CRE Models: What's the Right Model for You - CoreNet … is dependent on sufficient market activity to generate broker fees Lack of sufficient resources for planning have led to over-reliance

CRE Models:

What's the Right Model for You

#CNGSanDiego

Stan Gibson

Senior Vice President, Wells Fargo

• Stan leads Strategic Planning at Wells Fargo,

100+ MSF globally. He’s been with Wells Fargo

for 6 years and has been in the industry for 30

years.

• Previously, he was with Principle Financial Group,

Vantage Real Estate, and Lincoln Property

Companies.

• Stan has been teaching MCR classes for Corenet

for 15 years, and has been voted Top Faculty for

the 12 years. He teaches Real Estate

Transactions Impact and Portfolio Restructuring.

Mark Wanic Americas Head of Occupier Services, Cushman & Wakefield

• Mark leads Cushman & Wakefield’s Americas

Occupier Services business for all corporate

accounts.

• Prior to his current role, Mark led the Occupier

Services business in the NY area and served as

relationship manager for several large corporate

accounts.

• Previously, Mark held several real estate and

sales roles at Computer Associates, Inc. and

Lucent Technologies (now Alcatel-Lucent),

including living in the Netherlands where he

directed Lucent’s International Real Estate

Operations. Mark received his B.A. in Marketing

from Benedictine University

Steve Forino Director, Global Real Estate, United Technologies

• Steve is the Head of Real Estate at United

Technologies Corporation, a $60B global

conglomerate, and is responsible for 4,500 locations

and 98 million square feet of real estate globally.

• Steve has been with United Technologies for 23 years

in various financial roles and has been the Head of

Real Estate for the past three years.

• He has a BS in Accounting from Post University and

an MBA in Finance from Rensselaer Polytechnic

Institute.

Adam J. Hoy Global Real Estate Director, Unilever

• Adam has been with Unilever, a $60B

European-based FMCG Company,

approximately 2 years and leads the Real

Estate Services group covering global

transactions, lease administration, and

strategic portfolio planning.

• Before joining Unilever, Adam spent 11 years

at Pfizer in a variety of Real Estate, Facilities,

and Procurement roles.

• Adam received his BSBA from Bowling

Green, MBA from Saint Louis University, and

is currently working on his Master’s in Real

Estate Strategy at NYU.

Sally A. Fisher Sr. Director, Global Real Estate Strategy & Americas Transactions

• Sally is Senior Director of Pfizer’s Real Estate

function which provides global strategic planning

support and delivers on Americas real estate

transactions. Sally recently joined Pfizer earlier this

year.

• Previously held positions with Union Bank in

Portfolio Strategy, Cushman & Wakefield in Account

Management, and Jones Lang LaSalle in Corporate

Solutions and Advisory. Prior to corporate real

estate, she spent 15 years in management

consulting.

• Received undergraduate degree in Social

Psychology from San Francisco State University and

her MBA from the University of Michigan. She also

holds a Masters in Real Estate Development from

the University of Southern California and a Six

Sigma certification at the black belt level.

Al Ronci Executive Director, Morgan Stanley

• Al is the Head of Retail Real Estate, Strategy, and the

Client Relationship Manager at Morgan Stanley, he

responsible for ~800 locations and 12 million square feet

of real estate nationally.

• Prior to joining Morgan Stanley, Al accumulated more

than 17 years of Corporate Real Estate and Design and

Constructions expertise, managing both Corporate and

Retail portfolios for Unisys Corporation, American

Express, and JPMorgan Chase. In addition, Al has 10+

years of experience at a top 100-ranked architectural

design firm.

• He currently serves on the advisory board of the New

York Institute of Technology School of Architecture, where

he earned his degree. Al has been a registered architect

with the state of New York since 1996.

Key Takeaways

• Factors to consider

• Impact of changing your model

• Understanding of spectrum of outsourcing

• Hear from companies with various models

What to Consider

• Geographic scope

• Resource management

• Workload leveling

• Culture

• Skills

• Impact on decision-making

• Pricing

• Impact of changing models

Outsourcing Spectrum

STRATEGIC ALLIANCE Provider and client partner change the business paradigm to create a

mutual and competitive advantage, sharing risks and rewards.

OUTSOURCED PARTNER Provides all services for a specific function to the exclusion of

other providers with shared goals and rewards.

EXCLUSIVE PROVIDER Provides one or more repetitive services based on more favorable

contract terms to the exclusion of other providers.

PREFERRED PROVIDER Provides one or more repetitive services based

on more favorable contract terms. May be

one of multiple providers.

SERVICE PROVIDER Provides discrete contract-based

service when and as needed.

COLLABORATIVE ALLIANCES Multiple providers ensure business continuity and

mitigate risk; all teams use consistent processes, tools,

performance measurement, and technology.

