The Cfo Perspective on Corporate Real Estate

THE CFO PERSPECTIVE ON CORPORATE REAL ESTATE

Areport prepared by CFO Research Services in cooperation with United Systems Integrators Corporation THE CFO PERSPECTIVE ON CORPORATE REAL ESTATE

Areport prepared by CFO Research Services in cooperation with United Systems Integrators Corporation TABLE OF CONTENTS

About this report 1 Chapter 1: Introduction and summary of findings 3 Study methodology 3 A changing view of real estate 4 Key findings 4 Chapter 2: Finance’s changing view of CRE 7 A rising priority 7 CFO goals for real estate 8 The problems with CRE management 9 Improvement to the CRE function needed 11 Finance becomes involved 11 Case study: SAP Americas 13 Chapter 3: Unlocking the value in real estate 15 Centralizing the real estate function 15 Integrating real estate and corporate strategy 16 Case study: Royal Bank of Canada 17 Case study: Union Pacific Railroad 18 Leveraging technology 19 Outsourcing real estate 20 Conclusion 20 Six recommended CFO actions 21 Appendix A: Survey response demographics 23 Appendix B: Survey questionniare 25 Sponsor’s perspective 29

ABOUT THIS REPORT

In June 2003, CFO Research Services (a unit of CFO Publishing Corp.) launched a research program to examine the CFO’s perspective on corporate real estate. This report summarizes the findings of a mail survey of 264 senior financial executives from large companies and telephone interviews with 13 more. United Systems Integrators Corporation, a real estate outsourcing services firm, funded the research and the publication of our findings.

In addition to our survey respondents, the following companies participated in our telephone interview program: ■ Air Products and Chemicals ■ Alcatel N.A. ■ Alcoa ■ Cardinal Distribution ■ Kerr-McGee ■ Novell ■ Philips Semiconductors ■ Royal Bank of Canada ■ SAP Americas ■ T-Mobile ■ Union Pacific Railroad ■ Wachovia Retail and Small Business Banking ■ Wells Fargo

CFO Research Services and United Systems Integrators Corporation developed the hypotheses for this research jointly. CFO Research Services produced the final report. We would like to thank Ed McLaughlin, Chris Davidson, and September 2003 Julie Williams at United Systems Integrators Corporation for their guidance Copyright and support. ©2003 CFO Publishing Corp., which is solely responsible for At CFO Research Services, Alison Rea conducted the interviews and wrote its content. All rights reserved. the case studies. Don Durfee oversaw the project and wrote the final report. No part of this report may be reproduced or stored in a retrieval system or transmitted Finally, we would like to thank the many executives who participated in our in any form or by any means study. Without their contribution, this report would not have been possible. without written permission. The CFO Perspective on Corporate Real Estate is published by CFO Publishing Corp., 253 Summer Street, Boston, MA 02210.

Website: www.cfo-research.com

Please direct inquiries to Lisa Nelson at (617) 345-9700 ext. 249, or [email protected].

Study Methodology CHAPTER 1 In the summer of 2003, CFO INTRODUCTION AND Research Services conducted a written survey of CFOs and other SUMMARY OF FINDINGS finance executives to understand how they view corporate real Corporate real estate (CRE) is one of the largest items on the balance sheet, estate and what changes they but one that often receives scant attention from the CFO. After all, this asset plan for managing this asset. is typically managed by the company’s various operating units or by a separate real estate function. And unlike the supply chain or sales operations, Our mailing yielded 264 responses: its ability to change quickly and influence a company’s strategic goals is not 34 percent are CFOs or SVPs of always immediately apparent (an exception being retailers, who have long finance, 18 percent are VPs of been aware of CRE’s importance). finance, 17 percent are controllers, and the rest have other titles, including Yet for most companies, CRE—which we define as the real estate a company uses director of finance and treasurer. Over 10 industries are represented, to operate its business, excluding property held as a speculative investment—is a including manufacturing, financial vast expense, trailing only salaries and the procurement of direct materials. services, professional services, Indeed, our survey of senior finance executives at large companies indicates that and high tech. for 66 percent of companies, CRE is among the top four expenses (see Figure 1). Typically, CRE comprises 5-10 percent of a company’s expenses. Most of the companies in the sample are large: 61 percent of respondents work for companies with over $1 billion in annual Figure 1: How do real estate and facilities rank as a cost of doing business? revenues (for complete demographic information, see the appendix on page 23). % respondents Other 1st (12%) (5%) To provide a context for the quantitative findings, we also conducted interviews with 2nd (17%) senior finance executives at 13 companies, including Novell, Wachovia Retail and Small 5th Business Banking, and Union (22%) Pacific Railroad.

3rd (25%)

4th (19%)

Source: CFO Research Services

Real estate is also an essential component of a company’s ability to achieve its strategic plans. For retailers and consumer banks, sales depend on the many properties that house their stores and bank branches. For other companies, such as manufacturers or high tech firms, real estate can be the limiting factor for growth plans or a burden when companies switch from a focus on rapid growth to maintaining profitability, as many are doing today.

A changing view of real estate CFOs are taking a fresh look at CRE. Under pressure to improve financial performance, many have concluded that real estate warrants significant personal attention. “I’m involved in every real estate decision,” says Mark White, CFO of SAP Americas. “Because of the impact on the P&L, my real estate person brings every deal to me [to review].” As we will show in the next chapter, finance executives expect their role in CRE decisions to grow over the coming two years.

But despite its importance—both as a source of cost savings and an enabler of strategy—CRE is not well managed at many companies. Real estate plans are not integrated with corporate strategy, CRE management is often fragmented and uncoordinated, and CFOs feel they lack adequate information about this asset.

The result is a significant opportunity: substantial value is tied up in CRE that companies, with the CFO’s involvement, can release. This research report aims to answer several questions: How is the senior finance executive’s view of corporate real estate changing? What are the CFO’s objectives for CRE and what stands in the way of achieving those objectives? And finally, how are leading finance executives leveraging corporate real estate to create greater value for the company?

This report consists of three chapters. The remainder of Chapter 1 will review the key research findings. Chapter 2 will consider how finance executives view CRE and what changes they hope to make. In Chapter 3, we will consider the experiences of companies that have discovered ways to improve the management of CRE.

Key findings ■ CRE is a top cost driver for companies. Sixty-six percent of the respondents to our survey reported that real estate is one of the top four costs they face. Twenty-two percent reported that it is their first or second biggest expense.

