The impact of structural changes on corporate real estate ownership: evidence from Germany
Abstract
Although real estate resources represent a high percentage of the corporate assets of non-property companies, their future role is unclear. Longevity and difficulty in revising property-related decisions clash under dynamically changing environmental conditions. This makes it necessary to consider the ownership strategy and its altering role in order to avoid inefficiencies and not to hinder companies in mastering structural change successfully. In a first step, data from a telephone company survey (CATI) among 69 corporate real estate managers of German companies are grouped by performing a two-step cluster analysis according to the degree to which they are affected by structural change. The resulting clusters are then tested regarding differences in their ownership strategy. The empirical analysis shows that firms highly affected by structural change exhibit a higher willingness to decrease the proportion of ownership. The decline in real estate assets is particularly evident in the office segment and in increased acceptance of sale-and-rent-back solutions. First hints show that structural change and associated new business requirements change the relevance of CRE ownership. To avoid competitive disadvantages, especially European firms should scrutinize their high ownership ratios.
First published online 09 November 2020
Keyword : structural change, corporate real estate ownership, firm performance, corporate real estate finance
How to Cite
Seger, J., & Pfnür, A. (2021). The impact of structural changes on corporate real estate ownership: evidence from Germany. International Journal of Strategic Property Management, 25(1), 1-16. https://doi.org/10.3846/ijspm.2020.13776
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Alvayay, J. R., Rutherford, R. C., & Smith, W. S. (1995). Tax rules and the sale and leaseback of corporate real estate. Real Estate Economics, 23(2), 207–238. https://doi.org/10.1111/1540-6229.00664
Ambrose, B. W. (1990). Corporate real estate’s impact on the takeover market. The Journal of Real Estate Finance and Economics, 3(4), 307–322. https://doi.org/10.1007/BF00178855
Ambrose, B. W., Diop, M., & Yoshida, J. (2017). Product market competition and corporate real estate investment under demand uncertainty. Real Estate Economics, 45(3), 521–590. https://doi.org/10.1111/1540-6229.12150
Armstrong, J. S., & Overton, T. S. (1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 14(3), 396–402. https://doi.org/10.1177/002224377701400320
Backhaus, K., Erichson, B., Plinke, W., & Weiber, R. (1996). Multivariate Analysemethoden: eine anwendungsorientierte Einführung (8th ed.). Springer.
https://doi.org/10.1007/978-3-662-08888-3
Baltussen, S., Schelle, T., Appel-Meulenbroek, R., Van Egmond, B., Hesselink, M., & Van Leersum, L. (2014). Lease accounting trouble looms for corporate real estate management. Journal of Corporate Real Estate, 16(3), 182–202. https://doi.org/10.1108/JCRE-01-2014-0002
Brounen, D., & Eichholtz, P. M. A. (2005). Corporate real estate ownership implications: international performance evidence. The Journal of Real Estate Finance and Economics, 30(4), 429– 445. https://doi.org/10.1007/s11146-005-7015-5
Byrne, P., Lizieri, C., & Worzala, E. (2002). The location of executive suites and business centers in the United States. Journal of Real Estate Portfolio Management, 8(3), 255–270.
https://doi.org/10.1080/10835547.2002.12089665
Chaney, T. (2016). Liquidity constrained exporters. Journal of Economic Dynamics and Control, 72, 141–154.
https://doi.org/10.1016/j.jedc.2016.03.010
Chaney, T., Sraer, D., & Thesmar, D. (2012). The collateral channel: how real estate shocks affect corporate investment. American Economic Review, 102(6), 2381–2409.
https://doi.org/10.1257/aer.102.6.2381
Cooke, H., Appel-Meulenbroek, R., & Arentze, T. (2019). Adjustment of corporate real estate during a period of significant business change. International Journal of Strategic Property Management, 23(3), 171–186.
https://doi.org/10.3846/ijspm.2019.7954
Dabson, A., & McAllister, P. (2014). The role of serviced offices in the corporate real estate supply chain (Working Papers in Real Estate & Planning 01/14). University of Reading, Reading.
