November 2010
BOSTON, MA—Today’s challenging economic conditions require corporate executives to be innovative in containing costs and maximizing the value of their real estate holdings.
“An important part of cost containment is is for companies to take advantage of every incentive offered by state and local governments”, says Mark Stevens, Principal of The Stevens Group, the Boston affiliate of the International Tenant Representative Alliance (ITRA). This was one of the the main topics of discussion at ITRA’s 2010 Corporate Real Estate Symposium recently held at the Beverly Wilshire Hotel in Los Angeles CA.
The symposium, which attracted corporate real estate executives from around the country as well as France, Canada, Sweden and the U.K., featured interactive discussions on how companies make decisions about office space, facility location and expansion, and how they view incentive programs offered by states around the country. Distinguished guest panelists included Gaston Kent, Vice President of Finance for Northrop Grumman, Timothy Stevenson, President of Viacom Realty Corp, and Mats Johansson, President of Skanska USA.
Dr. Ronald R. Pollina, head of ITRA’s Chicago office and author of the just released book Selling Out a Superpower, kicked off the discussion with a presentation of his firm’s annual ranking of the Top Ten Pro-Business States in the US. The study evaluates and ranks states based on 31 factors including taxes, human resources, right-to-work legislation, energy costs, infrastructure spending, workers compensation laws, economic incentive programs and state economic development efforts. For 2010, Virginia was ranked number one as “America’s most pro-business state” followed closely by Utah, Wyoming, South Carolina, and North Carolina.
In terms of job retention and creation by the 50 states and the federal government, Dr. Pollina emphasized “the effort to make America more business-friendly must come from all levels of government. Unfortunately, many states are doing such a poor job of creating a pro-business environment that they can’t even come close to competing with each other, much less compete globally.”
Undeterred by California’s ranking of dead last in the Pollina study for the seventh consecutive year, Joel Ayala, the Director of the California Governor’s Office of Economic Development (GoED), attended the symposium and said his focus will be to “work to facilitate and stimulate economic growth through the development and implementation of strategic policies and partnerships with the private sector, community, local, and national organizations that enhance human and capital infrastructure development as well as increase California’s competitive advantage in the global marketplace.”
Gaston Kent, Vice President of Finance for Northrop Grumman, was quick to point out that Northrop’s recent decision to relocate 300 people from its California headquarters to Virginia “was not because of any dissatisfaction with the state of California. To the contrary, Northrop has had a great relationship with the state and will continue to have a major presence here. The decision to move to Virginia was driven by the need to be near our largest customer, the Federal Government.” Mr. Kent also shared Mr. Pollina’s view that “most states do not do a good job at creating a pro-business environment and can’t always deliver what they promise.”
J. Patrick Moultrup, President and CEO of ITRA Affiliate AsiaPac International, whose firm advises companies locating or expanding to Asia Pacific Rim, indicated that “the biggest competition most states have comes from Asia. Often times when companies announce that they are shutting down a manufacturing facility or consolidating, what they really mean is they are moving the operation overseas.” Although moving an operation overseas may appear attractive, he cautions that “companies should have an exit strategy before making the move. It is easy to make capital investments in other countries, but many make it difficult and expensive to pull the investment and capital out.”
Mats Johansson, President of Skanska USA, brought a different perspective to the discussion. Skanska, an international development and construction company, has been expanding operations in the U.S. over the past two years. Working closely with corporate and municipal clients, they have been at the forefront of designing and creating cost effective green (Leed Certified) faculties. Mr. Johansson indicated that “the biggest challenge today is to educate tenants and their brokers to the cost benefits of being in a green building. Often times more focus is put on the additional cost and not enough emphasis on the operational savings and benefits to employees by working in space with better air quality, natural light and an energy efficient environment.”
The corporate real estate symposium, says ITRA Chairman Debra Stracke Anderson, “is yet another example of how the organization puts its expertise to work on behalf of the corporate clients we represent to ensure that they make educated and lucrative decisions in their real estate matters.”
With coverage in more than 85 global markets throughout North America, Latin America, Europe, and Asia Pacific Rim, ITRA is the largest tenant representation organization in the world, offering a unique approach to Corporate Real Estate Services. While other real estate organizations represent both landlords and tenants, ITRA’s North American offices represent only corporate users of space, eliminating the potential conflicts that exist within traditional brokerage firms.