■ CFOs believe CRE is important for achieving strategic goals. Eighty-six percent of finance executives see real estate as at least “moderately important” for being able to achieve their company’s strategic objectives. For 45 percent, it is a “very important” or “crucial” factor.

■ CRE and corporate strategy are poorly integrated. Despite the strategic priority companies place on CRE, few do a good job of integrating real estate planning with corporate strategy development. Sixty percent believe that CRE and corporate strategy are not well integrated.

■ CRE management suffers from organizational and process problems. The top three problems that finance executives see with CRE concern a lack of a unified approach to CRE: unclear lines of authority between business executives and CRE personnel, inconsistency of CRE processes, and a decentralized approach to managing CRE.

■ CFOs believe the real estate function needs improvement. Of the six functions we asked about, CFOs ranked CRE fifth in terms of professionalism and the quality of information provided. Only eight percent gave the real estate function a rating of “excellent.”

■ Finance executives plan increased involvement in real estate decisions. Recognizing real estate’s importance, and the problems with managing it today, CFOs expect to be more involved in making CRE decisions. Today, 55 percent have at least a contributing role in real estate decisions; in two years, 67 percent plan to.

■ The top objective for CRE is cost reduction. Eighty percent of finance executives cite reducing operating and occupancy costs as a goal for CRE. Other objectives include reducing the number of facilities required by the business, cutting the time required to open new facilities, and building or acquiring new facilities.

■ Those who outsource CRE report significant cost savings. Of those companies who are outsourcing some part of their real estate function today, 75 percent report cost reductions as a result. Fifty-eight percent have seen savings of between one and ten percent, and 17 percent report savings of over 10 percent.

■ Companies are not using technology extensively for CRE—but those that do report significant benefits. Most companies—77 percent—make only moderate use or less of technology to measure and track CRE. Through our interviews, however, we found that companies that use technology extensively to manage their real estate portfolio have better visibility into the performance of this asset.

CHAPTER 2 FINANCE’S CHANGING VIEW OF CRE

Main Points

■ CRE is a growing priority for the finance executive—86 percent say that it is important for their ability to achieve strategic goals ■ Reducing operating and occupancy costs is by far the most important CFO objective for CRE ■ Companies face various problems with CRE management today, including a lack of integration of CRE activities and strategic planning, and an overly decentralized approach to managing real estate today ■ Only eight percent of finance executives rate the CRE function as “excellent” ■ CFOs plan to become more involved in real estate decisions ■ CRE already reports to the CFO in 35 percent of organizations

Although CRE is a major expense for most companies, it is an area of expense that CFOs have focused on less than areas such as procurement and employee compensation. To the degree that the typical finance executive paid any attention to it, CRE was regarded as a non-strategic expense best left to the company’s real estate experts.

As we will explain in this chapter, CFOs are now taking notice of CRE. Nearly all see the real estate portfolio as an asset ripe for pruning and many are begin- ning to recognize the strategic importance of real estate decisions.

A rising priority There are two main reasons why CRE is attracting the attention of finance. First, unstable economic conditions are driving CFOs to search for savings in all corners of the organization. They have already extracted savings through strategic sourcing, business process redesign, and T&E expense management. Real estate is another obvious area to look—as we mentioned in the previous chapter, CRE is one of the top four expenses for most companies.

“[Real estate] is a very high priority,” says B.J. Losch, CFO of Wachovia Retail and Small Business Banking. “Our occupancy expenses in the retail bank are about 15-20 percent of our total expenses.” Other companies we interviewed report that real estate is an even larger portion of costs. The CFO of one technology firm estimates that real estate comprises 30 percent of his company’s costs.

Second, as the CFO’s role has expanded from the keeper of financial results to one that calls for deeper involvement in strategic planning, many finance executives are coming to recognize that an ill-conceived approach to CRE can hinder an ambitious growth plan or block efforts to reduce the company’s operation. Indeed, our survey found that CFOs regard CRE as an important component to their strategic plans. Eighty-six percent of our respondents reported that CRE is at least “moderately important” to their company’s ability to achieve its strategic objectives (see Figure 2, next page).

Figure 2: How important do you believe CRE is to your ability to achieve your company's strategic objectives?

% respondents Not at all important Crucial (1%) Not very (10%) important (13%)

Very important Moderately (35%) important (41%)

Source: CFO Research Services

Unsurprisingly, this belief is especially common in companies whose sales channels depend heavily on physical locations, including retail companies and consumer banks. “Real estate is the core part of our distribution network,” says Janice Fukakusa, EVP of finance for the Royal Bank of Canada. “Our branch infrastructure, our call centers—everything involves real estate.” According to our survey results, finance executives in the retail and financial services industries are more likely to be involved in real estate decisions than their counterparts in other industries.

CFO goals for real estate By far the most We asked survey respondents to identify their top goals for CRE. By far the most important objective important objective is reducing operating and occupancy costs, with 80 percent for CFOs is reducing choosing this option (see Figure 3, next page). The second priority—reducing the operating and number of facilities required by the business—addresses the same cost issue. occupancy costs T-Mobile is one company focusing on reducing the cost of its real estate portfolio. According to Arun Gore, the CFO of one of the company’s operating units, unstable financial markets are pushing most companies to look internally for capital rather than turning to outside investors. This has meant finding ways to boost operational efficiency as a means of creating free cash flow. Efficiently managing the corporate real estate portfolio is one promising means of achieving this.

We found that high technology firms are even more focused than others on reducing the cost of real estate. This makes sense, given the rapid growth of this sector in the 1990s—after the end of the dotcom boom several years ago many found themselves saddled with excess real estate. According to Tim Kleckner, VP of finance for Philips Semiconductors, the company is focusing on reducing its holdings, particularly in the Silicon Valley area. “[In Silicon Valley] we have enough real estate capacity for over 2,000 people, and we’re now well below that,” he says. “We need to get that footprint down to a point where it’s reasonable.”

Many consumer banks are facing the opposite problem—many of these companies are expanding their networks of bank branches, causing them to focus on acquiring new facilities. Indeed, our survey found that financial

Figure 3: How important are the following CRE objectives for your organization?

% responding "very important" or "crucial"

Reduce operating and occupancy costs 80%

Reduce number of facilities required by the business 45%

Reduce time required to open 43% new facilities

Build/acquire new facilities for 41% the business

Improve appearance and cleanliness 38% of facilities

Improve quality of reporting to senior management on CRE costs 33%

Increase consistency of image across real estate portfolio 30%

Note: Figures do not add to 100% due to rounding 0102030405060708090 Source: CFO Research Services

services firms were more likely to cite as objectives building and acquiring new facilities, and shortening the time required to open new facilities.