UTC Portfolio Overview

53% 37%

8%

Office

Industrial

R&D and Other

98 million square feet

4,504 locations in 73 countries

Variable target square foot per seat

16% owned 84% leased

UTC Real Estate Operations

Outsourcing Model

Single Provider by Region

• Goal

– In 1999, needed to centralize global real estate without the need

for a large internal real estate group

• Benefits

– Provides global/regional/local expertise at point of contact with

centralized oversight

– One global process to ensure information flow with ability to

expand/contract resources depending on volume

– Market pricing with revenue sharing

Finding the Right Fit

Single Provider by Region

Pros Cons

Centralized global management

One standard global process

Global knowledge base

Centralized data

collection/process control

Flexibility

Management intensive

Direct Business Unit

interface

Lower level strategic

development

Unilever Portfolio Overview

13%

80%

Office

Ind

Retail

R&D

Other


1600 locations in 115 countries

Target 110-140 square feet per

person


CRE Team

South Asia

RES Director

North/Latin

America

RES Director

Europe/Africa

RES Director

SEAA/N Asia

NAMET & RUB

RES Director

Global RES

Director

Portfolio

Manager

Lease Admin

Coordinator

Lease Admin

Coordinator

Account Lead

N America

Account Lead

Latin America

RE Analyst

Account Lead

Europe

Account Lead

Asia

RE Support

Asia

Account Lead

NAMET &

RUB

RE Support

NAMET &

RUB

RE Analyst

RE Analyst

RE Support

Europe

Outsourced

Insourced


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Outsourcing Model

Single Partner by Region

• Goals

– Simplify the structure

– Build relationship with one provider

• Benefits

– Alignment of 1 Unilever Regional Director: 1 Provider

– Simplified information flow through one point of contact at each

level of the relationship


Single Partner by Region

Pros Cons

Simplified communication

Standardized reporting

Standardized process for

completing transaction and

planning

Account status within

service providers’

organization

Capabilities aren’t as strong

in all markets

Diminished desire for service

providers to “compete” for

business

Limited access to talent in

broader CRE marketplace

Pfizer Portfolio Overview

24%

76%

Office

Other



Variable target square foot per seat


Pfizer Americas Real Estate

Transaction Manager

Americas Real Estate

Transaction Manager

Americas Real Estate

Portfolio Planning Manager

Transactions Analytics Manager

Transaction Manager

Service Provider 1

Transaction Manager

Service Provider 2

Sally Fisher

Senior Director,

Real Estate Strategy & Americas Real Estate

Tom Donatelli

Vice President,

Real Estate & Portfolio Management

Transaction Associate

Service Provider 1

Transaction Manager

Service Provider 2

Transaction Associate

Service Provider 2

Rick Lam

Director,

APAC Real Estate

John Westwood

Director,

EMEA Real Estate

Service Provider Integrated with

Pfizer Processes and Organization

• Accessed for Market Intelligence

• Start performing work upon Engagement Agreement only

• Included on project teams on a need-to-know basis

The view for Pfizer

needs to be

seamless

Pfizer Real Estate

Services Team Integrated Service

Provider

Market

Representation

(Brokerage)

The use of market representation (brokerage) needs to be clear

• We are one team, each with a role to play

• All held accountable to act in Pfizer’s best

interest

• Pfizer strategies kept confidential

• Involved in defining real estate requirements


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Outsourcing Model

Two Partners per Region

Four Distinct Service Providers Total

• Goals

– In late 2009, after the closing of Wyeth acquisition, Pfizer had many real

estate consolidation opportunities across the globe

• Benefits

– Award work based on capabilities, competencies, and skill sets of

service provider staff, per state or region

– Allows Pfizer to focus on business engagement, strategic projects and

provider oversight, while Integrated Service Providers manage portfolio

planning & full ownership of transaction management

– Pfizer can manage a flexible scaling of resources, based on current

demand

– Pfizer focuses on milestones and critical communication points to

integrate people and processes


Two Providers

Pros Cons

Speed of execution

Leverage strengths and quality of staff in

each region

All held accountable to act in Pfizer’s

best interest

More incentive for value-add execution

Negotiated fee structure for services with

volume discounts

Flexible model for special projects

Clear role and responsibilities for each

team member

Model is dependent on sufficient

market activity to generate broker

fees

Lack of sufficient resources for

planning have led to over-reliance on

advisory services

Duplication of job responsibilities

between Pfizer staff and Service

Provider were difficult to work through

with “First Generation” contract

Morgan Stanley Portfolio Overview

95%

5%

Office

Data Center

17.4 million square feet


Target 264 square feet per seat


CRE Organization


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Outsourcing Model

Two Regional Providers

• Goals

– Obtain best practices

– Streamline process

– Enhance control

– Match coverage model to CS and BU structure

• Benefits

– Aligns with organization

– Onsite transaction managers and financial analysts reinforce

information flow

– Shared commission


Two Regional Providers

Pros Cons

Obtain best practices and perspective

from more than one firm – competition

Standardization and more control over

process and procedures; streamlines

processes

Adaptability to workload peaks and

valleys

Better accountability / tracking / and

governance model (KPI’s /

benchmarking, etc.)

Portfolio strategy services

Shared commission revenues

National coverage and local intelligence

Managing multiple partners

Consistency among partners

(manageable, but needs to be

managed)

Questions and

Answers

Documents

CRE Models: What's the Right Model for You - CoreNet … is dependent on sufficient market activity to generate broker fees Lack of sufficient resources for planning have led to over-reliance