Activating the stem cells of life sciences CRE

April 30, 2014 / By  

The corporate real estate (CRE) function plays an integral part in the evolution of life sciences companies. Like a stem cell in a growing organism, CRE represents support and relationship patterns in an industry undergoing fundamental structural and geographic shifts. CRE teams are expected to restructure and revitalise portfolios to respond to a changing business environment and support organisational transformation. However, the potential value of life sciences CRE is yet to be realised, as the function is in the process of redefining itself in reaction to changing business priorities.

Our 2013 Global Corporate Real Estate survey revealed that the CRE function in life sciences companies suffers from a disconnect with business strategy and operations. Regarded as a non-revenue-generating activity, CRE departments are not involved in strategic decision making and have a lack of communication with and support from the C-suite (Figure 1). As such, CRE teams are not quite aligned with business units’ needs and often act as tactical support, thereby missing an opportunity to provide optimal solutions on a more strategic level.

Figure 1 Major constraints hindering CRE from enhancing its strategic position

Question: In your opinion, what are the top two constraints that are hindering CRE from enhancing itself as a strategic value add to your organisation?

Nevertheless, the ‘regenerating’ abilities of CRE teams should not be overlooked. As life sciences companies are going through major business transformations, the requirements for portfolio efficiency, costs and flexibility are becoming essential. ‘Repairing’ obsolete or underutilised real estate assets, as well as ‘restoring’ portfolio productivity, can help life sciences companies remain resilient and adaptable in the competitive marketplace.

In addition, the CRE function can play a central role in fostering interrelationships between other corporate functions as they work toward a shared productivity goal. At present, life sciences CRE lags behind other sectors in terms of integration with other support services. Integration with HR has the highest potential for improvement, as this function is expected to have the strongest increase in collaboration with CRE in the near future.

Finally, as life sciences companies increasingly focus on fast-moving emerging markets, they will rely on CRE for ensuring geographic mobility. However, reassessing location strategies and designing optimal portfolios requires an understanding of global business objectives and effective communication with the C-suite and other business lines.

Like a stem cell set on a course to serve a specialised function within the body, life sciences CRE needs to go through the process of differentiation within the organisation. A more proactive involvement in business units’ operations, the support of the C-suite and a close collaboration with other corporate functions will all catalyse CRE’s ability to create value and ensure life sciences organisations stay adaptable and thriving.

To learn more about CRE trends in life sciences sector, read our report Rewriting the Code of Life Sciences CRE.

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