Deng, Y., & Gyourko, J. (1999). Real estate ownership by non-real estate firms: an estimate of the impact on firm returns (Unpublished Working Paper). Wharton School.
Diop, M. (2013). Product market competition, real estate and stock returns (Dissertation Draft). Real Estate Research Institute, Pennsylvania State University, Pennsylvania, USA. https://doi.org/10.1111/1540-6229.12201
Diop, M. (2018). Real estate investments, product market competition and stock returns. Real Estate Economics, 46(2), 291–333.
Gan, J. (2007a). Collateral, debt capacity, and corporate investment: evidence from a natural experiment. Journal of Financial Economics, 85(3), 709–734.
https://doi.org/10.1016/j.jfineco.2006.06.007
Gan, J. (2007b). The real effects of asset market bubbles: loan-and firm-level evidence of a lending channel. The Review of Financial Studies, 20(6), 1941–1973. https://doi.org/10.1093/rfs/hhm045
Ghent, A. C., Torous, W. N., & Valkanov, R. I. (2019). Commercial real estate as an asset class. Annual Review of Financial Economics, 11, 153–171. https://doi.org/10.1146/annurev-financial-110118-123121
Gibson, V. A., & Lizieri, C. M. (1999a). Change & flexibility: the role of serviced office space in corporate real estate portfolios and office markets (Working Papers in Land Management & Development 01/99). University of Reading, Reading.
Gibson, V. A., & Lizieri, C. M. (1999b). New business practices and the corporate property portfolio: how responsive is the UK property market? Journal of Property Research, 16(3), 201–218. https://doi.org/10.1080/095999199368111
Gibson, V. A., & Lizieri, C. M. (2000). Space or service? The role of executive suites in corporate real estate portfolios and office markets. Real Estate Finance Journal, 15(4), 21–29.
Grönlund, T., Louko, A., & Vaihekoski, M. (2008). Corporate real estate sale and leaseback effect: empirical evidence from Europe. European Financial Management, 14(4), 820–843. https://doi.org/10.1111/j.1468-036X.2007.00417.x
Hartmann, S., Linnemann, P., Pfnür, A., & Siperstein, B. (2007). Corporate real estate benchmark study 2007: Darmstadt Technical University. Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Heywood, C., & Arkesteijn, M. (2017). Alignment and theory in corporate real estate alignment models. International Journal of Strategic Property Management, 21(2), 144–158. https://doi.org/10.3846/1648715X.2016.1255274
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2014). Strategic management: concepts: competitiveness and globalization (11th ed.). South-Western College Publishing.
Kenley, R., Heywood, C., & McGeorge, D. (2000). Australian corporate real estate management: identification of the hybridisation of property and financial knowledge in practice. Paper presented at the 6th Pacific Rim Real Estate Society (PRRES) Conference, Sydney, Australia.
Ling, D. C., Naranjo, A., & Ryngaert, M. (2012). Real estate ownership, leasing intensity, and value: do stock returns reflect a firm’s real estate holdings? The Journal of Real Estate Finance and Economics, 44(1–2), 84–202.
https://doi.org/10.1007/s11146-010-9271-2
Liow, K. H. (2010). Is real estate an important factor in corporate valuation? Evidence from listed retail firms. Journal of Corporate Real Estate, 12(4), 249–278.
https://doi.org/10.1108/14630011011094685
Liow, K. H., & Nappi‐Choulet, I. (2008). A combined perspective of corporate real estate. Journal of Corporate Real Estate, 10(1), 54–67. https://doi.org/10.1108/14630010810881667
Liow, K. H., & Ooi, J. T. L. (2004). Does corporate real estate create wealth for shareholders? Journal of Property Investment & Finance, 22(5), 386–400. https://doi.org/10.1108/14635780410556870
Mintzberg, H., & Water, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257–272. https://doi.org/10.1002/smj.4250060306
Mayer, H. O. (2004). Interview und schriftliche befragung: entwicklung, durchführung, auswertung (5th ed.). Oldenbourg.
