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Real Estate Strategies for Non-Profit-Organisations (NPOs)

Real Estate Strategies for Non-Profit-Organisations (NPOs). 17 th Annual European Real Estate Society Conference 2010 Milan, Italy 23 rd – 26 th June 2010 Carmen Bader. Case Study: RealEstateTUdarmstadt2020. Agenda. Background information and motivation Research approach

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Real Estate Strategies for Non-Profit-Organisations (NPOs)

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  1. Real Estate Strategies forNon-Profit-Organisations(NPOs) 17th Annual European Real Estate Society Conference 2010 Milan, Italy 23rd – 26th June 2010 Carmen Bader Case Study: RealEstateTUdarmstadt2020 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 1

  2. Agenda • Background information and motivation • Research approach • Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020 • Conclusion 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 2

  3. Agenda • Background information and motivation • Research approach • Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020 • Conclusion 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 3

  4. Background information Research concerning real estate strategies Empirical studies in Corporate Real Estate Management (CREM) • Pfnür/Hartmann/Pärssinen (2008): About one out of four mid-sized companies have a written real estate strategy, thus there are issues of real estate strategies possible. • Hartmann/Linnemann/Moy/Pfnür/Siperstein (2008): Missing detailed real estate strategy (USA/EU) shows the more reactive than proactive real estate management. • Hartmann/Lohse/Pfnür (2007): Missing strategic orientation of CREM and lack of aligning real estate and corporate strategy. Empirical studies in Public Real Estate Management (PREM) • Ecke (2004): Conflicts of interest between stakeholder complicate the development of a real estate strategy. Therefore the target concept in PREM is distinguished from such in CREM. Empirical study in regard to private Non-Profit-Organisations (NPO) • Heller (2010): There's little research concerning real estate management in NPOs. Increasing awareness of importance in real estate management is necessary. Surveys in regard to real estate management at Universities as one type of public NPOs • HIS (Higher Education Information System): Findings with focus on selected areas of activity concerning the construction and building, but the holistic view of real estate management is missing. • CHE (Centre for Higher Education Development): Lack of opportunities and resources for professional real estate management. 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 4

  5. Motivation Characteristics of NPOs as a challenge for real estate management Changing external and internal effects are challenges for the NPOs (e.g., Bologna Process, demographic change and bylaws). Times of tight budget complicate the financing of new projects and the deferred building maintenance (e.g., limited financial resources at self-governing universities). Large number of specialised properties which can only be used for the special purpose (e.g., teaching and research building or churches). The challenge consists of evaluating the sentimental value of real estate. Lack of transparency in real estate portfolio (e.g., occupancy costs on building level). Non distribution constraint for NPOs in contrast to For-Profit-Organisations with profit-related objectives. Nevertheless NPOs even have to allocate and use their resources efficiently. Real estate is managed in a more reactive than pro-active manner (e.g., maintenance at the time of user requirements instead of state of construction). Lack on aligning real estate with corporate strategy. Short-term space needs are not balanced with long-term requirements. Lack of minimising property costs. Real estate strategy formation with holistic approach to real estate management and user interests 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 5

  6. Agenda • Background information and motivation • Research approach • Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020 • Conclusion 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 6

  7. Research design A single case study was chosen as research approach • Study question: How can a NPO professionalize its real estate management implementing a real estate strategy for further planning and decision making? • Propositions are shown in the areas of activities • Data collection: • Literature research • Analyzing previous surveys of real estate management topics at Darmstadt University of Technology • Questionnaire survey for ranking targets of a real estate strategy • Expert interviews concerning specific areas of activity • Unit of analysis: Real estate management at Darmstadt University of Technology • Logic linking the data to the propositions: Appropriation of the tasks, subgoals and collected data to the areas of activity • Criteria for interpreting the findings: Subgoals in the target concept Source: Yin (2009) 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 7

  8. Agenda • Background information and motivation • Research approach • Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020 • Conclusion 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 8

  9. Strategy formation Process steps Part of the management process but not of the strategic planning Environment: opportunities/threats Implemen-tation Strategic options Strategic evaluation Strategic programmes Enterprise: strengths/weaknesses Strategic control Source: Steinmann/Schreyögg (2005), S. 172. scientific input through integration of the workgroup “real estate strategy“ 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 9

  10. Target concept development Implementation of a target workshop • Members: chancellor, department heads, professor • Definition of objectives due to findings in CREM research User survey for measurement of target importance • Conception of a questionnaire: “Which importance do you attach to the targets of real estate management?” • Questionnaire with 18 items • Evaluation scale ranges from 1 to 5 (1 = extremely important, 5 = not important at all) • Study participants: members of the target workshop and professors of the workgroup “real estate strategy” 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 10

