practice at The Polacheck Company
Michael Parker recalls the time when business success was announced by emblazoning your name on your building. The successful "Businessman Jones" didn’t just do business in a facility at 1234 N. Main St., he did business in the "Jones Building."
"It used to be that you were successful in running a business if your name was on the building," notes Parker, vice president and director of Corporate Services for The Polacheck Co. in Milwaukee.
There’s a different view nowadays as business owners are seeing their property as tools that have capital value – capital that can often have a lesser return than capital invested in production.
"The rate of return on business ownership is substantially less than the return on making widgets or providing a service," Parker points out. That investment focus is causing more business owners and managers to desire more information about their properties. And commercial real estate firms are responding.
"In the past, the real estate business has been looked at as a transactional process. You tell your real estate agent to go out and find me a box that’s 40,000 square feet, or sell this property for me," Parker says. "Today, we find we are being a lot more consultative. Research, demographics, understanding zoning, planning and economic development issues – all of these things provide a better environment that can lead to that transactional situation that comprised that commercial real estate business of the ’60s, ’70s and ’80s."
The success of Polacheck’s Corporate Services Group, which was founded three years ago, is indicative of the trend of real estate firms becoming increasingly consultative and not just transactional.
While some of the work performed for Polacheck’s Corporate Services Group does lead to traditional real estate transactions, the primary focus is in assisting businesses in the management of their real estate assets. Parker and his team provide services in the areas of strategic planning, relocation management, asset management, space planning, facilities management and financial consulting.
"Frequently, real estate decisions have far-reaching consequences – a purchase or lease creates a long-term obligation," he said. "These types of decisions frequently are not integrated into the business process. The earlier we are involved, the more effective we can be."
Businesses can receive assistance to ensure that their decisions to lease or purchase properties will support their business goals, will help attract employees and will represent a good use of capital.
While the goal of the Corporate Services Group is not to execute real estate purchases and sales, some of its activities do feed properties into the company as a whole. And while many of the group’s 20 or so clients are also longtime Polacheck clients, the goal, Parker said, is to operate like a separate entity with its own mission.
"We try to be synergistic with our current customers. Our activities cross over well with the transactional part of our business, feeding properties into the firm. We do keep our eyes and ears open for municipalities that want to get involved in development projects. The governmental component to this consulting service is a major factor. Of course, not everything we do from a consultative side results in transactions," Parker said. "We also have our own clients that we do strictly consulting work with. The spectrum is broader than I had originally envisioned it. There is a lot of opportunity for us in a lot of different industries. When I first joined the firm, I thought I’d be working exclusively with larger clients of a particular type. But size and industry type are not good indicators of who our clients have become. It’s just a matter of how well companies’ capital investment is being used, relating to a lease, owning real estate and the effective use of what they have."
Cases in point
Parker helped a southeastern Wisconsin manufacturing business develop a strategy to allocate current resources between two administrative facilities. One division was shrinking while the other was growing.
"We looked at the advisability of disposing of some of the real estate, transferring of operations between various locations and combining business operations. As a result, the client has combined operations and will be moving into a new facility," Parker said.
Parker is currently working with a company that has a very large network of offices throughout the world, and is helping it with day-to-day transactional management and discovering ways to lower its overall occupancy cost.
"We are in the process of doing pilot studies of certain regions where they can combine offices, move before lease terms are up, and more effectively use their existing real estate. We are also looking at the way they use their own real estate management staff and determining whether outsourcing some of that is of value."
The Corporate Services Group also recently worked with a large consulting company in central Wisconsin as it was being purchased by a national conglomerate.
"We provided analysis of their real estate and space utilization, along with information on reducing the amount of space they needed to perform their consulting business," Parker said. "Eventually, they sold all of their property to a third party and leased it back from them. This released capital that was tied up in real estate."
Education, experience key
Prior to joining Polacheck to initiate the Corporate Services Group, Parker was senior director of Facilities and Services for S.C. Johnson Co. in Racine, where he was employed for 20 years. He holds a B.S. in business administration from the University of Colorado at Denver and an M.B.A. from Duke University in Durham, N.C.
Parker credits Mark Levine of Denver’s Burns School of Real Estate and Construction Management with running an extremely strong real estate curriculum.
He also thinks highly of the University of Wisconsin program.
"Dr. James Graascamp, one of the founders of the University of Wisconsin-Madison Department of Real Estate and Urban Land Economics, started a great program. I think this program spawned the very high-quality commercial real estate industry we see in the state today," Parker said. (The department at Madison was ranked best in the nation in 1996 by U.S. News and World Report.) "People in the Wisconsin industry are well-trained, very ethical, and good business people that provide a real value-add for the clients they serve. That applies to not just us, but others that work here and nationally. There is a parallel here between what we have and what architectural firms in Milwaukee do. The Commercial Association of Realtors and the individual companies are at a very high level of professionalism."
"There are some people in Wisconsin who do this as an adjunct to the services they provide – but I don’t think they are as focused as we are," Parker said. "Architectural firms do some of this type of consulting work, as do pure consulting companies like Anderson Consulting."
A major Wisconsin developer, NAI MLG, in Brookfield, offers some similar services through its MLG Consulting and MLG Management companies and its involvement in a national organization – NAI Direct.
T, Michael Parker
– Vice president and director,
Corporate Services, The Polacheck Co., Milwaukee
– Graduate of the College of Business at the University of Denver; also attended the Graduate School of
Business at the University of Illinois and the University of Wisconsin.
He is also a graduate of the Duke
University Fuqua School of Business Executive Education Program.
– Formerly senior director of Corporate Services & Facilities for S.C. Johnson Wax in Racine.
– Past and present involvements:
Past president and chairman of Racine County Economic Development Corp.; served on several projects for the Governor of Wisconsin and the Racine County executive; nominated in 1992 as "One Who Made a Difference" in the Racine area; president of the National Alumni Association of the University of Denver; board of directors of the Greater Milwaukee Open PGA Tournament.