Nappi-Choulet, I. (2002). Corporate property outsourcing in Europe: present trends and new approach for real estate economics. Paper presented at the IPD European Property Strategies Conference, Wiesbaden, Germany.
Nappi‐Choulet, I., Missonier‐Piera, F., & Cancel, M. (2009). Value creation and the impact of corporate real estate assets: an empirical investigation with French listed companies. Journal of Corporate Real Estate, 11(2), 78–90. https://doi.org/10.1108/14630010910963124
Nourse, H., & Roulac, S. (1993). Linking real estate decisions to corporate strategy. Journal of Real Estate Research, 8(4), 475–494.
Pfnür, A. (2014). Economic relevance of corporate real estate management in Germany: Darmstadt Technical University. Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Pfnür, A. (2019). Herausforderungen des Corporate Real Estate Managements im Strukturwandel / hrsg. vom Zentralen Immobilien Ausschuss (ZIA) e.V. Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Pfnür, A., & Seger, J. (2017). Produktionsnahe immobilien - herausforderungen und entwicklungsperspektiven aus sicht von corporates, investoren und dienstleistern. In Arbeitspapiere zur immobilienwirtschaftlichen forschung und praxis (Band Nr. 34), Technische Universität Darmstadt.
Pfnür, A., & Seger, J. (2019). Corporate real estate specificity, ownership and its contribution to firm performance: empirical evidence from the German capital market. In European Real Estate Society (ERES), Cergy-Pontoise Cedex, France. https://doi.org/10.15396/eres2019_132
Pfnür, A., Seger, J., & Appel-Meulenbroek, R. (2019). Impact of corporate real estate on the firm performance: theoretical concept and empirical evidence. In 26th Annual European Real Estate Society, Cergy-Pontoise Cedex, France. https://doi.org/10.15396/eres2019_144
Pfnür, A., & Wagner, B. (2020). Transformation of the real estate and construction industry: empirical findings from Germany. Journal of Business Economics, 90, 975–1019.
https://doi.org/10.1007/s11573-020-00972-4
Picot, A. (1981). Strukturwandel und Unternehmensstrategie Teil 1. Wirtschaftswissenschaftliches Studium, 11, 527–532.
Ratcliffe, J. (2001). Imagineering global real estate: a property foresight exercise. Foresight, 3(5), 453–465.
https://doi.org/10.1108/14636680110416788
Rochdi, K. (2015). The risk of real estate ownership: evidence from German equities. Journal of European Real Estate Research, 8(2), 107–129.
https://doi.org/10.1108/JERER-03-2015-0012
Rodriguez, M., & Sirmans, C. (1996). Managing corporate real estate: evidence from the capital markets. Journal of Real Estate Literature, 4(1), 13–33.
Rutherford, R. C. (1990). Empirical evidence on shareholder value and the sale‐leaseback of corporate real estate. Real Estate Economics, 18(4), 522–529.
https://doi.org/10.1111/1540-6229.00535
Schehl, M. (1994). Die kostenrechnung der industrieunternehmen vor dem hintergrund unternehmensexterner und-interner strukturwandlungen. Duncker & Humblot.
Sing, T. F. (2005). Impact of information and communications technology on real estate space: perspective of office occupiers. Journal of Property Investment & Finance, 23(6), 494–505. https://doi.org/10.1108/14635780510626538
Tay, L., & Liow, K. H. (2006). Corporate real estate management in Singapore: a business management perspective. International Journal of Strategic Property Management, 10(2), 93–111. https://doi.org/10.3846/1648715X.2006.9637547
Ting, K. H. (2006). Impact of the Asian financial crisis on corporate real estate disposals. Journal of Corporate Real Estate, 8(1), 27–37. https://doi.org/10.1108/14630010610664787
Tuzel, S. (2010). Corporate real estate holdings and the cross-section of stock returns. The Review of Financial Studies, 23(6), 2268–2302. https://doi.org/10.1093/rfs/hhq006
Weber, F., & Scheunemann, H. (2018). Logistik- und industriemarktüberblick Deutschland 1. Quartal 2018. Frankfurt a.M.