The problems with CRE management Many companies will have trouble achieving their goals, however. While CFOs say that real estate is a growing priority and is important for achieving strategic objectives, few manage it accordingly. For example, while over four- fifths of finance executives regard CRE as at least moderately important for achieving strategy, only 40 percent report that it is well integrated with the strategic planning process (see Figure 4).

Figure 4: How well integrated are your company's corporate strategy and CRE strategy?

% respondents

45 39% 40 35 30% 30 25 20 17% 15 10% 10 5% 5 0 Not integrated Not very Somewhat Very integrated Completely at all integrated integrated integrated Note: Figures do not add to 100% due to rounding Source: CFO Research Services

Figure 5: What problems do you see with CRE management at your company?

% responding

Unclear lines of authority between business 28% unit leaders and CRE personnel

Real estate not managed in one 21% place within organization

Inconsistent CRE 20% processes

Lack of senior management 19% leadership

Inability to create business case to 19% support decisions

Poor availability/credibility of 16% CRE data Unresponsive to shifts in corporate business plans and strategies 15%

Poor caliber of CRE 7% personnel

Other 7%

We have no problems 20%

051015 20 25 30 Source: CFO Research Services

A lack of integration with strategy is not the only issue. We asked respondents to identify the top problems they see with CRE management at their companies—only 20 percent reported that they see no problems (see Figure 5). The top three issues reflect a lack of a unified approach: unclear lines of authority between business unit leaders and CRE personnel, real estate not being managed in one place within the organization, and inconsistent CRE processes. In other words, at many companies real estate remains a neglected function, divided among business units and managed in a fragmented way.

Other problems CFOs cited in our interviews included a lack of consolidated information about the company’s real estate holdings, and conflicts between the CRE strategies of business units due to a lack of coordination. At one company, for example, the CFO reports that because of an inadequate IT system, there have been cases where different business units have bid on the same property, each unaware of the other.

One outcome of such problems is that poorly managed CRE becomes a business risk. When facilities are acquired and operated by branch or field-level staff, companies often fail to conduct a rigorous assessment of potential legal liabilities or property-related hazards. Worse, perhaps, the company fails to develop contingencies, exposing itself to risks such as disruption of operations, employee health and safety, and IT system vulnerability.

Figure 6: Rate the professionalism and quality of information provided by the following functions

% responding "good" or "excellent"

100 87% 80 69% 58% 60 41% 40% 40 30% 20 0 Finance Legal Travel Human Real estate Information resources technology Source: CFO Research Services

Improvement to the CRE function needed Many finance executives also believe that the real estate function itself needs Only eight percent of to improve. We asked survey participants to rate six corporate functions in respondents give the terms of their professionalism and the quality of information they provide. CRE function a rating Corporate real estate ranked fifth, with only 40 percent saying that the of “excellent” function is “good” or “excellent” (see Figure 6). Only eight percent give it a rating of “excellent.” While many of our interviewees hold a positive view of their CRE functions, not all are satisfied. As one finance executive commented, “Our corporate real estate group does not act as a centralized group that acts proactively to manage real estate across the company.”

The CFOs we spoke to say that they would like to have a CRE function that is not only technically competent but also takes the initiative when it comes to finding new opportunities for cost savings.

Such areas of savings can include: ■ Bulk purchasing of furniture and equipment ■ Identifying leases about to expire and renegotiating them ■ Looking for opportunities to consolidate holdings across the portfolio ■ Disposing of excess real estate

Finance becomes involved Confronted with such problems, many CFOs have concluded that they must become more involved in real estate issues. We asked survey respondents what role they have in making real estate decisions today, and how involved they expect to be in two years. Currently, 55 percent report having at least a contributing role; in two years, 67 percent expect to (see Figure 7, next page).

The CFO can contribute in several ways. One is to act as champion for company-wide real estate initiatives. “At T-Mobile, we are driving the shift from a decentralized real estate function to one that is handled centrally,” says Arun Gore.

Figure 7: How involved are you in making CRE decisions today? How involved will you be in two years?

% responding Today In 2 years

30 28% 27% 24% 25% 25 21% 19% 20 17% 15% 15% 15 9% 10 5 0 Not involved Limited role Contributing Important Leadership role role role Source: CFO Research Services

According to Gore, having the CFO in charge helps to overcome the reluctance of some units to give up the real estate activities they were handling. “It’s imperative the CFO be involved in this process because of the need for this to be driven from top to bottom,” he says. CFOs can also help by setting financial goals for the CRE function and actively participating in the financial aspects of major real estate deals.

One company where the CFO has taken a leading role in real estate is SAP Americas. As the case study on the next page describes, the company’s financial executive is closely involved in setting CRE strategy and ensuring that it supports the plans of the business.

In some cases, increased CFO involvement in real estate will mean direct responsibility for the CRE function. Our survey found that CRE already reports to finance at over one-third of companies (see Figure 8).

Figure 8: To whom does the most senior CRE executive report?

% responding

CFO 35%

CEO 19%

COO 14%

CAO 11%

Business unit head 10%

Other 9%

General counsel 2%

051015 20 25 30 35 40 Source: CFO Research Services

According to the executives we interviewed, the primary reason that companies are choosing to give CFOs oversight is to ensure that real estate is factored into corporate strategy. This is the case at Union Pacific Railroad, which three years ago put finance in charge of real estate to facilitate integration with strategy.

In the next chapter, we will consider how some leading companies—under the leadership of the CFO—are extracting greater value from corporate real estate.

SAP Americas: The case for CFO involvement in real estate

SAP Americas’ CFO Mark White is immersed in every real estate decision his company makes. "Maybe I’m a little bit different than other CFOs, but I like to see just about every dollar that we’re spending in the company, and real estate is no exception," says White. The real estate group at SAP reports to the CFO and works closely with him. According to White, he personally reviews every real estate deal.

The CFO's close hold on real estate has been particularly relevant given that one of the company's recent strategic goals has been to cut costs to fit a new, downsized business model. One factor driving change has been the changing real estate needs of SAP consultants who tend to work offsite and are increasingly hooked into the office by the Internet. "We’ve found in some cases, we had 150 people assigned to an office but only five to six showing up every day," says White.

SAP has been aggressively trimming its real estate costs. The company has closed down underutilized offices—seven in the last year—consolidated multiple training centers into one location, and has been choosing new space that better fits its needs and actual usage patterns. As a result, real estate as a percentage of total costs has fallen from 2 percent to 0.7 percent (not including IT). It is down to about where White would like it to be.

