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November 29, 2011

2011 Best Practices Index

Tough Times Make for Great Companies

By Jack Kern, Research Editor, and Mike Ratliff, Associate Editor

(Scroll to the bottom of the post to play the Power Index Podcast.)

Table 1. - The 2011 Best Practices Index

The commercial real estate sector is a tough group, and nothing demonstrates that more than the results of this month’s survey.

We asked our participating companies a number of questions about their business practices which included the opportunity to tell us about their charitable and community building efforts.

Considering we’ve been facing possibly the fiercest headwinds and most difficult circumstances ever, we’re in awe of this year’s top companies. Not only did many of the firms on our list find a way to increase revenues, add employees and grow their core businesses (see Table 2), but many of them found a way to give back, not only to their employees but also to their communities. At a time when you’d expect someone to become more introspective, the champion companies in the survey encouraged employees to take paid time to teach, mentor, paint, shovel, build, grow and in some instances just listen in their communities.

We read about efforts to really engage staff in activities that provided the ability to reach a population that was as far as you can get from their core businesses, just to show that commercial real estate cares. It doesn’t get any tougher than that, to build their businesses during harsh market conditions and still find time to let employees give back. To say that we’re proud of our listed companies greatly understates the true value of what they do, rather we heartily suggest they are greatly deserving of this recognition, especially now, and we’re honored to share this with you.

Looking across the landscape of the listed companies, we noticed at least observationally that more of them are investing in broader geographic areas, diversifying in many of the property sectors, and taking advantage of lower prices by purchasing distressed and under-performing assets to improve and add to their core holdings.

Rather than this being a cycle to either buy or sell, it has instead become the cycle to improve, and to realign management, operations and holdings to take advantage of the continuing recovery across the broader economy. While bells are not ringing just yet in holiday sales at cash registers, and many office buildings are still empty, positive signs of growth in new leases signed, apartments filling up, and industrial deals closing showed that an ever-optimistic industry has been rewarded with unexpected results.

Table 2. - Revenue, office and employee growth since 2007. The numbers represent the combined totals for all companies list in Table 1.

Methodology

Change is hard. If we had to characterize what makes great companies the best, it would easily be their ability to manage change elegantly and still find ways to make a difference. In determining rankings, we examined certain tangible factors, such as the length of time the CEO has held his/her current position, the number of years the firm has been in business, the changes in the number of offices, gains or losses in employed professionals, differences in revenues generated over varying time frames, lines of investment by sector, changes in holdings over time, geographic dispersion and investment patterns over time as well as other structural and organizational factors, including a commitment to the environment.

Then we took a look at the additional information submitted that gave us a detailed view about their community and charitable activities. We tried to understand how the efforts would make a difference in their communities, whether the activity was part of longer, more organized and dedicated plan and if it was both repeatable and sustainable. We then combined scores from the two separate panels and prepared the index.

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