Wheaton, W. C. (1996). A perspective on telecommunications technology and real estate: office, industrial, and retail markets. Real Estate Finance, 13, 13–17.
Zhao, D., & Sing, T. F. (2011). Why do firms own and not lease corporate real estate? (IRES Working Paper Series, IRES2011-003, p. 42).
Zhao, D., & Sing, T. F. (2016). Corporate real estate ownership and productivity uncertainty. Real Estate Economics, 44(2), 521–547. https://doi.org/10.1111/1540-6229.12112
Ambrose, B. W. (1990). Corporate real estate’s impact on the takeover market. The Journal of Real Estate Finance and Economics, 3(4), 307–322. https://doi.org/10.1007/BF00178855
Ambrose, B. W., Diop, M., & Yoshida, J. (2017). Product market competition and corporate real estate investment under demand uncertainty. Real Estate Economics, 45(3), 521–590. https://doi.org/10.1111/1540-6229.12150
Armstrong, J. S., & Overton, T. S. (1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 14(3), 396–402. https://doi.org/10.1177/002224377701400320
Backhaus, K., Erichson, B., Plinke, W., & Weiber, R. (1996). Multivariate Analysemethoden: eine anwendungsorientierte Einführung (8th ed.). Springer.
https://doi.org/10.1007/978-3-662-08888-3
Baltussen, S., Schelle, T., Appel-Meulenbroek, R., Van Egmond, B., Hesselink, M., & Van Leersum, L. (2014). Lease accounting trouble looms for corporate real estate management. Journal of Corporate Real Estate, 16(3), 182–202. https://doi.org/10.1108/JCRE-01-2014-0002
Brounen, D., & Eichholtz, P. M. A. (2005). Corporate real estate ownership implications: international performance evidence. The Journal of Real Estate Finance and Economics, 30(4), 429– 445. https://doi.org/10.1007/s11146-005-7015-5
Byrne, P., Lizieri, C., & Worzala, E. (2002). The location of executive suites and business centers in the United States. Journal of Real Estate Portfolio Management, 8(3), 255–270.
https://doi.org/10.1080/10835547.2002.12089665
Chaney, T. (2016). Liquidity constrained exporters. Journal of Economic Dynamics and Control, 72, 141–154.
https://doi.org/10.1016/j.jedc.2016.03.010
Chaney, T., Sraer, D., & Thesmar, D. (2012). The collateral channel: how real estate shocks affect corporate investment. American Economic Review, 102(6), 2381–2409.
https://doi.org/10.1257/aer.102.6.2381
Cooke, H., Appel-Meulenbroek, R., & Arentze, T. (2019). Adjustment of corporate real estate during a period of significant business change. International Journal of Strategic Property Management, 23(3), 171–186.
https://doi.org/10.3846/ijspm.2019.7954
Dabson, A., & McAllister, P. (2014). The role of serviced offices in the corporate real estate supply chain (Working Papers in Real Estate & Planning 01/14). University of Reading, Reading.
Deng, Y., & Gyourko, J. (1999). Real estate ownership by non-real estate firms: an estimate of the impact on firm returns (Unpublished Working Paper). Wharton School.
Diop, M. (2013). Product market competition, real estate and stock returns (Dissertation Draft). Real Estate Research Institute, Pennsylvania State University, Pennsylvania, USA. https://doi.org/10.1111/1540-6229.12201
Diop, M. (2018). Real estate investments, product market competition and stock returns. Real Estate Economics, 46(2), 291–333.