The CFO can also take a very hands-on approach to real estate because of SAP's detailed real estate data. The company’s IT system provides details on real estate spending, lease expiration dates, and square footage occupancy, among others. According to White, this plethora of information helps him fine-tune SAP's real estate needs.

Another important rationale for close CFO involvement in real estate is to help ensure that the company’s real estate usage is closely aligned with strategy. "You’ve got to be thinking three to four years out and asking what are the potential different alternatives that could happen to the business," says White. "The CFO needs to understand what the operating people are thinking to put the right infrastructure in place for them to be successful."

CHAPTER 3 UNLOCKING THE VALUE IN REAL ESTATE

Main Points

■ Managing real estate centrally produces several advantages, including economies of scale and better coordination of CRE plans ■ Leading companies are finding ways to factor in CRE considerations early in the strategic planning process ■ Information technology can provide the CFO and CRE function better leverage over the real estate portfolio—but today, only 23 percent of companies use technology extensively for CRE ■ Outsourcing the CRE function produces significant savings three-quarters of the time

If real estate is becoming a higher priority for finance executives, and if it is not being managed as well as it should be, what steps should CFOs be considering? Our survey and interviews with senior finance executives indicate that many are concentrating on four areas:

■ Centralizing the real estate function ■ Integrating real estate and corporate strategy ■ Leveraging technology ■ Outsourcing real estate

Centralizing the real estate function In many companies, the management of real estate is an organizational afterthought, with each of a company’s operating units handling its own property needs. In some ways this makes sense—business units usually have to pay for the real estate they use (rather than charging it back to the corporation), and those close to the operation often have the clearest understanding of its requirements. But by allowing one unit to purchase or lease property without reference to what other parts of the company are doing, the corporation pays a price in terms of lost economies of scale and reduced effectiveness.

There are several advantages to managing real estate centrally. First are the cost savings. By knowing the entire company’s needs, a central CRE function may be able to negotiate volume discounts with large landlords or find opportunities for different parts of the company to share a single site. One of the reasons Philips Semiconductors manages its real estate in one place, according to Tim Kleckner, is that having individual business units make their own real estate decisions might mean that the company acquires new space when it already has underused facilities that those businesses could use. As one finance executive we spoke with puts it, “If you want to optimize cost and maximize the effectiveness of real estate—and if you’ve got the size and scale—you should centralize it.”

A second reason to centralize is that individual business units don’t typically have the expertise to manage real estate well, and arguably should be spending their time generating revenue, instead. Centralizing can also make it easier to build a truly professional CRE function. As the case study on the next page shows, Royal Bank of Canada has found that with a central CRE group, it is able to attract better real estate specialists, because the organization is big enough to offer attractive career opportunities.

A centralized CRE Third, a centralized CRE function will be in a position to provide the CFO function can provide the with the data on real estate usage and costs necessary for managing corporate CFO with the real estate financial performance. For example, with visibility into how efficiently data necessary for business units use their space, the CFO can better enforce cost-saving goals for the businesses. Of course, few finance functions have the time to gather managing corporate such information—a competent internal or outsourced CRE function would financial performance be capable of this, however.

Finally, as we discuss in the next section, having a corporate real estate function means that it’s simpler to integrate real estate planning with corporate planning.

Centralizing CRE can pose a risk—that individual business units won’t receive the customized support they need. Wachovia’s solution is to assign “relationship managers” from the CRE function to each operation. With a solid-line reporting relationship to corporate CRE and a dotted line to the business unit, the manager can understand the specific needs of that group while drawing on the resources, information, and scale of the central group. “[The relationship manager] plays an invaluable role as really being one point of contact for us to go to in corporate real estate,” says Losch of Wachovia. “We always know that whether it’s under his direct control or not he can talk with his counterparts in CRE to make sure get we what we need.”

Integrating real estate and corporate strategy As mentioned in the previous chapter, one of the CFO’s major concerns regarding real estate is that planning for CRE is rarely well integrated with corporate strategic plans. Integration is not equally important to all companies, of course. For a distributor, CRE may be a relatively straightforward matter of securing inexpensive warehouses. For others— including companies with a strategy that calls for expansion or cost cutting— real estate is a more complex and important consideration. “Real estate has to be aligned with strategy as we are expanding and restructuring,” says Nancy Greer, CFO of Alcatel, N.A. “If it is not involved, then we pay a significant price either way (by paying too much for space when needed or by not being able to dispose of space when downsizing).”

The retail banking sector is one business where integration is crucial. Many banks, including the three we interviewed for this report, are expanding their retail networks and thus have a strong interest in making sure that real estate is at the decision-making table. Wachovia, for example, plans to expand its retail network by between 30 and 50 branches per year for the next three years. “Obviously we can’t do this without the help of corporate real estate,” says Losch, “so they’ve been in with us in strategic planning from day one on

how to do this in the most effective, efficient, value-added way.” Wachovia holds meetings twice a month to conduct planning related to the building of new branches—the meetings include senior members of both the business unit and CRE.

Royal Bank of Canada: A centralized CRE function to support group strategy

At Royal Bank of Canada (RBC), real estate is not only one of the biggest expenses, but also a core part of the financial service firm's distribution strategy. That means that managing real estate well is crucial and, for RBC, this is synonymous with managing the function centrally.

The advantage of being central RBC has seen a number of benefits from managing real estate in a center of expertise. For one, real estate requires very specialized skills and expertise. By having one group focus solely on CRE, individual units are free to concentrate on their main priority— serving customers. "We don’t want our businesses to also have to manage real estate,” says Janice Fukakusa, RBC’s EVP of finance. “So we manage real estate on behalf of the entire company in a real estate group with specialists who know about everything from leasing to actually maintaining property."

Indeed, having a unified group also helps RBC attract more sophisticated real estate professionals since people can embark on a clear career path that’s unavailable in companies with dispersed real estate organizations. "Centralization is an advantage because when you have real estate in all of the different businesses, it’s not a core capability. That means they don’t have the critical mass to get the expertise that’s required," says Fukakusa.

Talented professionals are further attracted to work at RBC because real estate is treated as a strategic imperative. Reporting directly to Fukakusa gives CRE a strong role when strategic decisions are made on such initiatives as branch expansion, call center locations, or mergers and acquisitions. In addition, the real estate group is involved in the implementation of strategy since it has professionals embedded in the various business units as part of their management teams.

