Are you benchmarking your corporate real estate performance? Benchmarking refers to the practice of comparing your processes and performance to those of other companies, competitors, and industry standards. More so, benchmarking is used to track historical progress or compare sites in your own various locations – not just peer-to-peer comparison.
Benchmarking is done for a variety of purposes including streamlining processes, lowering costs, and improving products or services. Corporate real estate benchmarking involves looking at specific metrics to improve the performance of either a property or a CRE investment portfolio. It’s one of the best ways for corporate occupiers and portfolio managers to improve commercial property management value while lowering expenses and improving overall business performance. Benchmarking allows users to uncover savings and realize inefficiencies that contribute to overall positive business performance.
If you want to make managing corporate real estate or a CRE portfolio easier, then benchmarking is a valuable tool. Ultimately, benchmarking is a great way to gauge overall performance, but it can also be used to drill down further and look at the performance of a specific aspect of a business process, portfolio, or property.
When you have a benchmarking system in place you can:
Without a benchmarking system or corporate real estate software in place, you’re only able to gauge performance internally. It’s like playing golf. You’ll know if your game is improving based on the scores of previous games, but you won’t know how your performance compares with others on the course that you may be competing against. You won’t know if your improved score is good on a whole or just good for you. This is where a real estate management software comes into play.
Benchmarking can provide amazing value if it’s done correctly. Corporate real estate benchmarking methodology can be broken down into three phases across 12 steps:
The goal is to compare your processes and performance metrics to others in the space to figure out what can be done better. The methodology above, or a very similar version of it, is the basis for benchmarking across many industries.
The last five steps highlight that benchmarking is an iterative process that must be ongoing to gain real value from the insights. Robert Camp’s “The Bible of Benchmarking” covers this methodology in detail and is a good read for anyone who is implementing a benchmarking strategy.
One way that corporate occupiers can leverage benchmarking is by comparing their corporate headquarters to other headquarters in the surrounding area. By looking at the space utilization and operation costs of other nearby headquarters through a corporate real estate software, corporate occupiers can gauge:
In short, benchmarking is an effective way for corporate occupiers to determine if the amount spent on a headquarters building is excessive or reasonable compared to similar buildings in the area.
Performance metrics are the key part of benchmarking. Without them benchmarking simply isn’t possible. The question is, which performance metrics should be targeted for benchmarking.
There is no simple answer to that question because it is entirely defined by the business and their most immediate concerns. As noted above, the first step in the most widely accepted benchmarking methodology is to define a problem or issue that you’d like to correct or improve. The performance metrics that are analyzed must be specific to that defined issue.
Some common performance metrics used for CRE benchmarking include:
The metrics that you track internally must also be tracked at the market level for comparison. Without the market metrics you’re simply tracking performance rather than benchmarking, and you won’t gain the value of knowing how your property or business is performing within the CRE market at large.
You might be wondering how corporate occupiers and portfolio managers are supposed to perform all of this benchmarking on top of everything else. The answer is technology. CRE tech is helping corporate occupiers and portfolio or property managers process a lot more data in different ways with less effort.
CRE software is certainly an investment worth making, however, corporate real estate software is not created equal and CRE tech is still in the infancy stages. Corporate real estate software is often extremely targeted, sometimes to the point that it is single-purpose. If benchmarking is a priority, the software needs to be built for that process in order for it to be manageable and scalable over time.
Another option is to use a corporate real estate tech solution like RefineRE that includes a benchmarking tool in a single, easy-to-use system. RefineRE’s BenchCore is designed specifically for benchmarking in the corporate real estate sector. It not only allows you to target the right performance metrics, but you can also compare the data for properties and competitors within the same block, a geographic region, or around the globe. Automatic reporting makes it easier to visualize, share, and apply the data so you complete the entire benchmarking process and gain real-world value from the insights and comps.