Interviewed on January 17, 2020
Interviewed by Yingying Zhu
Dr. Martha O'Mara is a leading authority on the integration of corporate real estate planning with business strategic planning. She most recently headed strategy consulting for the Strategy and Innovation group at Colliers International where she and her team provided clients industry leading advisory services in the disciplines of management consulting, portfolio optimization and location strategy. Colliers acquired her firm, Corporate Portfolio Analytics, in 2015 which she ran for a decade, serving some of the largest corporate portfolios in the US including financial, professional services, technology and media companies, governments, as well as international portfolio advising on the management of over two billion square feet of occupancy. Earlier Martha served as a professor of real estate at the Harvard University Graduate School of Design for nine years and has lectured at MIT, Tufts University and executive development programs. Her MBA, MA and PhD are from Harvard University.
You have extensive experience in corporate real estate consulting. Can you give us a quick rundown where your focus has been? I had a number of careers. They all follow this arch of organization and placemaking. I worked for a management consulting firm and then an interior architecture firm very early in my career. I realized for every single design problem, there were always a series of business and organizational problems. I was fortunate enough to get a PhD scholarship at Harvard in organizational behavior and then spent a decade teaching their real estate related courses and urban development studios. During that time, I started to focus on how companies could better plan for long term real estate needs when future business forecasts were becoming harder and harder. I started consulting part time in the early 90’s for large companies such as Sprint, Bank of America and AT&T. These industries - telecommunications and financial services were going through a lot of changes in the 90’s, just like the technology industry is going through today. When I left full-time teaching I realized that consulting was fun and rewarding, and more importantly, it offers a more flexible time schedule to me as a mom of three. I turned my part time business into my full time start-up Corporate Portfolio Analytics in 2005. At the peak time, I consulted for 12 of the top 100 largest office portfolios in the country. The assignments include long-range strategic portfolio plans, forecasts, site selections, consolidations and leasing strategy. During the financial crisis, I was lucky to keep my company diversifying more into public sector consulting. Coming out of the recession, a number of companies were interested in buying my company and I chose to work with Colliers in 2015.
How does data and technologies impact corporate real estate consulting? There are a lot of good tools such as Collier’s 360 dashboard. It is transformational for clients to get all the possible data in one place to show the current state. You will still have to use qualitative and quantitative assessment and vision to figure out what you will need in the future, which requires human knowledge and judgment. But it is way more efficient to gather and process data today.
What do you think of Amazon’s choice of second headquarters since you are an expert in site selection assignment? I wasn’t involved in the actual selection for Amazon. The epicenter of the Internet is always Northern Virginia and the federal government is a huge client of Amazon’s. The two most important real estate factors are available office stock and workforce housing. Amazon is moving so fast that they needed something readily available. There is a huge inventory of available office space in Crystal City and Pentagon City as a result of the Department of Defense’s Base Realignment and Closure initiative. It literally takes 10 minutes to get from DC to Crystal City by the subway. Vornado-JBG owns a large number of buildings there and have been renovating them. It was an easy “plug and play” for Amazon. The second factor is housing breathing room. If you go west from Crystal City, you have easy access to workforce housing neighborhoods in the close-in suburbs and the outer ring suburbs. There has been a lot of transit infrastructure investment as well. This is not true if you were putting Amazon’s second headquarters in Long Island City in New York. There is only so much real estate in Long Island and most of it is expensive already, let alone Manhattan. Amazon’s employment base, although young in general, will want to achieve home ownership at some point and it will be challenging around Long Island City. On the contrary, the Penn Station/Chelsea area that they chose to set up a smaller location later, does have easy access to New Jersey, where there is breathing room for workforce housing.
FAANG (Facebook, Amazon, Apple, Netflix and Google) are taking up huge amount of space in NYC and life science users are expanding rapidly in both NYC and Boston. JPMorgan announced that they are moving some of their functions from NYC to Texas/Ohio/Delaware. How do you make sense of these inbound and outbound movements for urban centers? In general, companies are moving jobs out of urban centers because they are too expensive for their employees. The financial services industry has become a low cost-based game so they can’t afford high cost locations for most of their lower margin functions. Technology is still making high margins so they can afford the high office rent and the premium salary that they need to pay to cover their employees’ living expenses. But I still think that those technology companies are showing a huge lack of vision and creativity by all clustering in that part of Manhattan. There are so many functions that they could put in other places, but they haven’t done that so far because those are very brave and visionary moves to make. . If I put out my crystal ball, I will tell you that 10 to 20 years from now, their real estate will look very different because their margins are going to get smaller, just like those companies who once in held monopoly positions in the 1980’s such as IBM.