Centralization also creates economies of scale. Whether applied to procurement, leveraging best practices across the group, or technology, centralization is more efficient and cost effective. It also helps the company in real estate negotiations since RBC can often get better leases using the clout of the entire company.

CRE’s contribution In addition to the benefits of having real estate better aligned with strategy, RBC’s unified CRE function has uncovered areas for significant savings. For example, when the bank recently moved its retail banking head office with over a thousand people three blocks down the road, it realized significant savings. The real estate group saw that the lease in the old head office was coming due, and quickly found a more cost-effective alternative. "We’re always thinking about real estate. It is a very important business partner in affecting cost reduction and in looking at expansion, particularly for our retail banking operation," says Fukakusa.

That said, RBC's real estate group must continually make sure that it is offering a real service to the business lines. If not, the groups will do it themselves and the benefits of centralization will be lost.

Regulatory developments are another reason companies are seeking to bring CRE into the planning process. According to Don Dana, EVP of real estate for Wells Fargo, new rules about financial reporting affect the way that public companies must account for and disclose complex real estate transactions. Given the requirement that CFOs and CEOs sign off on financial statements, there is a need for input from CRE.

Often, the CFO will have a central role in integrating real estate into strategic planning. As the case study below shows, Union Pacific Railroad ensures alignment of CRE and strategy by having real estate report to the SVP of finance and having that executive bring attention to any relevant real estate issues when the plan is being formulated.

Union Pacific Railroad: Bringing real estate to the decision-making table

For 140-year-old railroad legend Union Pacific, having 33,000 miles of track running through twenty-three states puts real estate squarely in senior management’s sights. "Real estate plays a critical role in our day-to-day operations. It is a very strategic business," says Robert Knight, SVP of finance.

To reinforce this high visibility and the fact that real estate is a management priority, Union Pacific changed reporting lines five years ago so that its real estate group reports into the finance organization. This has helped align corporate real estate initiatives with strategy. "This gives real estate more of a strategic seat at the table from both a financial perspective and also from a strategic perspective," says Knight.

In practice, real estate reports to Knight, who reports to the CFO, which means that both are fully apprised of real estate matters and can represent these concerns in strategy meetings. "It gives real estate a real voice, because finance is intimately involved in goal-setting and strategic planning. Real estate is always a part of that discussion," says Knight, who meets with the general manager of real estate every other day or even more often if the need arises.

The finance group sets the business objectives for real estate. The real estate group in turn provides the finance group with summary results against these business targets. The summary includes ROI, cash generation, net income, and figures on properties.

The finance group also expects the real estate department to help cut costs and create value. With the help of sophisticated technology that can track holdings parcel by parcel, Union Pacific aggressively tries to lease its track right-of-ways for lucrative uses including pipelines, fiber optic and phone lines, and billboards. "We have a fairly extensive, cross-functional, internal process that we go through to continually evaluate opportunities to achieve value from our assets," says Knight.

The real estate group's general manager runs day-to-day activities with the help of a number of sales and real estate professionals who are located in high-value and high- priority regions of the U.S. The real estate group also works closely to match its activities with the strategic needs of Union Pacific's marketing, sales, and industrial development teams.

Leveraging technology The third area where leading companies are focusing is technology to support the management of CRE. The CFOs we interviewed were careful to emphasize that technology is not a substitute for a competent, centrally-led CRE function, but that it is a crucial enabler. Many companies have no simple way of viewing information about their properties. Copies of leases often reside in filing cabinets in offices around the country, making it hard for the CFO (or anyone else) to know what properties the company has, how much they cost, or when the leases expire. With an integrated technology system, the CFO can see all of this information, resulting in improved management of the CRE portfolio and better budgeting as a result of having access to more complete cost information.

77 percent of survey Most have a long way to go, however. We found that 77 percent of survey respondents do not use respondents do not use technology extensively when managing CRE (see technology extensively Figure 9). Only five percent report using technology “to a great extent.” The to manage CRE features that would be of most interest to CFOs include improved reporting of CRE occupancy costs (58 percent cited this as a valuable feature); better tracking of lease information (55 percent); and improved tracking of CRE projects, timelines, and budgets (49 percent).

Figure 9: To what extent do you use technology to measure and track CRE costs and service?

% responding

40 35% 35 31% 30 25 18% 20 15 11% 10 5% 5 0 Not at all To a minimal To a moderate To a To a great extent extent considerable extent extent Source: CFO Research Services

But those who do use technology for real estate report significant benefits. Wells Fargo has a Web-based CRE system that allows real estate managers in different regions to enter lease and property information remotely. As a result, the CRE function at the company’s corporate headquarters always has the most current data about the firm’s real estate holdings and is able to manage the portfolio more actively. For example, when the CRE function sees that a certain lease is about to expire, it can get in touch with the relevant business line to consider the available options.

Similarly, SAP Americas’ CFO has access to detailed information about the company’s various properties. “The data I have is literally to the penny that we spend every month and in terms of when leases expire, what our square footage occupancy is, what our future needs are likely to be in each of those locations,” says Mark White. One benefit of the company’s system has been to help the CFO trim the real estate portfolio. Because employees scan their badges when entering SAP’s buildings or conference rooms, the real estate manager can track usage levels and determine where the company may have excess space.

Outsourcing real estate Finally, outsourcing aspects of CRE can help companies trim costs in the real estate function and allow them to focus on the core business. Our survey reveals that 48 percent of companies outsource at least some of their real estate staff. Those who do not outsource say that the primary reason is that they are unconvinced that outsourcing will yield either cost savings or a better process. However, our survey found that of those who do outsource, 74 percent have seen cost savings (see Figure 10).

Figure 10: If you do outsource, what savings have you achieved in CRE operations?

% respondents More than 20% (6%)

11 to 20% No savings or (11%) higher cost (26% )

6 to 10% 1% to 5% (29%) (28%)

Source: CFO Research Services

The types of activities companies outsource vary widely. Many outsource facilities maintenance or the transactional aspects of buying and selling properties. The Royal Bank of Canada, for instance, outsources all of its facilities maintenance.

Other companies have gone further, turning the entire CRE function over to outside providers. For example, Adecco, an $18 billion personnel services company, recently outsourced the full range of real estate activities. This included property acquisition and disposition, real estate portfolio review, space planning, database management, and project management. To date, the company has been able to reduce its occupancy costs by over $10 million by working with its partner to consolidate its holdings.

