Impact of Corporate Real Estate on UK Business

Research output: Contribution to conferenceAbstract

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Abstract

Purpose: Corporate Real Estate (CRE) directly impacts upon the performance of business, as a cost and in providing the environment for it to operate in. Lease length and the total financial commitment is rarely understood and is not a prominent part of the decision-making process. However, the financial burden of property can hamper business and indeed lead to its failure. The purpose of the research is to establish the scale of the commitment to CRE; examine how it varied over the period 2007 to 2013 (namely into and out of the financial crisis and the recession), in absolute terms and against profitability; determine portfolio flexibility (or anticipated inflexibility) and establish whether business can resize the property portfolio in reaction to changes in the business environment. Design/methodology/approach: The research approach was to examine the published financial accounts of the top 350 quoted companies listed on the London Stock Exchange. The first stage was to extract the data for the individual companies for the years 2007 to 2013 inclusive. The data included turnover; profitability; net asset of the company; property book value; Full Time Employees; property provisions and the profile of property lease commitments. Companies were grouped in business sectors, such as retailing, industrial, etc., for analysis. The analysis examines the lease length profile; the cost of property against turnover and profitability and relative to the headcount within the organisation; and how the provision for surplus property compares to profitability. It considers the sectors on an individual year basis and how the ratios have changed from 2007 to 2013. The underlying focus was to assess how business reacted to the financial crisis and the recession. That was measured by reference to changes in turnover, profitability and headcount through and out of the recession. Allied to that the question was how did business seek to change its property cost base and what correlation is there between the various metrics. The process of abstracting data and analysis is on going, and with that how business is recovering from the recession. Sectorial differences as well as the overall patterns are examined. Findings:The analyses indicated that the impact of the recession was relatively transitory. The retail sector, as an example, showed for 2007 to 2012 that the total lease commitment expanded by circa £1,500m rising to £9,387 in 2012.
Original languageEnglish
Publication statusPublished - 2015
Event22nd Annual European Real Estate Society Conference (ERES 2015) - Istanbul, Turkey
Duration: 24 Jun 201527 Jun 2015
Conference number: 22
http://www.eres2015.itu.edu.tr/

Conference

Conference22nd Annual European Real Estate Society Conference (ERES 2015)
Abbreviated titleERES 2015
CountryTurkey
CityIstanbul
Period24/06/1527/06/15
Internet address

Fingerprint

Real estate
Profitability
Recession
Lease
Costs
Turnover
Financial crisis
Design methodology
Book value
Business environment
Assets
Employees
Listed companies
Decision-making process
Business sector
Surplus
Burden
London Stock Exchange
Retailing
Retail sector

Cite this

Cooke, H., & Appel - Meulenbroek, H. A. J. A. (2015). Impact of Corporate Real Estate on UK Business. Abstract from 22nd Annual European Real Estate Society Conference (ERES 2015), Istanbul, Turkey.
Cooke, H. ; Appel - Meulenbroek, H.A.J.A. / Impact of Corporate Real Estate on UK Business. Abstract from 22nd Annual European Real Estate Society Conference (ERES 2015), Istanbul, Turkey.
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author = "H. Cooke and {Appel - Meulenbroek}, H.A.J.A.",
year = "2015",
language = "English",
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Cooke, H & Appel - Meulenbroek, HAJA 2015, 'Impact of Corporate Real Estate on UK Business', 22nd Annual European Real Estate Society Conference (ERES 2015), Istanbul, Turkey, 24/06/15 - 27/06/15.

Impact of Corporate Real Estate on UK Business. / Cooke, H.; Appel - Meulenbroek, H.A.J.A.

2015. Abstract from 22nd Annual European Real Estate Society Conference (ERES 2015), Istanbul, Turkey.

Research output: Contribution to conferenceAbstract

TY - CONF

T1 - Impact of Corporate Real Estate on UK Business

AU - Cooke, H.

