Portfolio Resources

Portfolio Structural Analysis and Strategic Planning

Systematic evaluation of portfolio holdings can deliver true operating cost savings. Strategic leasing strategies are first developed through portfolio analysis, which graphically portrays the occupier‚s leases focusing on lease characteristics including area, cost, term, use, line of business, and forecasted future rent growth. Portfolio analysis helps identify top priorities within a portfolio, allowing clients to maximize return on CRE resources.

Corporate Portfolio Analytics’ approach to Portfolio Analytics is based upon both academic research and real world experience. Our graphic approach helps our clients clearly communicate strategic choices to their organizations‚ leadership. Three types of Portfolio Analysis frequently used are described below:

Portfolio Planning Platform Audit and Training

A corporation’s “Portfolio Planning Platform” drives its long-term real estate supply management, demand forecasting and client relationship management efforts. Corporate Portfolio Analytics reviews a client’s approach through a series of interviews and identifies priorities to enhance its platformusing Corporate Portfolio Analytics‚ “best practices” Place Strategy model and cross Partnership benchmarking. Corporate Portfolio Analytics Principals conduct an on-site portfolio planning skills development seminar addressing the needs identified in the benchmarking audit. Training sessions are typically comprised of a combination of short lectures, case studies, exercisesand participant presentations with training materials included. In subsequent years, a progress review, further Partnership benchmarking, and coming year goal setting is facilitated.

Alternative Workplace Strategies (AWS)

New ways of working that do not require one dedicated workstation per worker, termed AWS, are becoming widely utilized and greatly impact portfolio efficiency, as well as other factors such employee productivity, satisfaction, and retention, as well as carbon consumption. AWS configurations use less space per worker than conventional workplace arrangements – typically about 30-50% less. As part of our local portfolio planning process, Corporate Portfolio Analytics has a proprietary methodology that assesses both current and future work practices along with the physical portfolio for AWS opportunities. We integrate these findings with the broader strategic planning objectives to achieve portfolio reduction and other efficiencies, and forecast these impacts to the portfolio over time.

In addition to portfolio planning, AWS is a main topic of our Knowledge Network. Over the past few years we have presented Webinars and written Briefs on AWS Strategies and their impact on the Portfolio Planning process. Corporate Portfolio Analytics also hosts a bi-monthly Discussion Group among our Place Strategy Partners on the most pressing topics they face as their AWS programs grow.

Local Portfolio Plans

Real estate portfolio decisions are essentially location decisions based upon an existing workforce, labor market opportunities, local resources and logistics. Consequently, metro level portfolio strategies are the building blocks of portfolio strategy for multi-locational organizations.

Local Portfolio Plans encompass far reaching real estate and organizational analysis for CRE professionals, business line managers, and senior executives. Development of the Plan involves not only data collection and analysis, but also the active engagement of internal CRM or line of business representatives in its development. Active client engagement helps achieve a more thoughtful and implementable end product as well as buy-in across the organization. Covering occupancy within a metro area or city, the objectives of a Local Portfolio Plan are to develop short, medium and long term strategies to better house clients in as cost efficient and effective manner as possible.

Data collection and intensive quantitative and qualitative analysis supporting the development of the metro plan focuses on three building blocks: the current owned and leased portfolio assets, the current and future housing needs of various occupier client groups, and current and forecasted real estate market conditions at the metro, submarket and asset level. Forecasted growth and future use of alternative work environment strategies are also integrated.

The various interrelated factors that go into metro planning are diagrammed below. Every organization will choose to emphasize different elements depending upon its needs, resources, and its approach to decision-making.

Supply vs Demand Annalysis Scenarios for Strategic Portfolio Plan Implementation

Metro Level Portfolio Strategy Framework

Comparative Metro Analysis

Comparisons across metro locations that integrate labor and economic data with real estate commitments are critical to corporate occupiers for portfolio downsizing and optimization initiatives. Because metro areas across are becoming increasingly differentiated in terms of workforce, resources, costs and economic vitality, proactive location choice is a potential source of competitive advantage. In a Comparative Metro Analysis, Corporate Portfolio Analytics provides clients with compelling cost data and clear, rigorous analysis to identify the optimal locations for business contraction or expansion.

Customer/Business Line Tools

Line of Business Footprint

Highlighting a single line of business’ footprint can identify where the greatest opportunities for consolidation, lowering costs, better utilization and improved workplace quality may be realized. Integrating labor and econometric analysis will help determine the optimal locations to grow or contract the client’s labor force over time.

A “Line of Business Footprint” (sometimes called a “Client Portfolio Plan”) summarizes the real estate portfolio of the line of business (LOB) both graphically and quantitatively. It treats each line of business as if it were a separate portfolio, allowing line managers to view their occupancy in the context of their business strategy. The summary identifies overall conditions of occupancy and highlights any near term decisions that need to be made. Because LOBs are often unaware of the breadth and cost implications of their occupancy, a primary goal of the footprint document is to demonstrate to the LOB that corporate real estate understands their distinct needs and business drivers. LOB Footprints are especially useful when a line of business is considering major changes to its work process, technologies or workforce.

Line of Business Profile

Corporate Portfolio Analytics‚ Line of business profile is an assessment of a line of business (LOB) (or customer group) that focuses on business strategy, not occupancy. The LOB profile includes relevant data gathered through interviews with key managers as well as from internal company documents and all “secondary” sources of company information about the business including financial analyst reports and news articles. Key elements include information on competitors, growth rate, working styles and demographics, as well as functional needs. The profile is an essential element of an overall portfolio plan, rolling up into demand forecasting and overall strategy for the entire portfolio.

The LOB profile also ensures that a Customer Relationship Manager (CRM) has close, up-to-date knowledge of the business they are serving, and serves as an important first step in becoming acquainted with business unit managers. LOB profiles should be updated at least yearly and are vital when a new CRM is placed on the job. Corporate Portfolio Analytics can help CRM groups with training or designing an appropriate profile document for your organization.

Owned Portfolio Analysis

Corporate Portfolio Analytics works with clients to identify potential disposition candidates. Analysis includes consideration of book value, market value, as well as strategic value which can include elements such as a building’s impact on corporate image, regulatory issues, or connection to corporate values.

Demand Forecast Modeling and Duration Matching

Corporate Portfolio Analytics’ probability-based Demand Forecasting is a more accurate and comprehensive method of forecasting future real estate demand than the traditional CRM activity of collecting headcount forecasts from the lines of business and then rolling them up into space forecasts. Corporate Portfolio Analytics uses Monte Carlo simulations to forecast space demand, presenting demand as a cumulative distribution function of possible levels of demand based on the volatility (or uncertainty) of growth in demand. The result is a probabilistic representation of possible outcomes that quantify the magnitude of potential downside and upside scenarios.

Matching the future supply of corporate real estate resources with anticipated demand for space is at the core of effective long-term portfolio strategy, as management of supply is the critical risk factor that corporate real estate can proactively influence. Corporate Portfolio Analytics Duration Matching analysis overlays the range of different demand scenarios identified during Demand Forecasting against the structure of the CRE portfolio to identify the optimal amount of both long and short term leased space and committed versus controlled space in the portfolio in an effort to satisfy a range of possible levels of demand at minimal cost. “Committed” space is that which a company is obliged to pay for in the future, either through a lease or through ownership, whereas “Controlled” space is that which a company has the right, but not the obligation, to occupy in the future.