Conclusion Corporate real estate is evolving from a back-office activity that holds little interest for the CFO to one that finance executives monitor closely and frequently participate in. As we have shown, executives at companies ranging from Union Pacific Railroad to The Royal Bank of Canada are taking a keen interest in real estate as something that can improve profit margins, help or hinder strategic plans, and in some cases contribute to increased revenues.

To make the most of CRE, however, CFOs will have to guide their companies past a variety of obstacles, ranging from a fragmented management structure to a lack of accurate, consolidated information about the real estate portfolio. Depending on the company, this may call for a centralized structure, the use of technology and outsourcing, and a concerted effort to put real estate issues before the company’s strategic planners. It can be done: under the leadership of finance, companies such as Wachovia, T-Mobile, and SAP manage real estate efficiently and effectively, and in a way that supports each company’s strategic goals.

In the end, the real benefit of good CRE management is to free resources tied up in real estate and allow the CFO to reallocate them to revenue-generating areas of the business such as employees, sales and marketing, or manufacturing. As Mark White of SAP puts it, “The true cost of our organization is really just the people. Ideally, IT spending will be as low as it can get—the same is true of facilities.”

Six recommended CFO actions

Our survey results and interviews suggest several steps CFOs can take to improve the management of corporate real estate:

1. Examine corporate real estate as an area of potential cost savings. CRE represents five percent to 10 percent of a company’s expenses, on average. The experience of leading companies indicates that aggressive management of the real estate portfolio can yield savings in the area of 20 percent.

2. Bring CRE to the decision-making table. On its own, good CRE management won’t create a successful company, but poor CRE management can derail even the best strategic plans. “It’s extremely important to have corporate real estate at the table whenever you’re making major decisions,” says Losch of Wachovia. CFOs should consider ways of integrating real estate issues early in the strategic planning process. This may mean including a CRE executive in planning sessions or having the CFO bring real estate issues to the discussion.

3. Be the champion for company-wide real estate efforts. Major organizational changes—such as pulling responsibility for real estate away from the business units and placing it with a central CRE function—rarely succeed without a credible senior manager to drive it to completion. As an executive who can articulate clearly the financial benefits of a new approach to CRE, the CFO is well positioned to play this role.

4. Build a highly qualified, central CRE function. The experiences of the companies we spoke with for this report suggest that successful management of CRE will require more than the active involvement of the finance executive. It calls for a centralized real estate function with employees skilled in the technical aspects of CRE management. “You need to recognize the value of real estate and put very competent professionals who understand real estate in charge of those activities,” comments Knight of Union Pacific Railroad.

5. Leverage technology to improve real estate portfolio management. CFOs should also consider what technology is available to provide a better view of total CRE expenses and to facilitate better real estate planning. As we described in this report, some companies have found that easier access to lease information, for example, has allowed them to be more active about renegotiating leases.

6. Consider outsourcing as a means of further reducing CRE costs. Finally, CFOs may want to consider whether there are aspects of the company’s real estate activities that can be outsourced without compromising the level of control the company needs over this asset. As our study shows, most of these arrangements result in lower costs for companies.

APPENDIX A Survey response demographics Our written survey yielded 264 responses. The charts below describe the characteristics of the survey population:

What is your title?

% responding Other CEO (9%) (4%)

Controller CFO/SVP (17%) finance (34%)

Director of finance (18%)

VP finance Source: CFO Research Services (18%)

What were your firm's worldwide revenues for the most recently completed fiscal year?

% respondents

Under $250m (4%)

Over $10bn (19%) $250m to $499m (20%)

$6bn to $10bn (9%)

$500m to $999m (15%)

$1bn to $5bn (33%) Source: CFO Research Services

Is your firm publicly traded?

% responding

No Yes (40%) (60%)

Source: CFO Research Services

What is your organization's primary business?

% responding

Financial services 19% Auto/Industrial/ Manufacturing 14%

Wholesale/Retail 13%

Other 9% Business/ Professional services 7% Food/Beverages/ Consumer packaged goods 7%

Health care 6%

High tech/Computers 5% Transportation/ Warehousing 4% Public sector/ Non-profit 4%

Telecommunications 4%

Energy/Utilities 3%

Chemicals 3% Pharmaceuticals/ Biotechnology 2%

Travel/Hospitality 2%

02468101214161820

Note: Figures do not add to 100% due to rounding Source: CFO Research Services

APPENDIX B Survey questionniare

Dear Colleague,

I am writing to ask for your help with a research project being conducted by CFO Research Services, the sponsored research arm of CFO magazine. We are asking a select group of finance executives to answer 30 brief questions about their views on corporate real estate—the value it creates, the challenges it poses, and strategies CFOs adopt to manage it.

All questionnaire responses will remain strictly confidential. You may reply anonymously, if you wish.

In return for your participation, we will send you a pass that entitles you or your subordinate to free admission to any one of CFO magazine’s conferences in 2003 or 2004. We will also send via E-mail a free copy of the research findings. To receive these valuable benefits, please provide the following information along with your completed survey:

Name: Title:

Company:

Company address:

City: State: Zip code:

Telephone: Fax:

E-mail address: (to be used only by CFO magazine)

❑ Please check if you would be willing to receive future CFO surveys via E-mail.

Thank you in advance for your important contribution to our research.

❑ Check here to receive your free CFO conference pass Don Durfee, Research Director CFO Research Services

Please return completed questionnaire to: Lisa Nelson, CFO Publishing Corp., 253 Summer St., Boston, MA 02210 or reply by fax to 617-345-0037 If you have any questions, please E-mail [email protected] or call (617) 345-9700, Ext. 249

