Risks ahead: the transformation of the corporate real estate function

Abstract

Purpose

This paper aims to detail key findings from Jones Lang LaSalle's (JLL's) biennial Global Corporate Real Estate Trends (GCRES) 2013 study and highlight risks for corporate real estate (CRE) departments arising from global trends.

Design/methodology/approach

JLL's second GCRES report is based on a survey conducted in 2012, concluding in December. Its findings are based on 636 responses from CRE executives spread across 39 countries, representing a 24 increase in respondents from the 2011 survey. The base sample used within the report covers 545 companies, each employing more than 1,000 people worldwide. Survey responses reflect the views of CRE leaders from a diverse range of sectors, domicile and operational locations, as well as companies of varied size.

Findings

The paper focuses on risks to the CRE function arising from the most significant trends, such as portfolio right-sizing in mature US and European markets versus growth opportunities in emerging markets. Such risks include excessive real estate cost cutting and lack of investment capital for revenue-enhancing workplace strategies; procurement-driven outsourcing decisions; the focus on cost-per-square-foot rather than more holistic productivity metrics; the growth of shared services; and the challenging of entering less-developed markets that have significantly less market transparency that mature regions. CRE professionals will gain valuable and timely insights into current trends, along with practical guidance for responding to these trends and risks.

Research limitations/implications

This paper focuses on global trends. However, mature and emerging markets tend to diverge in terms of trends and risks facing CRE executives. An individual country may diverge significantly from the overall global trend.

Practical implications

The global financial crisis increased the importance of CRE to CEOs as a tangible lever for enhancing revenue growth – even as cost-cutting has resulted in historic lows in the departmental budgets, and a slashed pool of in-house talent. Amid continuing global economic challenges, CRE executives now face new C-suite demands to dramatically affect the culture, productivity and performance of their companies.

Originality/value

This study is one of very few that includes data about CRE outsourcing trends, the growth of the shared services model and numerous other trends affecting CRE executives.

Citation

Sharp, D. (2013), "Risks ahead: the transformation of the corporate real estate function", Journal of Corporate Real Estate, Vol. 15 No. 3/4, pp. 231-243. https://doi.org/10.1108/JCRE-09-2013-0021