Executives in real estate increasingly eyeing costs and agility

06 July 2017 Consultancy.uk 5 min. read
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Businesses looking for office space are increasingly eyeing efficiency and agility, in light of increasingly uncertain times, according to a new report.

The study from consulting firm CBRE found that occupiers of office space in Western Europe and North America are set to contract their presence in the near-term, whereas those in India and China are forecast to expand their presence. Key amenities meanwhile remain an important part of portfolios for companies across the globe.

The paper explores occupancy levels and use expectations for business across the globe, along with key trends faced by businesses as well as trends in consequent decision making by businesses. The report is based on responses from businesses across three major global regions.

Space efficiency and user experience

The research finds that businesses continue to focus on space efficiency in their office space management strategies. Space efficiency is noted by 58% of organisations as driving considerable cost management benefits, although the number is down from 79% last year. Space agility too is noted as key to respondents as part of their wider strategy (cited by 40% of respondents), up 5% on the 2016 survey result.

Respondents also said that user experience has increased in importance. Amenities are cited as a key driver for employee satisfaction in the Americas, while globally 86% of respondents saying that they are adapting their workspace standards with the goal of employee satisfaction. 68% of respondents in the EMEA region say that they are seeking to meet employee comfort expectations through indoor environmental quality improvements, with 72% of respondents globally preferring WELL certified buildings. In the Asia-Pacific region 52% of respondents are engaged with connectivity & collaboration, while 53% said that they plan to implement activity-based working.

Economic uncertainty is a global and growing sentiment

Another factor indicated by the study was that businesses are increasingly faced by global uncertainties. The number of respondents that cited econoic uncertainty in their top three challenges grew considerably in the US, from 36% last year to 52% this year. The EMEA region too saw an increase in those citing uncertainty in their top three, from 58% last year to 64% this year. In the Asia-Pacific region economic uncertainty remain high at 68%.

Respondents were found to be mainly concerned about the US presidents policies and the consequence of Brexit on their wider operations. Regarding changes in the APAC region, Ada Choi, CBRE’s Senior Research Director for the region, explains, “Last year, the uncertainty in the APAC region was largely surrounding the China slowdown and the consequent volatility in the financial market. But the source of uncertainty is now shifting more to policies, in particular whether protectionism will rise in the U.S. and consequently affect Asia Pacific’s outsourcing and export demand.”

Expected portfolio change over three years

The research asked respondents to consider their respective plans to grow or contract their presence in various global regions over the coming decades. The research points to general expansion across the globe – although Western Europe and North America are in for contraction.

India is set to see the biggest expansion in portfolio, with almost 50% of respondents planning to expand whour around 17% say that they will contract, followed by China, with 36% planning an expansion and around 17% planning to contract. South East Asian respondents returned more reserved responses however, with expansion and contraction planning companies, set for a net gain of 10%, with a similar story noted by researchers in Central and Eastern Europe.

Western Europe is projected to see the biggest decrease, at almost 40% of respondents saying that they plan to contract in the region, while around 18% say that they will expand their operation. North America too shows considerable numbers of organisations planning to contract, at around 35%, while around 25% say that they will expand.

Amenities are provided in your portfolio

The report adds that various amenities are increasingly important to their portfolio properties – although considerable differences are noted between regions. Food & beverages were, for instance, provided in the portfolios of 73% of respondents from the Americas' portfolios, 74% of EMEA portfolios, and 57% of those from Asia-Pacific. Health and wellness features were less well catered for, at 54% of Americas, 45% of EMEA and 36% of Asia Pacific respectively.

In terms of work/life integration meanwhile, the research notes that most regions have coffee bar access, although canteens are predominantly only a feature of the Americas. Fitness centres too are often found in American portfolios with wellness facilities & services present in both the Americas and APAC. Showers are the main work/life integration feature noted by respondents in all regions.