Real Estate Management - Chicago Transit Authority
To carry out its mission (“We deliver quality, affordable transit services that link people, jobs and communities.”), the Chicago Transit Authority by necessity owns and leases operating and administrative support properties throughout its service area. These include right-of-way, subway and elevated stations, bus turnarounds, administrative space, and a variety of other real estate.
In March 2005, AECOM Consult was retained to assist the CTA in an analysis of operations throughout the Authority. Although the CTA had dramatically reduced costs during the preceding eight years, they sought additional savings.� The consulting assignment was divided into nineteen components, one of which was Real Estate. The Real Estate analysis was subcontracted to John Burns Consulting Company, a LaGrange, Illinois firm specializing in real estate and particularly building operations.
With a focus on asset management, Rutledge Company was a logical complement to John Burns Consulting Company, and Rutledge was asked to participate in the project.
As a team, Burns and Rutledge interviewed key CTA real estate officials, studied property inventories, reviewed various operating policies (what must be done) and procedures (how to do it), made property visits, and analyzed financial data. In our work, we collaborated closely with consultants looking at other components of CTA operations.
In mid-2005, we submitted our detailed recommendations to AECOM and our findings were incorporated into their comprehensive report.
For most entities, real estate management is not obviously central to the mission. Real estate is a resource necessary to carry out the primary function of the organization, in this case moving people safely, efficiently, and comfortably. By focusing on the real estate, however, the asset manager usually can find opportunities to increase revenues, identify areas to reduce costs without sacrificing functionality, and improve the contribution to the owner’s mission and image.
A particular difficulty for any public agency is the need for transparency. Transactions that can be negotiated confidentially in the private sector must be done by a governmental agency in the light of public scrutiny. Intended to assure propriety, this requirement often adds time and complexity to the process and detracts financially from the final result because of the impact on the other party to the transaction. For example, with a wide variety of vacant spaces available for lease, a large retail chain of coffee shops may be reluctant to participate in a public tender for a government-owned space. Instead, they will negotiate privately with the owner of nearby space.
The CTA has adopted several of the real estate recommendations found in the final report including the centralization of real estate management and the outsourcing of additional functions.
The success of this assignment was due to the complementary nature of the expertise and experience of the Burns and Rutledge firms and to the deep commitment of the CTA organization to a continual search for improvement.
Rutledge Company LLC