What are the hurdles to win corporate real estate clients today? More and more companies are large, complex organization with different lines of business in varied locations. The procurement process by which they buy real estate services and goods has become more complex and requires a much longer sales cycle. It is challenging for service and tech companies to understand how their clients buy. For example, I once coached an occupancy sensor company for business development. I pointed out that they ll have to sell to the real estate department, the facilities department, the HR department and the IT department and good luck getting all of those people to talk to each other. Even if you have a helpful and relatively cheap application, the process to get to the “buy” is painful. After getting the business buy-in, you will still have to deal with procurement protocols and over complicated legal templates. The second biggest hurdle is what I call the “good enough solution”. In the case of the occupancy sensor, it was a great technology that would generate cool data for space management and office design. But if your goal was to figure out the utilization during a period of time, I could get to a similar conclusion that people were only at their desk 30% of the day by doing headcounts manually with a clipboard. In the history of technology, the best technology does not always win in the marketplace. Maybe it is too advanced or too basic to meet your clients’ demand. Maybe your client hasn’t reached the tipping point in scale where your technology will make a difference. Maybe good enough is OK.
How do you advise to overcome these hurdles? It all comes down to the two things that will ultimately trigger your clients’ decision – cost efficiency and differentiation. Make sure your product presents a close link to these results – either helping people to do things at a lower cost or helping them differentiate in a way that will attract more customers. For example, do you think you have a 10% better chance getting a tenant to pick your building over another building by having this concierge service app that it is getting popular but your top competition in the submarket doesn’t have yet? If yes, you have scored the differentiation point. My other piece of advice is to start small. I would propose a small project with a client and use it to understand what the business need really is. Later on, I would propose something that is more comprehensive or customized when I know there is a real possibility that they will pay for it without throwing myself in the huge procurement process and not knowing what the chance is to win at the end.
What are the pros and cons of working with Colliers versus owning your own business? It was an awesome feeling when I sold my company to Colliers International in 2015 and to have a renowned company hand you a pile of money for something you created. The biggest advantage is that I got to work on a few large global clients, which would have been harder as an entrepreneur. Having business development and back office resources that you can easily draw upon is good, so I can focus on doing the work. Having colleagues that are working on other interesting things is another benefit to being in a larger company. . I also appreciated the financial stability. When you own your company, everyone else gets paid first and there was a period of time when I didn’t have enough money to pay myself unless I laid off people which I did not want to do. However, it is more personal when you are selling your own product than selling a huge platform. It is exciting and rewarding to have your own business, to see your employees prosper and the positive impact you have on your clients when you own the relationship. .
What is your next step? I am currently working in Florida on a large government center project for a county. There is a huge need for these public agencies to do better real estate planning, particularly in the Sunbelt area where many of their facilities were built in the 60’s and 70’s and now need to be replaced. Their needs are very different today - how people work has changed and how you engage with the community has changed. They need to figure out what property to monetize and how to better work with the private sector. I feel I am helping make a difference in these communities and it is creative and a lot of fun. And it’s warmer in the winter than Cambridge!
You founded Executive Women in Corporate Real Estate (EWCRE) in 2001. How do you support other female founders and professionals? I am very focused on working with women and supporting women. I organized Executive Women in Corporate Real Estate and we still meet once a year after 19 years. It is sad to say but we are still nowhere near a level playing ground for women in business. We have to make a special effort to support each other every day. I love my male friends, colleagues and employees, but in the limited ability that I have, I do want to focus on supporting women-owned businesses. At a personal level, two of my best friends from Harvard Business School are Jean Kovacs and Donna Horton Novitsky. They are both serial entrepreneurs based in the Silicon Valley and they continue to inspire me. I go to them for advice and we try to introduce investors and business networks to each other. Some of my other friends through EWCRE are the most senior women at their real estate companies and I try to be their biggest cheerleader. It is about being secure enough in yourself to have a generous attitude that the more other people succeed, the better it is for everybody.
Edited and condensed for clarity.