SEPTEMBER 2003 © 2003 CFO PUBLISHING CORP. 6. What problems, if any, do you see with CRE management at DEFINITION: your company? Check ALL that apply (12) We define corporate real estate (CRE) as the real estate that Unresponsive to shifts in corporate business plans and ❑ (-1) your company owns, leases, and occupies to operate your strategies business. This does not include the real estate portfolio that Unclear lines of authority between business unit leaders ❑ (-2) your company uses as an investment instrument. and CRE personnel Real estate not managed in one place within the ❑ (-3) organization SECTION 1: YOUR CRE ORGANIZATION & PORTFOLIO Lack of senior management leadership concerning ❑ (-4) CRE initiatives 1. Within your company’s cost structure, how do real estate ❑ (-5) and facilities rank as a cost of doing business? Check ONE Poor caliber of CRE personnel (5) Inconsistency of CRE processes ❑ (-6) 1st ❑ (-1) Inability to create business case to support decisions ❑ (-7) 2nd ❑ (-2) Poor availability and/or credibility of CRE data ❑ (-8) 3rd ❑ (-3) Other:______(13) ❑ (-9) 4th ❑ (-4) 5th ❑ (-5) 7. How many total sites (i.e., facilities) does your company Other:_____(6) ❑ (-6) utilize? Check ONE (14) Under 50 ❑ (-1) 2. To whom does the most senior CRE executive report? 50 to 99 ❑ (-2) Check ONE (-3) (7) 100 to 199 ❑ CFO ❑ (-1) 200 to 499 ❑ (-4) COO ❑ (-2) 500 to 999 ❑ (-5) CEO ❑ (-3) 1,000 or more ❑ (-6) Chief Administrative Officer ❑ (-4) General Counsel ❑ (-5) 8. Approximately what percentage of your facilities are leased? Business unit head ❑ (-6) Check ONE (15) Other:______(8) ❑ (-7) None ❑ (-1) 1-24% ❑ (-2) 3. How is your current CRE organization structured? Check ONE (-3) (9) 25-49% ❑ All, or nearly all, staff are in-house ❑ (-1) 50-74% ❑ (-4) Most staff are in-house ❑ (-2) 75-100% ❑ (-5) 50/50 ❑ (-3) Most staff are outsourced ❑ (-4) 9. In what geographic areas do you foresee your CRE portfolio All, or nearly all, staff are outsourced ❑ (-5) expanding in the next two years? Check ALL that apply (16) North America ❑ (-1) 4. How satisfied are you with the current level of performance Central/South America ❑ (-2) of the team that manages your real estate? Check ONE ❑ (-3) (10) Eastern Europe ❑ (-4) Very dissatisfied ❑ (-1) Western Europe ❑ (-5) Moderately dissatisfied ❑ (-2) Asia ❑ (-6) Neither satisfied nor dissatisfied ❑ (-3) Middle East Other:______(17) ❑ (-7) Moderately satisfied ❑ (-4) No expansion expected ❑ (-8) Very satisfied ❑ (-5)

5. How satisfied are you with the way the CRE organization SECTION 2: YOUR CRE STRATEGY supports the overall needs of your business units? Check ONE 10. How involved are you in making CRE decisions today? (11) How involved do you expect to be in two years? Very dissatisfied ❑ (-1) Check ONE in EACH column Moderately dissatisfied ❑ (-2) (18) (19) Neither satisfied nor dissatisfied ❑ (-3) Today In 2 years ❑ (-1) ❑ (-1) Moderately satisfied ❑ (-4) Not involved ❑ (-2) ❑ (-2) Very satisfied ❑ (-5) Limited role Contributing role ❑ (-3) ❑ (-3) Important role ❑ (-4) ❑ (-4) Leadership role ❑ (-5) ❑ (-5) 11. How well integrated are your company’s corporate strategy 15. What are the top three activities through which real estate and CRE strategy? Check ONE can deliver the most incremental value to your company? (20) Please check THREE Not integrated at all ❑ (-1) (33) ❑ (-1) Not very integrated ❑ (-2) Managing human resources and space occupancy ❑ (-2) Somewhat integrated ❑ (-3) Increasing flexibility in lease terms ❑ (-3) Very integrated ❑ (-4) Optimizing underutilized owned assets ❑ (-4) Completely integrated ❑ (-5) Disposing of excess assets (leased and owned) Reorganizing CRE department ❑ (-5) Increasing process efficiencies within CRE function ❑ (-6) 12. How important are the following CRE objectives for your ❑ (-7) organization? Improving access to real estate portfolio information and reporting 1 = Not at all important 4 = Very important 2 = Not very important 5 = Crucial 16. If you charge back real estate costs to the business units, by 3 = Somewhat important what means do you do so? Check ALL that apply (34) ❑ (-1) (21) Charge back direct costs to specific unit Reduce operating and occupancy costs 1 2 3 4 5 (rent; furniture, fixtures, and equipment; etc.) (22) Reduce the time required to open new facilities 1 2 3 4 5 Charge back costs via corporate allocation (by square foot) ❑ (-2) (23) Build/acquire new facilities for the business 1 2 3 4 5 Charge back costs via corporate allocation (by number ❑ (-3) Reduce the number of facilities that are 1 2 3 4 5 (24) of projects) required by the business Charge back direct costs plus service costs ❑ (-4) Improve the quality of reporting to senior 1 2 3 4 5 (25) Other:______(35) ❑ (-5) management on real estate costs No charge back to business units ❑ (-6) Increase consistency of image across the 1 2 3 4 5 (26) real estate portfolio (27) 17. How important do you believe CRE is to your ability to Improve the appearance and cleanliness 1 2 3 4 5 achieve your company’s strategic objectives? Check ONE of the facilities (36) (29) (28) Other:______12345 Not at all important ❑ (-1) Not very important ❑ (-2) 13. How satisfied are you with your ability to measure your Moderately important ❑ (-3) company’s total CRE costs, including costs allocated to Very important ❑ (-4) operating units? Check ONE Crucial ❑ (-5) (30) Very dissatisfied ❑ (-1) 18. How well do you understand the factors that influence ❑ (-2) Moderately dissatisfied your company’s real estate/occupancy costs? Check ONE Neither satisfied nor dissatisfied ❑ (-3) (37) Moderately satisfied ❑ (-4) Not at all ❑ (-1) Very satisfied ❑ (-5) Not very well ❑ (-2) Moderately well ❑ (-3) 14. Which CRE metrics do you use for assessing the performance To a large extent ❑ (-4) of your company’s portfolio? Check ALL that apply Completely ❑ (-5) (31)