Gan, J. (2007a). Collateral, debt capacity, and corporate investment: evidence from a natural experiment. Journal of Financial Economics, 85(3), 709–734.
https://doi.org/10.1016/j.jfineco.2006.06.007
Gan, J. (2007b). The real effects of asset market bubbles: loan-and firm-level evidence of a lending channel. The Review of Financial Studies, 20(6), 1941–1973. https://doi.org/10.1093/rfs/hhm045
Ghent, A. C., Torous, W. N., & Valkanov, R. I. (2019). Commercial real estate as an asset class. Annual Review of Financial Economics, 11, 153–171. https://doi.org/10.1146/annurev-financial-110118-123121
Gibson, V. A., & Lizieri, C. M. (1999a). Change & flexibility: the role of serviced office space in corporate real estate portfolios and office markets (Working Papers in Land Management & Development 01/99). University of Reading, Reading.
Gibson, V. A., & Lizieri, C. M. (1999b). New business practices and the corporate property portfolio: how responsive is the UK property market? Journal of Property Research, 16(3), 201–218. https://doi.org/10.1080/095999199368111
Gibson, V. A., & Lizieri, C. M. (2000). Space or service? The role of executive suites in corporate real estate portfolios and office markets. Real Estate Finance Journal, 15(4), 21–29.
Grönlund, T., Louko, A., & Vaihekoski, M. (2008). Corporate real estate sale and leaseback effect: empirical evidence from Europe. European Financial Management, 14(4), 820–843. https://doi.org/10.1111/j.1468-036X.2007.00417.x
Hartmann, S., Linnemann, P., Pfnür, A., & Siperstein, B. (2007). Corporate real estate benchmark study 2007: Darmstadt Technical University. Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Heywood, C., & Arkesteijn, M. (2017). Alignment and theory in corporate real estate alignment models. International Journal of Strategic Property Management, 21(2), 144–158. https://doi.org/10.3846/1648715X.2016.1255274
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2014). Strategic management: concepts: competitiveness and globalization (11th ed.). South-Western College Publishing.
Kenley, R., Heywood, C., & McGeorge, D. (2000). Australian corporate real estate management: identification of the hybridisation of property and financial knowledge in practice. Paper presented at the 6th Pacific Rim Real Estate Society (PRRES) Conference, Sydney, Australia.
Ling, D. C., Naranjo, A., & Ryngaert, M. (2012). Real estate ownership, leasing intensity, and value: do stock returns reflect a firm’s real estate holdings? The Journal of Real Estate Finance and Economics, 44(1–2), 84–202.
https://doi.org/10.1007/s11146-010-9271-2
Liow, K. H. (2010). Is real estate an important factor in corporate valuation? Evidence from listed retail firms. Journal of Corporate Real Estate, 12(4), 249–278.
https://doi.org/10.1108/14630011011094685
Liow, K. H., & Nappi‐Choulet, I. (2008). A combined perspective of corporate real estate. Journal of Corporate Real Estate, 10(1), 54–67. https://doi.org/10.1108/14630010810881667
Liow, K. H., & Ooi, J. T. L. (2004). Does corporate real estate create wealth for shareholders? Journal of Property Investment & Finance, 22(5), 386–400. https://doi.org/10.1108/14635780410556870
Mintzberg, H., & Water, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257–272. https://doi.org/10.1002/smj.4250060306
Mayer, H. O. (2004). Interview und schriftliche befragung: entwicklung, durchführung, auswertung (5th ed.). Oldenbourg.
Nappi-Choulet, I. (2002). Corporate property outsourcing in Europe: present trends and new approach for real estate economics. Paper presented at the IPD European Property Strategies Conference, Wiesbaden, Germany.
Nappi‐Choulet, I., Missonier‐Piera, F., & Cancel, M. (2009). Value creation and the impact of corporate real estate assets: an empirical investigation with French listed companies. Journal of Corporate Real Estate, 11(2), 78–90. https://doi.org/10.1108/14630010910963124
Nourse, H., & Roulac, S. (1993). Linking real estate decisions to corporate strategy. Journal of Real Estate Research, 8(4), 475–494.
