What are Strategic Assets?
If you reside in an organization such as a company, government or religious organization, what assets should you consider strategic? There does not necessarily have to be a set of strategic assets, but if an asset is strategic it must be key to the business. Examples would be a church for a religious organization, perhaps R&D facilities for a pharmaceutical company, truck terminals for a freight firm and restaurants for a chain of food providers. Key assets tend to be utilized for a term that is long. Therefore ownership is preferred to leasing. Non strategic assets are therefore all other classes of real estate and should thus be leased.
How does an organization decide if an asset is strategic? The following questions will help guide the discussion:
- What happens to the organization if the asset location needs to be changed such as at the end of a lease? For example, is there a very large investment in tenant improvements such as a laboratory ( up to $300 PSF) that would be abandoned, relocated or rebuilt?
- If a twenty to thirty year horizon is used for the financial analysis, how does the lease vs. buy analysis change?
- Can the asset be duplicated at a reasonable cost or a reasonable time in another location?
- Will my customers be retained if the asset is relocated? Is there an element of the buying decision that is location centric?
- What are the organizations requirements for capital and does that affect the choice of ownership vs. leasing?
NAI Global provides strategic advisory services with experienced professionals who have dealt with these questions as employees of organizations who are contemplating these issues and these professionals have helped guide others in this area.
Ted Parcel is Executive Vice President of Corporate Services for NAI Global.
About the author
NAI Global is the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries throughout the world. NAI professionals work together with our global management team to help our clients strategically optimize their real estate assets. NAI offices around the world complete over $45 billion in transactions in a typical year. We also manage over 200 million square feet of commercial space. In 2009-2010, NAI Global received top industry rankings and honors: Named Global Broker of the Year by Private Equity Real Estate magazine Ranked # 1 Network and #3 Overall Corporate Services Provider in Watkins Research Group Survey of Corporate Real Estate Executives Ranked #4 on Lipsey’s Top 25 Real Estate Brands Ranked #6 on National Real Estate Investor magazine’s Top 25 Brokerage Organizations NAI Global is based in Princeton, New Jersey. A dedicated 70-person staff, strategically positioned around the world, provides management, technology, marketing and corporate services support to its network of real estate offices.
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