This hugely recognizable office building owner and manager is also the largest REIT in the United States, with 595 office buildings comprising 109.4 million square feet of space. But, that’s changing at Chicago-based Equity Office - for the better. According to the company’s response to Buildings’ Who’s Who questionnaire, approximately $56.9 million worth of new construction and modernization will be completed by year-end, with another $1.2 billion devoted to new construction in the relatively near future. True to the term “office” in its name, the REIT has been busy buying properties in its target markets while selling non-core (mostly industrial) properties over the past few years. In early August, such strategies have combined to help Equity Office generate a net income of $87.9 million for second-quarter 2006. That’s always significant, but it’s even more so when compared to the company’s net loss of $205.4 million for the comparable 2005 period, according to National Mortgage News.
The company is also becoming more lean and mean, with plans to cut 360 positions by the end of the year - a response that Equity’s executive management claims will result in “a flatter, more-nimble, more-efficient organizational structure.” As a Fortune “Most Admired Company” and the first real estate company to be named to the S&P 500, Equity Office has a history of attracting top talent from across diverse industries. This planned organizational restructuring will certainly benefit from such expertise. In concert with slimming down its personnel numbers, Equity Office also anticipates reducing overhead costs to bring the organization more in line with its reduced size.
Such an aggressive approach to reach new levels of economy may not be popular, but it’s certainly ballsy. The industry will be looking at Equity Office’s second-quarter 2007 numbers to determine its results, and we may find others following suit.