Case Studies
Avaya
Global Mandate
Challenge
Avaya, the number one global leader and innovator in enterprise communications, sought a single service outsourced provider for its global portfolio of properties to supply a comprehensive management program of real estate services. Avaya was in need of a pro-active leader for all of its portfolio decisions and strategic initiatives, who could provide best-in-class, cost effective portfolio management services to reduce and control costs. The Avaya portfolio, totaling approximately 7.7 million square feet, spans 277 locations in the Americas, EMEA and APAC.
Action
Newmark Knight Frank's Global Corporate Services (GCS) group assumed management of the Avaya portfolio in 2008. At the outset of the relationship, Newmark Knight Frank GCS worked with Avaya to successfully transition the account, all within a tight timeframe.
As Avaya's full outsourcing provider, Newmark Knight Frank GCS reviews and assesses Avaya's existing processes and core objectives on an ongoing basis, proposing strategies utilising Newmark Knight Frank's model of integrated services and continuous improvement.
Year-to-date, completed transactions on behalf of Avaya total 290 leases in 53 countries. As Avaya's strategic real estate provider, Newmark Knight Frank GCS provides strategic planning and development services, consolidation initiatives, transaction management, project management, facilities management, financial and accounting services, lease administration and comprehensive operational reporting for the global portfolio. Newmark Knight Frank has provided directional real estate and strategic workplace services to analyse consolidation opportunities while improving business group synergies.
Newmark Knight Frank GCS is responsible for all of Avaya's facilities-related operations and expenses, including rent tax, projects and utilities, valued at approximately $16 million per month. In 2009, Newmark Knight Frank will be managing 115 projects, totaling $30 million, in over 20 countries. Financial results and expenses related to real estate operations are managed by Newmark Knight Frank's accounting staff based in the United States, Germany and India; this staff's focus includes outlooks, variance, depreciation and lease administration. Newmark Knight Frank also initiates Avaya's energy management program globally, through data collection, a review of historical expenditures, procurement of energy to achieve optimal market prices and identification of energy saving measures to reduce Avaya's global expenditure on utilities. On the real estate development front, Newmark Knight Frank's current strategic initiatives include the development of space in Westminster, CO, and Basking Ridge, NJ.
Result
The management of the Avaya global account is a testament to the value of the Newmark Knight Frank GCS integrated service platform.
Newmark Knight Frank Global Corporate Services has demonstrated its ability to meet Avaya's needs through active senior management involvement, efficient global management execution, lower pricing in all areas, geographic/service line compatibility, consistent levels of service and the ability to operate as a true single point of contact. Recent assignments from the Avaya account include multiple global locations, such as the United States, Argentina, Belgium, the United Kingdom, Germany and India.
Siemens Enterprise Communications
Global Mandate
Challenge
In 2008, Siemens Enterprise Communications (SEN), a leading innovator in enterprise communications and cellular telephone industries, retained Newmark Knight Frank as its global strategic account manager for its approximately 4 million-square-foot global portfolio. The relationship began when a prominent private equity firm, focused on acquiring controlling interests in mature and growing businesses, needed due diligence for its planned acquisition of the Siemens Enterprise Network division. The firm reached out to Newmark Knight Frank, with whom the partners had a previous relationship, to assist in the planned expansion. The challenge was to perform a holistic overview of the portfolio for SEN to help the client downscale and realign their real estate portfolio to achieve a 25% cost reduction.
Action
Prior to being engaged for the work noted above, Newmark Knight Frank provided a desktop valuation exercise and market to market analysis for over 600 locations. This work was accomplished within 48 hours utilising Newmark Knight Frank’s global platform and network of advisors who provided local market intelligence for the portfolio of properties. Extensive analysis uncovered that a select group of properties, including two major manufacturing sites in Greece and Germany, were in need of a more detailed valuation and rationalisation. In addition, site audits were required for 12 locations around the globe, including those in Germany, the UK, Belgium and the US. Teams were deployed around the world to visit sites, document specific observations and provide a report summarising the findings to the client. All of this work was executed over a five-day time period.
Through Newmark Knight Frank’s efforts, the acquiring entity was able to evaluate potential risks and opportunities related to the occupancy and the condition of the real estate. The desired acquisition closed successfully in September of 2008.
Result and activities underway
Owing to the success of Newmark Knight Frank’s due diligence for the private equity firm’s acquisition of SEN, SEN with the support of its acquirer hired Newmark Knight Frank as its real estate advisor and consultant for its entire global portfolio. In this capacity, Newmark Knight Frank proposed focusing on providing global strategic account management for SEN as well as reducing costs for the entire SEN global portfolio. The review is underway and proceeding along two paths, namely (i) a phased strategic plan for the company’s seven regions, with its largest region, Germany, receiving first focus, and (ii) situations requiring transactional and project management support around the globe.
In the first case, Newmark Knight Frank deployed a consulting team to visit more than a dozen cities throughout Germany to conduct interviews with key people concerning their space use and needs. The objective was to gain an in-depth appreciation for what works well and what needs a fresh look. Interestingly, Newmark Knight Frank noted that the locations in secondary cities possessed a more efficient and creatively deployed foot-print than those in the larger cities such as Munich.
In the other cases requiring transactional and project management support, Newmark Knight Frank deployed a combination of local and disbursed talent to deliver what SEN needed, whether it be a new lease or a newly refurbished home. The team deployed here has the advantage of being staffed with a transaction market expert to help compare alternatives. This work is currently underway in every region.