Beating the crunch? How corporate real estate management responsed to the credit crunch

Abstract

Purpose: Which real estate strategy is most suitable during economic prosperity and downturn? This paper maps and analyses the relationship between the economic context, the corporate strategy and the real estate strategy of five multinational (Fortune 500) corporations over twenty years. The 2008 credit crunch is used as turning point in the strategy. Design/methodology/approach: This paper is based on both quantitative and qualitative analysis. To understand and explain the case studies a conceptual model is constructed that connects the four research elements -being the economic context, the business results, the corporate strategy and the real estate strategythrough two alignment models: (1) the impact matrix and (2) the real estate classification model. Findings:The credit crunch has directly and indirectly influenced the corporate real estate management strategy. Structural cost savings dominates the corporate objectives, primarily realized by portfolio reorganization. Corporations that use real estate for commercial purposes enable quick and efficient action, compared to those corporations whose primary purposes are production. Implications for research: The research provides a first concept of describing the relationship between the corporate success and the real estate activities of a multinational corporation. In the next stage, a model may be developed to directly relate (successful) real estate strategies to the economic conjuncture at any given time. Consecutive research needs to address more case studies within the three assessed industries.