According to a report launched today by Deloitte Touche Tohmatsu Limited (DTTL) entitled Office politics, improving public sector property management, the onset of public sector cuts is driving fundamental changes to the size and shape of governments around the world. As a result, property management is emerging as a key imperative for government cost effectiveness—resulting in better data, more innovation, and more aggressive utilization of space to drive efficiencies.

“Reforms that target leaner, smarter working practices are prompting government leaders to take a hard look at their asset base—not only in central departments, but across local authorities, operation sites, and health and social housing,” said Paul Macmillan, DTTL Global Leader, Public Sector.

For example, after the financial crisis of 2008 the UK government faced across-the-board cuts. But through better control over lease renewals, the government was able to save £190 million over the past two years, according to the UK Cabinet Office1.

The UK government isn’t alone in recognizing the value of more strategic asset management. A report by CB Richard Ellis (CBRE) found that in 2009, sales of government property in Europe amounted to €840 million. “On the face of it, this trend is significant,” said Tom Harris, Head of Public Sector Research, Deloitte United Kingdom. “Not only does it represent concrete savings, but also a shift in mindset around the management of government assets.”

The report identifies five critical success factors that offer insights on smart property strategies that address shrinking budgets and shifting needs: 1) prioritize real estate management and empower asset managers accordingly, 2) join up corporate services, 3) collaborate more effectively with the private sector, 4) work together to improve property data collection and use, and 5) build an integrated strategy across agencies.

“Globally, governments are working to consolidate operational locations and capitalize on their scale to strike value-for-money deals with landlords,” said William Eggers, Research Director, DTTL Public Sector. “But real cost penetration will require a bolder approach and will only emerge through collaboration across departments and agencies, a smarter utilization of floor space, and a fundamental rethinking of the way public sector assets are distributed, as well as key cultural changes.”