the COVID-19 pandemic.
Nearly all companies surveyed have a globally or regionally centralized real estate function with a reporting line into the C-suite. Two-thirds of direct reporting is not to the CFO, which suggests that while cost is important, many organizations have a different primary strategic role for their real estate.
Half of survey respondents said engagement between their company’s CRE department and the C-Suite has increased over the past three years, 38% said it has decreased, and 12% said it has not changed. CEOs and COOs view the relationship more positively than CFOs, the survey found.
To unlock real estate value, C-suite executives and CRE teams need to align around a broader understanding of the value of real estate to deliver spaces where teams and clients convene to generate ideas, innovate and deliver business. Real estate also provides an immediate representation of brand and vision to employees, clients and broader communities, said CBRE.