Lean, Mean Realty Four employees in Hartford, CT manage the globe-spanning real estate assets of United Technologies Corp. Ron Zappile tells us how.

Ron Zappile is Director, Global Real Estate Operations for United Technologies Corporation, the 42nd largest corporation in the United States last year. He and his tiny staff at United Technologies Realty manage billions of dollars of assets that house 215,000 employees in over 4,800 locations in 62 countries. UTC’s diverse divisions, engaged in businesses ranging from helicopters and air conditioners, elevators and fire protection systems, don’t fit easily into any single real estate template. “Network of Space” chatted with Ron the other day to uncover his management secrets.

NoS: Ron, how can a staff with only four managerial-level employees keep track of all that stuff, much less run it efficiently?
RZ: UT Realty has a highly leveraged, outsourced model. We connect with our three regional alliance partners – United Systems Integrators in North America; Knight Frank Newmark in Europe, Middle East, Africa and Russia; and USI/Jones Lang LaSalle in Asia Pacific and Central and Latin America -- through a web-based, global data and project management system. We have very few UTC personnel involved in this – basically four management personnel. All of our other team members are alliance partner personnel.

Our alliance partners have about 50 people dedicated to UTC transactions. That doesn’t count our partners’ local delivery networks. In effect, we’ve extended the enterprise to include the 400 to 500 offices that our regional alliance partners have around the world, and all of their professionals. At any point in time, depending on where the transaction is being done, those 50 UTC-dedicated personnel pull on the thousands of alliance partner personnel in their local delivery network.

NoS. You’ve made a big investment in information technology. I take it that your global portfolio management system is critical to making your outsourced business model work.
RZ: Absolutely. We use an off-the-shelf ERP system for real estate. Without it, I don’t think we could be doing what we’re doing. It has all the critical information we need to manage our real estate portfolio: critical dates, lease terms, landlord contacts, expiration dates. We can attach locational information, CAD drawings, data abstracts for lease properties, even the lease itself. We can look out at any length of time -- 12 months, 24 months, 36 months -- so our alliance partners know what volume of activity is coming in. They can begin the process of notifying their clients, our internal business units.

The sun never sets on the portfolio. We’re managing all 1,700 transactions going on around the world right now through the system. Each of those transactions has a critical-path milestone chart. Our project managers can access the system and keep a chronology on their projects, so all of our other users can access the system, locate the transaction and know what’s going on with it.

Currently, we have well over 700 users worldwide of the system. They’re accessing the data for various purposes, not just for real estate. For example, someone in UTC’s Leadership and Development group here in Connecticut may be planning a training program for Germany and might use it to get the addresses of all of our facilities in Germany. Finance uses it for the base data for SEC reporting of real estate and lease data. Many databases are static, put together once a year. Our data is updated every day.

NoS. You gained considerable recognition a few years back when you created the centralized/outsourced business model for managing UTC real estate. Now that you’ve put that system into place, what do you see as your main challenges?
RZ: One of the continuing challenges is to communicate and market what UT Realty is within the UTC family. UTC is a very acquisitive company. When we started the centralization of Real Estate in 2001 UTC was $27 billion company, and this year we expect it will be $53 billion. We’ve added entire divisions, like UTC Fire and Security. We’ve proven the model can sustain itself and it’s scalable. The challenge for us is to communicate this model to a growing UTC population so they are aware of and take advantage of the value we offer.

Another challenge is to continuously push the envelope in terms of technology, to learn how to become more efficient. UTC’s operating system, Achieving Competitive Excellence (ACE), forces us to continuously look at process improvement. Consider, back in 2001, we completed 350 transactions. Last year, we completed 1,100 transactions. This year, we’ve completed 760 so far. We are always looking to drive cost down while improving the service our business units receive on real estate transactions.

NoS. A number of observers have commented upon the changing nature of work – more teams, more collaboration, more part-time and contract workers, more flexible hours, more telework…. How have those trends impacted UTC, and what does it mean for managing the real estate portfolio?
RZ: The real estate industry is struggling with that question. I don’t think the trend is uniform across the industry, though. At UTC, we’re an industrial company. When you look at our portfolio, we’re 70 percent operations – manufacturing, warehouses, service centers. We’re not an information technology company like a Cisco or a Sun, where some of the workplace changes that they’re incorporating become a marketable business opportunity and they go out and sell to other companies. There are pockets where those practices are being implemented. We’ve incorporated mobile technology where it seems appropriate --- sales, engineering techs servicing various systems, components and the like.

This is the first time that I can recall that we have up to four generations in the workforce. You have people that are at all different technical skill levels. You have different ways of working – each of those generations has different expectations of their employer. We need to address these different needs and expectations. It moves the needle on the IT side. The younger generation is a wireless generation. Instead of just being hardwired, now you have to have wireless.

NoS. What metrics do you use to analyze performance?
RZ: Metrics are always an issue, especially when you try to do benchmarking. We look at the metrics around square footage. We look at revenue per square foot by business unit. We compare benchmarks in the industry to see how we’re doing. It’s not easy, though – not many conglomerates look like UTC. Our two key internal metrics are cost savings and customer feedback. We are a customer-focused organization and we need to support our customers real estate needs and their financial goals.

We’re also monitoring activity per account manager – the number of transactions managed. We’re continuously monitoring productivity and throughput. But we’re looking for a balance: we don’t want to overload people so much they lose their quality of life.

With the technology and tools we have, our ACE tools and methodology, we’ve been able to consistently have productivity and efficiency upwards of 50 percent above the benchmark. It’s challenging, especially when you consider the volumes being pumped through on a worldwide basis. But people are still here – we have a strong team with very little turnover.

NoS. Among your other responsibilities, you serve as treasurer of CoreNet Global. What role can Corenet play in rationalizing U.S. companies’ investment in real estate? Setting standards? Sharing best practices?
RZ: CoreNet encompasses everything we’re talking about. Technology, setting standards for the exchange of information, etc. I see the key issue as transparency. Once you leave North America, mainly Canada and the U.S., the transparency in the real estate market deteriorates rapidly. It’s not as good internationally as it here is in North America. We have detailed data about MSAs, for instance. That kind of data is not available in some cities in China or India. Setting standards is an important step toward having transparency in global markets. It may take years to get there, but it’s a very good start.