❑ (-1) Earnings per share impact SECTION 3: TECHNOLOGY AND OUTSOURCING Return on invested capital in real estate improvements ❑ (-2) 19. To what extent do you currently use technology to measure Occupancy cost (or rent) per square foot ❑ (-3) and track CRE costs and service performance? Check ONE (-4) Occupancy cost (or rent) per full-time equivalent ❑ (38) Square feet per full-time equivalent ❑ (-5) Not at all ❑ (-1) Occupancy cost (or rent) as a percentage of company ❑ (-6) To a minimal extent ❑ (-2) revenue To a moderate extent ❑ (-3) ❑ (-7) Occupancy cost (or rent) as a percentage of company To a considerable extent ❑ (-4) expense To a great extent ❑ (-5) Other:______(32) ❑ (-8) 20. What features would be most valuable to you in a CRE technology system? Check ALL that apply (39) Improved reporting of CRE occupancy costs ❑ (-1) Improved tracking of CRE projects, timelines, and budgets ❑ (-2) Improved tracking of lease information ❑ (-3) Improved customer service functions, such as facilities ❑ (-4) 1-800 help desks Other:______(40) ❑ (-5) 21. Rate the professionalism and quality of information provided 25. If you do outsource—and your service provider measures by the following corporate functions. Circle ONE in EACH row savings—what savings have you achieved in corporate real estate operations? Check ONE 1 = Very poor 4 = Good (61) 2 = Not very good 5 = Excellent No savings or higher cost ❑ (-1) 3 = Satisfactory 1 to 5% ❑ (-2) 6 to 10% ❑ (-3) (41) Finance 1 2 3 4 5 11 to 20% ❑ (-4) (42) Legal 1 2 3 4 5 More than 20% ❑ (-5) Travel 1 2 3 4 5 (43) (44) Human Resources 1 2 3 4 5 26. Does CRE fall under the responsibility of the procurement Real Estate 1 2 3 4 5 (45) organization? Will it in two years? Check ONE in EACH column Information Technology 1 2 3 4 5 (46) (62) (63) Today In 2 years ❑ (-1) ❑ (-1) 22. Do you intend to increase, decrease, or maintain your Yes degree of outsourcing for each function over the next two to No ❑ (-2) ❑ (-2) five years? Check ONE in EACH row (-1) (-2) (-3) SECTION 4: COMPANY DEMOGRAPHICS Increase Decrease Maintain Finance ❑❑❑(47) 27. Is your company publicly traded? Human Resources ❑❑❑(48) (64) Yes ❑ (-1) No ❑ (-2) Legal ❑❑❑(49) ❑❑❑(50) Real Estate 28. What is your title? Travel ❑❑❑(51) (65) Information Technology ❑❑❑(52) CEO, President, or Managing Director ❑ (-1) CFO ❑ (-2) 23. How satisfied are you with your outsourcing efforts to EVP or SVP of Finance ❑ (-3) date? Circle ONE in EACH row VP of Finance ❑ (-4) Director of Finance ❑ (-5) 1 = Very dissatisfied 4 = Somewhat satisfied Controller ❑ (-6) 2 = Somewhat dissatisfied 5 = Very satisfied Other: ______(66) ❑ (-7) 3 = Neither satisfied n/a = Not applicable nor dissatisfied 29. What were your firm’s approximate worldwide revenues (in Finance 1 2 3 4 5 n/a (53) $US) for the most recently completed fiscal year? Check ONE (67) Human Resources 1 2 3 4 5 n/a (54) Under $250m ❑ (-1) Legal 1 2 3 4 5 n/a (55) $250m to 499m ❑ (-2) Real Estate 1 2 3 4 5 n/a (56) $500m to 999m ❑ (-3) Travel 1 2 3 4 5 n/a (57) $1bn to 5bn ❑ (-4) Information Technology 1 2 3 4 5 n/a (58) $6bn to 10bn ❑ (-5) Over $10bn ❑ (-6) If you do outsource your corporate real estate function, go to Q.25 30. What is your organization’s primary business? Check ONE 24. If you do not outsource your corporate real estate function, (68) what are your main reasons? Check ALL that apply Auto/Industrial/Manufacturing ❑ (-1) (59) Business/Professional services ❑ (-2) ❑ (-1) Not convinced of the people, process, or technology ❑ (-3) savings Chemicals Energy/Utilities ❑ (-4) Not convinced of the improved service levels ❑ (-2) Financial services and real estate ❑ (-5) Concerned about the visibility into controls and ❑ (-3) financial information Food/Beverages/Consumer ❑ (-6) packaged goods Not compatible with my corporate culture ❑ (-4) Healthcare ❑ (-7) Prior unfavorable experience with outsourcing ❑ (-5) High tech/Computers ❑ (-8) Too much time required to negotiate outsourcing deal ❑ (-6) Pharmaceuticals/Biotechnology (69) ❑ (-1) Prefer to maintain current CRE headcount ❑ (-7) Public sector/Non-profit ❑ (-2) Other: ______(60) ❑ (-8) Telecommunications ❑ (-3) Transportation/Warehousing ❑ (-4) Travel/Hospitality ❑ (-5) Wholesale/Retail ❑ (-6) Other (please specify) ______(70) ❑ (-7) 29 ADVERTISEMENT

SPONSOR’S PERSPECTIVE Ed McLaughlin, Chairman and CEO, United Systems Integrators Corporation

Corporate real estate is a top cost driver for companies United Systems Integrators Corporation (USI) was established in 1991 to serve the needs of corporations looking to save money on their real estate portfolios. Our initial concept was to bring enhanced processes and technology to the market and unify all of the disparate CRE functions into one cohesive service offering.

Much has changed and much has stayed the same in the industry during the past 12 years. Many corporations now realize how critical it is to tightly manage their CRE costs. This is relatively new thinking. Conversely, a large number of companies are still struggling to understand the most effective way to structure their portfolios, their internal real estate teams, and their vendor relationships.

It is USI’s hope that this report will shed light on this ongoing effort to understand and optimize the CRE profiles of corporations both large and small.

We believed the best way to accomplish this was to examine the thoughts and perceptions of leading financial executives on the topic of CRE. Our goal: to discover what CFOs think of CRE as a leading cost item on their income statements, how they view their CRE team’s performance, how they feel technology can impact CRE performance, and whether outsourcing can deliver tangible results.

USI’s relationship with CFO magazine commenced during 2002 with the placement of client testimonial ads that feature our customers speaking about the cost savings that we have delivered. We felt the magazine’s research arm was perfectly situated to execute this project.

The results uncovered by CFO Research Services are illuminating and concrete. We hope you are able to use this information in a meaningful way regardless of your role in the CRE world.

About USI United Systems Integrators Corporation is the world’s fastest-growing corporate real estate services firm. The objective of USI’s business is to form real estate alliances with clients with a goal to contain, control, and reduce real estate costs. With more than 40 offices throughout North America and overseas, USI provides clients with single-source, integrated real estate, design, construction, and e-business services. USI serves a cumulative portfolio of more than 300 million square feet across 25,000 sites, including office, industrial, retail, and technology space. USI’s clients include Avaya, Centex, Computer Sciences Corporation, Delta Air Lines, Farmers Insurance, Pfizer, RBC Dain Rauscher, Quick & Reilly/FleetBoston, Sutter Health, and all of the business units of United Technologies.