Article

Choosing metrics that matter

Global /

It’s time to plan your strategy and budget for the coming year. You’ve drawn up a solid action plan and you’ve got a strong team in place to deliver it. But will this plan help your company achieve the right outcomes? How do you move beyond being measured for cost savings to demonstrate where real estate can make an impact?

According to a survey of real estate executives by JLL, 52 percent of real estate executives said that lack of data and analytics to measure value and generate insights holds them back from enhancing strategic value-add to their organizations. Other challenges include standard and traditional real estate metrics being inadequate across a complex real estate portfolio; demanding stakeholders who might not be familiar with metrics and results; corporate real estate executives facing too many choices when it comes to data points and ratios used to gauge performance—from lease expiries to operating cost per square foot and employee churn rates.

In addition, using any single measurement in isolation is unlikely to determine if your real estate team is driving results for your customer and company. Emerging trends such as co-working spaces or smart building technology are new factors to consider when addressing the needs and wants of today’s workforce.

So, how do you choose metrics that really matter? These three principles will help you get your team off to the right start.

Aligning your metrics to your strategy

In order to build meaningful performance metrics for your CEO, the first step is to ensure you align with the overall business strategy. By doing so, you will be in a better position to distill the strategy into the critical real estate performance indicators—better known as key performance indicators (KPIs).

Your goal at this point is to understand how real estate functions enable your company’s overall business results. Having a solid understanding of your company’s core business strategy, both long and short term, is critical. Your business goals, for example, might include objectives like this:

  • Acquire emerging companies that expand our product offering
  • Provide long-term value to shareholders
  • Drive growth in identified emerging markets and take market share in our most competitive business units
  • Develop products to help customers become more innovative, efficient and competitive
  • Drive innovation and transformation into the company culture and recruitment programs
  • Shed low margin business units

These objectives will provide the first and most important clue to begin drawing up meaningful metrics. Using the imaginary objectives from above, you might then translate them into real estate measures that look something like this:

Another important filter is to take a close look at your overall industry and competitive landscape. How does real estate play into some of the differentiators between the companies? How might these differences manifest itself in your forward-looking real estate strategy? For example, if your top competitor does not rank things like workplace strategy or employee amenities as top priority, then this could be an important differentiator that your real estate team can help drive for your company.

Creating balance and impact


After shortlisting the metrics that would best align to your company’s business strategy, you may now want to review their impact on the organization by assessing if they are essential to your management team in making decisions. Could you envision your leadership team using these metrics to help make an important decision? Would the results of these metrics help indicate if the company was doing the right things to remain competitive and profitable?

Impact can also be measured outside of your company’s management team. Reviewing best practices across your industry, or even outside of it, can help determine if your metrics are impacting and performing well. For example, you might compare your employee satisfaction scores following a headquarters renovation or new fit-out standards to those within the hospitality industry.

You might also look into defining impact against corporate social responsibility programs, such as sustainability programs, energy use or community impact.

Balance across traditional and nontraditional metrics is also important. Traditional metrics, such as total portfolio size or total operating cost may provide a solid foundation to start. But rapidly changing business environments and new trends in the workplace and workforce mean the need for evolving metrics. Having a balanced mix of traditional and emerging metrics will help you better manage your team for both short and long term.

If you are looking to make a change to your metrics, keep what works and evolve what doesn’t. If you have had positive past results in tracking utilization rates by business unit, then keep this in your mix. Add a few new metrics such as user experience or employee health and well-being to those core metrics to explore and evolve for your organization.

Checking if your metrics make sense


You can likely imagine—or have experienced—a scenario where 250 measures and data points are presented in a meeting, leaving those in attendance exhausted at best and confused at worst.

The theory of “simplexity” is the complimentary relationship between things that are both simple and complex. Articulating your real estate goals and metrics must comprise of a level of elegance and practicality to help them be embraced and applied. How the metrics are written, verbalized and visualized can be just as important as the metrics themselves. For example, a portfolio optimization goal won’t mean much to someone outside of your real estate team.

Less is also more. Streamlining the number of key metrics will help ensure that your organization is focused on the most important measures. Here is a great way to test your metrics for both impact and simplicity: Would the results of your real estate team be meaningful enough to make the pages of your company’s annual shareholder report, year-end results presentation or corporate social responsibility report? You need your metrics to be impactful and comprehensible performances summaries which are easily communicated.

These three concepts above are a good start to help get your organization rallied around a strong set of real estate metrics so you can better focus and deliver against them.

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