Does Anyone Give a Flying Flip About KPI’s?
January 10, 2018
In today’s market, there is some question as to whether Key Performance Indicators (KPI) for Commercial Real Estate decision making are still relevant. Here are some of the reasons that the relevance of KPI’s is questioned in today’s commercial real estate environment:
- Historically, the role of KPI’s is to align corporate real estate activities with corporate strategy. In companies where corporate real estate is highly transactional, KPI’s may seem like to much effort to monitor.
- Technology has made information transparent, so that gathering real estate marketing intelligence can be performed in-house. Instead, brokers provide value through their knowledge of and relationships with landlords. For example, a broker who has experience in working with a specific landlord adds value by knowing the ins and outs of their operation which can prove valuable in negotiations. These relationships are highly valued and not easily measured by KPI’s.
- The pace of business is so fast these days that the effort in gathering data for analyzing KPI’s may not provide a return on investment. Most businesses operate by reacting to situations as they arise rather than executing a long-term strategy.
- KPI’s may not be relevant if corporate management doesn’t have a good grasp of the role of corporate real estate. The solution here is for finance and CRE to work together and develop KPI’s that help the company reach their goals.
Does your company rely on KPI’s in evaluating your CRE? If so, are you consider making any changes in what you are currently doing?
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