Pfnür, A. (2014). Economic relevance of corporate real estate management in Germany: Darmstadt Technical University. Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Pfnür, A. (2019). Herausforderungen des Corporate Real Estate Managements im Strukturwandel / hrsg. vom Zentralen Immobilien Ausschuss (ZIA) e.V. Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
Pfnür, A., & Seger, J. (2017). Produktionsnahe immobilien - herausforderungen und entwicklungsperspektiven aus sicht von corporates, investoren und dienstleistern. In Arbeitspapiere zur immobilienwirtschaftlichen forschung und praxis (Band Nr. 34), Technische Universität Darmstadt.
Pfnür, A., & Seger, J. (2019). Corporate real estate specificity, ownership and its contribution to firm performance: empirical evidence from the German capital market. In European Real Estate Society (ERES), Cergy-Pontoise Cedex, France. https://doi.org/10.15396/eres2019_132
Pfnür, A., Seger, J., & Appel-Meulenbroek, R. (2019). Impact of corporate real estate on the firm performance: theoretical concept and empirical evidence. In 26th Annual European Real Estate Society, Cergy-Pontoise Cedex, France. https://doi.org/10.15396/eres2019_144
Pfnür, A., & Wagner, B. (2020). Transformation of the real estate and construction industry: empirical findings from Germany. Journal of Business Economics, 90, 975–1019.
https://doi.org/10.1007/s11573-020-00972-4
Picot, A. (1981). Strukturwandel und Unternehmensstrategie Teil 1. Wirtschaftswissenschaftliches Studium, 11, 527–532.
Ratcliffe, J. (2001). Imagineering global real estate: a property foresight exercise. Foresight, 3(5), 453–465.
https://doi.org/10.1108/14636680110416788
Rochdi, K. (2015). The risk of real estate ownership: evidence from German equities. Journal of European Real Estate Research, 8(2), 107–129.
https://doi.org/10.1108/JERER-03-2015-0012
Rodriguez, M., & Sirmans, C. (1996). Managing corporate real estate: evidence from the capital markets. Journal of Real Estate Literature, 4(1), 13–33.
Rutherford, R. C. (1990). Empirical evidence on shareholder value and the sale‐leaseback of corporate real estate. Real Estate Economics, 18(4), 522–529.
https://doi.org/10.1111/1540-6229.00535
Schehl, M. (1994). Die kostenrechnung der industrieunternehmen vor dem hintergrund unternehmensexterner und-interner strukturwandlungen. Duncker & Humblot.
Sing, T. F. (2005). Impact of information and communications technology on real estate space: perspective of office occupiers. Journal of Property Investment & Finance, 23(6), 494–505. https://doi.org/10.1108/14635780510626538
Tay, L., & Liow, K. H. (2006). Corporate real estate management in Singapore: a business management perspective. International Journal of Strategic Property Management, 10(2), 93–111. https://doi.org/10.3846/1648715X.2006.9637547
Ting, K. H. (2006). Impact of the Asian financial crisis on corporate real estate disposals. Journal of Corporate Real Estate, 8(1), 27–37. https://doi.org/10.1108/14630010610664787
Tuzel, S. (2010). Corporate real estate holdings and the cross-section of stock returns. The Review of Financial Studies, 23(6), 2268–2302. https://doi.org/10.1093/rfs/hhq006
Weber, F., & Scheunemann, H. (2018). Logistik- und industriemarktüberblick Deutschland 1. Quartal 2018. Frankfurt a.M.
Wheaton, W. C. (1996). A perspective on telecommunications technology and real estate: office, industrial, and retail markets. Real Estate Finance, 13, 13–17.
Zhao, D., & Sing, T. F. (2011). Why do firms own and not lease corporate real estate? (IRES Working Paper Series, IRES2011-003, p. 42).
Zhao, D., & Sing, T. F. (2016). Corporate real estate ownership and productivity uncertainty. Real Estate Economics, 44(2), 521–547. https://doi.org/10.1111/1540-6229.12112