In an uncertain environment, flexibility is key.
That’s one of the main takeaways from CBRE’s recently released 2017 Global Occupier Survey, which found that a growing number of respondents were concerned about the unpredictable outcome of shifts underway in the global economy.
These concerns are based on a variety of factors, with unique points of emphasis in different global markets. In the U.S., for instance, uncertainty centers around questions about the tax, regulation and trade policies the current administration plans to pursue. In Europe, meanwhile, the U.K.’s Brexit decision was cited by more than half of respondents as an issue due to “its potential impact on trade, operations and labor,” the report notes.
In Asia Pacific, attention has shifted from China’s slowdown to concerns about whether the U.S. is moving in a more protectionist direction, and how that might affect demand for APAC exports.
Globally, 59 percent of occupiers surveyed cited economic uncertainty as the primary challenge they are facing. In the Americas, the number was 52 percent of occupiers, up 16 points from last year. In EMEA, the figure was 64 percent, up 6 points from 2016. And in APAC it was 68 percent, the same as the year before.
Sophisticated occupiers are seeking ways to create flexibility with the goal of ‘de-risking’ their portfolios because the future is hard to predict.
The report finds that occupiers are responding to this increase in uncertainty by prioritizing flexibility. Forty percent of respondents said they were increasingly looking to space agility as a strategy for managing their real estate portfolios. This was up 5 percentage points from 2016.
“Sophisticated occupiers are seeking ways to create flexibility with the goal of ‘de-risking’ their portfolios because the future is hard to predict,” Brandon Forde, executive managing director of CBRE Advisory & Transaction Services, says in the report. That flexibility takes a variety of forms, including more agile workplace designs, more agile workplace offerings ranging from traditional office spaces to co-working and on-demand options, and more agile leasing structures featuring shorter terms and more flexibility for expansion and contraction in later years.
Mike Gedye, managing director of Advisory & Transaction Management at CBRE cited the case of a large oil-and-gas company that is building its alternative fuel business as an example of the growing desire for workplace flexibility.
Typically, Gedye says, the company would have added new employees to the corporate headquarters, expanding there as needed. In this case, however, the company sent these employees to work at a shared space offsite, allowing the team to “develop solutions in an environment that is more conducive to creativity,” and the company to “road test new ideas before they bring back all or parts of the team to the mainstream,” he says.
The report indicates that interest in shared workspaces is on the rise and is expected to continue to grow in coming years. Overall, 30 percent of respondents say they currently have plans to use a shared workplace, with 45 percent saying they plan to begin doing so by 2020.
This growing demand for flexibility means an increased role for real estate leaders and providers, the report suggests.
“Corporate real estate leaders have most often transitioned from being an order-taker to an order shaper; a true advisor to the C-suite,” says Karen Ellzey, executive managing director of CBRE’s Research & Consulting Practice. “The goal of creating value for the enterprise is a timeless discussion we have with our clients.”
31 August 2017 by Daniel Rosen