Establishing strategic corporate real estate management

Abstract

Despite being a Fortune 200 company with 117,000 employees in 800 offices in 125 countries, most people still might not know much about the A.P. Moller-Maersk Group (Maersk). But their television, computer or the shoes they are wearing right now are probably transported by one of Maersk Line's 3 million shipping containers, and their car might even be running on fuel produced by a Maersk Oil platform. Maersk is a global company with its headquarters in Copenhagen, Denmark. The group mainly operates in business-to-business (B2B) transactions, where it controls some 17 business units, mostly focusing on two core businesses: energy and shipping. Shipping has a lot of similarities with real estate. Both are very capital intensive and the lead time for supply is typically 2–3 years. Predicting future demand is uncertain and supply/demand thus difficult to balance correctly. With the sudden halt of the world economy in 2008–2009, while supply ordered during the heydays came on the market, shipping rates tumbled 30 per cent. The consequence was Maersk's first ever full-year loss in its over 100-year history and it was clear that leadership would not accept a repeat. Before 2009, Maersk's approach to real estate management was decentralised and there was no clearly defined corporate real estate (CRE) strategy. In light of the economic challenge, however, all sails had to be set to weather the storm. Among a number of strategic initiatives was the creation of a CRE department.