By: AJ Magner, Executive Vice President, Jones Lang LaSalle
Fast-moving market performance, innovative technologies and new workplace strategies are quickly forcing real estate investors, owners and teams to look ahead and adjust current strategies. It’s a great time to work or invest in the real estate sector; however, CRE executives and teams must advance workplace strategies and services to maintain (or obtain) a competitive edge.
To analyze and hypothesize the state of CRE, JLL elicited insight from the global community through interviews and surveys; more than 600 industry executives from 39 countries participated. JLL pinpointed five real estate trends shaping the future of the market – highlighted within our recently released research, Risks Ahead: Global Corporate Real Estate (CRE) Trends 2013.
With change comes risk, and, with risk comes opportunity. Below, I’ve highlighted five opportunities to consider as your business team reacts to industry trends, and formulates a game plan for the second half of 2013. Feel free to reach out to myself, or other experts at JLL, for more insight on global (or local) trends.
1. CRE Strategy Becomes Top Priority Within Business Strategy
“72% experience high expectations to deliver clear productivity enhancements for the workplace and 61% for the workforce.”
A business unit has many moving parts. High-level executives are recognizing the importance of CRE strategy as it relates to end goals, like cost savings and employee productivity. As a result, a large majority of CRE leaders are asked to report straight to senior-level executives (about 60%). So, executives are quick to address CRE spending, as well as increased demands related to cost savings and performance. If teams don’t accommodate the demand with change, the industry risks perceived underperformance.
The Opportunity: As businesses emphasize the importance of CRE, now is the time to leverage expertise for a lasting impact on organizational success – as well as client success.
2. Industry Outsourcing Holds Exponential Potential
“30% of respondents view CRE outsourcing as an entirely strategic relationship.”
Outsourcing is catching on within the CRE industry. Research found that nearly all companies now outsource a portion, if not more, of CRE responsibilities (92%) to outside parties. As internal CRE teams seek outside insights and expertise, most frequently outsourced activities include specialist services and project management.
The Opportunity: Businesses can enhance real estate activities by partnering with those who hold the desired expertise – without the headache of hiring in-house.
3. Business Owners Seek Workspaces Optimized for Productivity
“67% maintain that the quality of their workspace has improved during the last three years, with 68% suggesting that space utilization has also increased.”
The optimized workspace has become top-of-mind for successful business owners globally. With the economic upturn, employers and CRE leaders are able to take a new, narrowed focus on increased productivity, as well as cost savings. The subject of that focus is often “workplace transformation,” as referenced in Risks Ahead.
Workplace transformation involves space utilization, occupancy planning and data. CRE professionals use data to reduce underutilized space, and improve the quality of the space. But, if leaders choose not to spend, CRE teams risk losing the opportunity to increase productivity and exercise creative potential.
The Opportunity: Demonstrate the impact that strategic occupancy planning and workplace transformation has on business results, or more specifically, worker productivity. This trend grows the role of CRE expertise, in the business landscape as well as in the CRE scene.
4. The Role of CRE Expands, Merges with Neighboring Business Lines
“51% identify with the model of shared services integration between CRE and finance; collaboration with HR, IT and finance functions is forecast to shift to an integrated shared services model over the next three years.”
The increased demand for expertise – namely to enhance workplace productivity and cost savings – places CRE at the center of business decision-making. To do this, the CRE team must work side-by-side with business lines affected or involved, including IT, HR and finance. “Collaborative organizational structures” are predicted to trend in the coming years. The trend may affect not only your CRE team, but also the organizational structure of your business team.
The Opportunity: CRE expertise is a critical piece of the business team. This evolved business structure gives CRE experts the opportunity to take on new responsibilities and solidify the importance of existing duties; it also provides the opportunity to increase collaboration and communication among those in differing fields.
5. Emerging Markets Demand Attention, Investigation
“19% identify lack of transparency within real estate markets as the single greatest challenge when expanding into emerging markets.”
Emerging markets present great risks and great opportunities. Research found that fast-growing markets are also the least transparent. CRE experts must build new “operating platforms” to guide strategy; however, this proves difficult with little insight into market activity and oncoming shifts. CRE teams risk dedicating too much time to emerging markets, but addressing the issue is inevitable as emerging markets are expected to grow quickly in the coming years.
The Opportunity: Ensure that your team is educated on the risks of underperforming in emerging markets. It offers the opportunity to exercise creativity, leverage expertise, and gain a competitive edge by building new operational platforms.
Worldwide trends spill over into the Midwest economy; it’s critical to keep an eye on industry trends both internationally and nationally. We encourage the ongoing innovation of Great Lakes business and the advancement of commercial real estate. If you’d like to discuss a partnership or would like to schedule a consultation, send your request to firstname.lastname@example.org. Also, we invite you to post questions or comments below!
For details on the Global Corporate Real Estate Trends survey, download the full report.
About the Author
AJ Magner is Executive Vice President located in Jones Lang LaSalle’s Cleveland office. AJ oversees corporate account teams and relationships. He works with both corporate and non-profit clients, nationally and internationally. View AJ Magner’s bio or connect with him on LinkedIn.