In my early days at a development company, the Operations team was often overlooked in strategic discussions. The Leasing and Development teams were held in high regard, and rightfully so, as they were responsible for generating revenue and securing projects that formed the backbone of our property management business. We learned to respect their vital role.
However, as the focus shifted toward achieving proposed yields, it became apparent that the teams were falling short because we worked in a vacuum. This realization forced us to build stronger relationships and collaborate more effectively, empowering Operations to help drive success in CRE projects. The pro forma was sometimes treated as a closely guarded secret, as if sharing the information would jeopardize the project or invite unwanted scrutiny. In reality, every team member needed to take ownership of the entire pro forma collectively.
To deliver successful outcomes, it is crucial to have educated leaders from all divisions, including General Managers, Leasing and Development, and Operations talent, working together with transparent data and honest, open dialogue. When teams are united in their goals and engage in difficult yet necessary discussions, projects can move forward more effectively.
Collective Thought Leadership to Advance Organizational Goals
As Operations professionals, we must also do our part and push the boundaries to drive success in CRE projects. We need realistic expectations based on the specific project and its location while demonstrating our strengths and value to the Development and Leasing teams. With the increasing complexity of mixed-use projects and the sharing of costs, the presence of Operations at the decision-making table is more critical than ever.
Involving the Operations team from the beginning of any CRE project can significantly impact the bottom line. It is essential to foster an open dialogue among all divisions, discussing options, risks, and rewards from both short-term and long-term perspectives. Everyone should listen to one another, as this healthy tension can greatly enhance the project’s overall success. I always appreciated this dynamic, as it inevitably led to better outcomes.
However, this approach also requires Operations professionals to be receptive to exploring new solutions, even when faced with difficult decisions. Personally, I am passionate about customer-centric initiatives, safety, and sustainability. Looking back, though, I can identify instances where I advocated for features that were not essential to every project. Similarly, I have encountered newly acquired properties that had invested in excellent equipment and technology that was never fully utilized.
The importance of this collaborative approach becomes even more crucial in the context of mixed-use projects, which often involve shared parking and complex underground equipment. By engaging all teams from the outset and maintaining open lines of communication, we can ensure that resources are allocated effectively and that every aspect of the project is optimized for success, including:
1. Trash Rooms: The Operations team should collaborate with the Development and Design teams to determine the optimal number of trash rooms needed based on the project’s size and anticipated waste volume. They can explore outsourcing options and evaluate the costs and benefits of various waste management programs. By involving Operations early, the team can select the most appropriate equipment and design the trash rooms to minimize costs while ensuring efficiency.
2. Security and Safety: Operations should work closely with the Development and Leasing teams to assess the required level of security based on the project’s location, target market, and intended use. They can provide multiple options for maximizing equipment and staffing, considering design elements that can reduce costs for cameras and manpower. Operations should also communicate the security and safety plan to the Leasing teams, so they can effectively market the project. For projects with entertainment components, Operations can develop a strong opening strategy that sets the stage for success based on the local market.
3. Staffing: When planning project staffing, Operations should carefully consider the equipment and energy systems in place, and whether they can help reduce costs. They should also review the division of responsibilities between the corporate office and on-site staff. As the project scales, the team should constantly evaluate the centralization or decentralization of functions to minimize costs.
4. Lighting: Operations should collaborate with the Development team to review the payback periods for different types of lighting before the project is approved. Lighting installation can have a significant long-term impact on NOI, and many projects have opened without this discussion, leading to costly replacements in the first year of operation. By involving Operations early, the team can avoid additional capital expenditures and staffing time.
5. Parking Garages and Signage: Operations can provide valuable insights into the design and operational flow of parking garages, taking into account the customer base and shared resources. By understanding the equipment and signage needs, Operations can help control over-signing and enhance the customer experience.
6. Leasing Input: Engaging Leasing partners and listening to their pain points is crucial for fostering open dialogue. Operations can work with Leasing to determine the necessity of valet services and project the potential return or loss. They can also collaborate with the design team to optimize the layout and minimize staffing needs. It’s important to reach an agreement on lease language early in the project while understanding that some tenants may have the leverage to modify or remove certain clauses.
Operations Claiming a Seat at the Strategic Table
The Operations team has made significant strides in asserting its presence and value at the decision-making table. It is now our responsibility to own this position and continue demonstrating the crucial role we play in the success of each project. Executive leadership must ensure that their teams foster an inclusive environment and provide training to help Operations professionals effectively present paybacks and showcase how their requirements add value to the project. Encouraging Operations team members to develop business cases that highlight the value-add of equipment, sponsorships, and marketing initiatives, along with clear, measurable results, will further solidify their strategic contributions.
To maximize the long-term success of each project, Operations must forge strong partnerships with the Development and Leasing teams. By consistently demonstrating our value in day-to-day operations and long-term planning, we can reinforce our essential role in the organization. Operations teams dedicate countless hours and tireless efforts to form the backbone of the business — it is crucial that we continue to frame our strategic value and make it known to all stakeholders.
As the commercial real estate industry evolves and projects become increasingly complex, the importance of Operations in strategic decision-making will only continue to grow. By embracing our seat at the table, showcasing our expertise, and collaborating effectively with other teams, we can drive the success of CRE projects and shape the future of the industry.
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