  11. Analysis of the survey (I/II) –– Standard deviation 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 11

  12. Analysis of the survey (II/II) Targets with the highest extent from the viewpoint of the workshop members • User satisfaction with same importance • Workshop members attach a higher importance to user interests and core business than the workgroup “real estate strategy“ • Lack of importance attached to lowering of property costs Target 3 (EVERY) Target 1 (EVERY) Target 2 (EVERY) 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 12

  13. Draft of the target concept 1. Minimisation of property costs 2. Optimisation of value creation in real estate concerning the business process of TU Darmstadt Key target • Efficient provision of space according to the business process Dimensions of targets • Real estate management goals of the TU Darmstadt Interrelation between goals • A prioritization concerning the dimensions of targets has to follow in case of competing objectives 3. Strengthening Corporate Identity for positive positioning of TU Darmstadt in environment 4. Maximising the sustainability in real estate management to ensure the future viability of TU Darmstadt 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 13

  14. Dimensions of targets and subgoals 1. Minimisation of property costs • Life-cycle cost minimisation • Investment cost minimisation • Rent payment minimisation for not remaining property • Maximising the space efficiency 2. Optimisation of value creation in real estate concerning the business process of TU Darmstadt • Service orientation by maximising the quality of all real estate functions • Maximising the response in real estate • 4. Maximising the sustainability in real estate management to ensure the future viability of TU Darmstadt • Maximising the ecological sustainability • Securing the attractive locations for survivability of TU Darmstadt • Maximising the provision of required infrastructure • Reducing financial risks in regard to long-term conservation of real estate value • Risk minimisation through an effective compliance system 3. Strengthening Corporate Identity for positive positioning of TU Darmstadt in its environment • Active management of university life concerning places for meeting • Profiling through integration of internal expertise • Maximising the image of TU Darmstadt in its environment • Strengthening the competitiveness 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 14

  15. Target state and recommendations Target state • Identifying areas of activity and their interdependencies depending on the target concept • Formulating measures for each area of activity • Institutionalisation • Derivation of recommendations as transfer from the measures Recommendations REALESTATETUDARMSTADT2020 2010 2020 Performance Target 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 15

  16. Agenda • Background information and motivation • Research approach • Case study: Real Estate Strategy for the Darmstadt University of Technology – TUDARMSTADTREALESTATE2020 • Conclusion 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 16

  17. Conclusion • Complex target system particularly in NPOs increases the target conflict • ➢ Increase in user orientation (strategic planning is to bring into agreement with other functional units) • ➢ Ranking of subgoals by the stakeholder • ➢ Stakeholder acceptance in regard to the target concept • ➢ Analysing user satisfaction for measurement of success • Tight budget is a general problem of NPOs • ➢ Development of alternate financing models • ➢ Efficiency in resource allocation • ➢ Increase in space efficiency Implementation of a real estate strategy means a clearer understanding of real estate planning and decision making by user's perspective. 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 17

  18. Thank you for your attention! Carmen BaderTechnische Universität DarmstadtFachbereich 1 Rechts- und WirtschaftswissenschaftenFachgebiet Immobilienwirtschaft und Baubetriebswirtschaftslehre / BWL9Hochschulstraße 1D-64289 DarmstadtTelefon: +49 (0) 6151/16-4727Fax:       +49 (0) 6151/16-4417Email:    bader@bwl.tu-darmstadt.dehttp://www.real-estate.bwl.tu-darmstadt.dehttp://immobilien-forschung.de/ 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 18

  19. Background details - backup- Definition of NPO • There's no correct definition due to “the complexity of their operations and their relationships withy their environment, the difficulties of defining the boundaries of NPO activity and determining, categorically, what is and what is not an NPO.” Source: Helmig/Jegers/Lapsley (2004) • NPOs are class-divided in 12 Major Activity Groups: Source: ICNPO 1996 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 19

  20. Identifying areas of activity - backup- INSTITUTIONALISATION Target system Organisational structure Control system Stakeholder management Description of property related tasks for each area of activity concerning the critical realisation and success of the real estate strategy Appropriation of the subgoals and the gathered information Determination of responsibility for the measures within the organisational structure Implementation of a control system such as transfer prices for the achievement of objectives Stakeholder management means an increase in user satisfaction 25th June 2010 | ERES 2010 | TU Darmstadt | Research Centre for Real Estate Business Administration | Carmen Bader | 20

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