Land and buildings

And Israel smote him with the edge of the sword, and possessed his land. Numbers

Historically, organizations have needed a physical base from which to operate. Certainly, if products are manufactured there needs to be a factory. If a service is offered then buildings may be required, such as a school or hospital, although some services, such as consultancy, may use the client's home or office instead. The enabler is the use and position of land, buildings, waterways, or airspace, rather than actual ownership. Whether they are owned, rented or leased is of secondary importance, provided they are used for the organization's benefit. Indeed, determining who the actual owner is could be difficult!

The ownership and use of land: Organizations such as rail networks, canal operating companies and airports, derive their very existence from the land which they own or use. It is not possible for them to leave their location and settle somewhere else. Gas, water and electricity supply utilities derive their existence not from their ownership of land but from their right-of-way over or under it. Indeed, they may be able to exploit their right-of-way over land by getting into other industry sectors, such as telecommunications. This is what the Energis company did when it was formed to exploit the UK’s national electrical grid network by wrapping optical fibres around electricity cables to carry data at high speed over large distances.

Location, Location, Location: It is not just the land and buildings themselves that are important, but their actual location. A warehouse near a junction of two major roads is more valuable than in a remote area. The value of land for agriculture depends very much on its location - large fields in flat areas for growing wheat, or sunny slopes for grapes. The march of technology may obviate the need for owning large amounts of land, particularly in towns. Some financial institutions are outgrowing their need for a physical presence in city centres because of the increased use of the telephone and internet.

Exploitation: Organizations are increasingly evaluating their land and buildings to see if their value can be realized in other ways, for example, by selling it and then leasing it back to raise finance for other developments. Land and buildings can also be rented out, even to competitors – a warehouse can be more fully utilized by storing another company’s products as well. Farmers may be able to get a better return from converting their fields to golf courses or space for holiday caravans. >>>