Responsibility for and Performance of Corporate Real Estate Functions - A Comparison of European and North American Companies

Due to the enormous values and costs, real estate is more and more recognized as an important competitive factor. To tap hidden values, identifying a suitable form of institutionalization and coordination of CREM has been one of the major challenges in many companies over the last years. Besides many other coordination instruments (e.g. standardization of decision making, corporate planning, intra-organizational market mechanisms, etc.) used to organize CREM, the responsibility for real estate decision making and the performance of real estate tasks are further more one of the most important organization variables in this context. Two different types can be found in practice. The first comprises all companies where decision making authority for nearly all real estate issues is bundled in a separate CREM department. The second consists of companies where business units themselves are responsible for specific real estate decisions and performance of real estate tasks. Little research has been carried out so far that analyzes the causes for the occurrence of these different models. The purpose of this paper is to identify characteristics concerning the responsibility for real estate functions and their performance in European and North American companies as well as to determine the factors that influence the occurrence of different models. An empirical survey among 74 major European and 38 North American companies was executed. The results show that the degree of bundling real estate functions is generally higher in North American companies compared to their European counterparts. More sophisticated functions were in the majority of cases under responsibility of the CREM department, whereas in a large number operational functions were also under responsibility of someone other than CREM group. Moreover, five typical models concerning the responsibility for real estate functions could be identified.