Organizations that find ways to integrate their corporate real estate (CRE) and facilities management (FM) functions can experience cost reductions beyond 25 percent, due to economies of scale and “economies of capability.” Realizing such savings, however, can require patience, because recouping change costs may take up to seven years, if not managed well.
Although CRE and FM share the ultimate goal of providing space in which an organization conducts its business, the two functions traditionally have significantly different focuses. Integration can be challenging, in part because it means different things to different organizations within the CRE and FM industries.
The way an organization approaches the relationship and level of integration between the CRE and FM functions impacts the organization in two significant ways: How it manages the real estate function internally, and how it engages with real estate and facilities services providers (i.e. suppliers’ scope of services). An organization can manage all CRE and FM functions in-house, completely outsource them, or use a hybrid approach to optimize total costs, capabilities, and risk management.