AU - Appel - Meulenbroek, H.A.J.A.

PY - 2015

Y1 - 2015

N2 - Purpose: Corporate Real Estate (CRE) directly impacts upon the performance of business, as a cost and in providing the environment for it to operate in. Lease length and the total financial commitment is rarely understood and is not a prominent part of the decision-making process. However, the financial burden of property can hamper business and indeed lead to its failure. The purpose of the research is to establish the scale of the commitment to CRE; examine how it varied over the period 2007 to 2013 (namely into and out of the financial crisis and the recession), in absolute terms and against profitability; determine portfolio flexibility (or anticipated inflexibility) and establish whether business can resize the property portfolio in reaction to changes in the business environment. Design/methodology/approach: The research approach was to examine the published financial accounts of the top 350 quoted companies listed on the London Stock Exchange. The first stage was to extract the data for the individual companies for the years 2007 to 2013 inclusive. The data included turnover; profitability; net asset of the company; property book value; Full Time Employees; property provisions and the profile of property lease commitments. Companies were grouped in business sectors, such as retailing, industrial, etc., for analysis. The analysis examines the lease length profile; the cost of property against turnover and profitability and relative to the headcount within the organisation; and how the provision for surplus property compares to profitability. It considers the sectors on an individual year basis and how the ratios have changed from 2007 to 2013. The underlying focus was to assess how business reacted to the financial crisis and the recession. That was measured by reference to changes in turnover, profitability and headcount through and out of the recession. Allied to that the question was how did business seek to change its property cost base and what correlation is there between the various metrics. The process of abstracting data and analysis is on going, and with that how business is recovering from the recession. Sectorial differences as well as the overall patterns are examined. Findings:The analyses indicated that the impact of the recession was relatively transitory. The retail sector, as an example, showed for 2007 to 2012 that the total lease commitment expanded by circa £1,500m rising to £9,387 in 2012.

AB - Purpose: Corporate Real Estate (CRE) directly impacts upon the performance of business, as a cost and in providing the environment for it to operate in. Lease length and the total financial commitment is rarely understood and is not a prominent part of the decision-making process. However, the financial burden of property can hamper business and indeed lead to its failure. The purpose of the research is to establish the scale of the commitment to CRE; examine how it varied over the period 2007 to 2013 (namely into and out of the financial crisis and the recession), in absolute terms and against profitability; determine portfolio flexibility (or anticipated inflexibility) and establish whether business can resize the property portfolio in reaction to changes in the business environment. Design/methodology/approach: The research approach was to examine the published financial accounts of the top 350 quoted companies listed on the London Stock Exchange. The first stage was to extract the data for the individual companies for the years 2007 to 2013 inclusive. The data included turnover; profitability; net asset of the company; property book value; Full Time Employees; property provisions and the profile of property lease commitments. Companies were grouped in business sectors, such as retailing, industrial, etc., for analysis. The analysis examines the lease length profile; the cost of property against turnover and profitability and relative to the headcount within the organisation; and how the provision for surplus property compares to profitability. It considers the sectors on an individual year basis and how the ratios have changed from 2007 to 2013. The underlying focus was to assess how business reacted to the financial crisis and the recession. That was measured by reference to changes in turnover, profitability and headcount through and out of the recession. Allied to that the question was how did business seek to change its property cost base and what correlation is there between the various metrics. The process of abstracting data and analysis is on going, and with that how business is recovering from the recession. Sectorial differences as well as the overall patterns are examined. Findings:The analyses indicated that the impact of the recession was relatively transitory. The retail sector, as an example, showed for 2007 to 2012 that the total lease commitment expanded by circa £1,500m rising to £9,387 in 2012.

M3 - Abstract

ER -

Cooke H, Appel - Meulenbroek HAJA. Impact of Corporate Real Estate on UK Business. 2015. Abstract from 22nd Annual European Real Estate Society Conference (ERES 2015), Istanbul, Turkey.