Risks Ahead: Global Corporate Real Estate Trends 2013

Risks AheadGlobal Corporate Real Estate Trends 2013

Jones Lang LaSalle 3
Tod Lickerman
Global Director and CEO
Corporate Solutions, Americas
John Forrest
Corporate Solutions, Asia Pacific
Vincent Lottefier
Corporate Solutions, Europe, Middle East
and Africa
However, we believe that with increased
risk comes even greater reward. If the
right decisions are taken, those who
effectively manage the risks will be
rewarded with the opportunity to drive
productivity enhancements and corporate
competitiveness.
We sincerely thank those of you who
shared your thoughts and perspectives.
Your input has provided a clear picture of
the pressures facing CRE teams across the
world. While the picture is clear, it is also
complex as some geographies and industry
sectors show high degrees of variation.
Accordingly, we will issue additional reports
focusing on country and industry level
results over the remainder of the year, as
well as pieces that dive deeper into the
specific themes and issues raised in this
global report.
To view these reports when they are
released, and to explore the trends in more
detail, visit www.jll.com/globalCREtrends.
Introduction
We are delighted to introduce Jones Lang
LaSalle’s second biennial report on global
corporate real estate (CRE) trends, which
provides powerful insights into the current
condition and future direction of CRE.
More than 600 CRE executives from 39
countries contributed to this report through
surveys and interviews. Their responses
show that amid continuing challenges in
the economic and operating environment,
there are more risks ahead. CRE teams
have been tasked with a broader and more
strategic agenda since our first report was
released in 2011. Five global trends have
emerged, each with its associated risks.
Post the global financial crisis (GFC),
the elevation of CRE has created a new
tipping point. CRE must keep pace with
the increasing speed and demands of the
broader business or risk a return to the
undervalued positioning of the past. This will
require change in the mandate, structure,
positioning and method of CRE.

4 Global Corporate Real Estate Trends 2013 Jones Lang LaSalle 5
Leadership pressure demands
action at both tactical and strategic
levels. CRE teams are being
challenged to impact and add value
to a wider range of agenda items.
A trend that has intensified since our
2011 report, the rising expectations
of senior leaders require CRE
teams to make a step change. This
is challenging given the minimal
investment in in-house CRE talent over
the past few years. There is a scarcity
of the right strategic skills to deliver
clear workplace productivity outcomes
and address the rising focus on worker
productivity. When combined with
resource constraints, the ability to fully
deliver to this agenda is unrealistic.
Risk: Perceived
underperformance if step
change is not realized
What you can do: Be clear about your
priorities. Leverage and partner with
your supply chain and create capacity
so that you can focus on managing
internal stakeholders.
Extended and complex demands
on in-house CRE teams are driving
rapid growth in CRE outsourcing
across more geographies, functions
and corporations.
Those with CRE outsourcing
experience continue to seek innovative
delivery models that harness greater
strategic contributions and deliver
best practice—a trend that has gained
significant momentum since 2011.
Today, they are joined by a growing
number of new corporations taking
varied and sometimes innovative paths
toward strategic outsourcing. Some are
starting out with tactical out-tasking,
while others are progressing quickly by
following the paths taken by pioneers.
The majority view outsourcing as a
partnership, and more and more, are
involving procurement in CRE decision
making.
Risk: Undervaluing external
contributions
What you can do: Take control of your
supply chain. Proactively partner with
your organization’s procurement team
so that it has a better understanding
of CRE and its potential contribution to
corporate strategy. This will reduce the
risk of undervaluing relationships with
service partners or constraining their
ability to deliver over the long term.
Embracing new work styles and
implementing supportive new
workplaces has been a strategic
vision, if not immediate intention, for
years. This is changing rapidly.
Workplace transformation is taking on a
new resonance in developed countries
as senior business leaders respond to
an improving economic environment.
The emphasis is on cost control,
efficiency gains and productivity
improvements. In emerging countries
where strong growth is moderating,
workplace transformation is gaining
relevance and momentum. Globally, if
backed with the required investment
capital, it has the potential to influence
the strategic contribution, financial
impact and positioning of the CRE
function.
Risk: Not investing enough to
fulfill strategic potential
What you can do: Don’t shy away
from the strategic contribution CRE
already makes. Embrace big data,
analytics and performance tracking to
demonstrate value. Be clear on what
has and can be achieved. But, be
clearer still on the investment needed
to maximize the strategic contribution
CRE can make, particularly in
relation to the workplace and worker
productivity.
A greater focus on workplace
transformation calls for a cultural
shift within the CRE team. CRE
teams need to become adept at
working across the organization and
positioning themselves as agents
and managers of change across
shared services.
Collaboration between CRE,
information technology (IT), human
resources (HR) and finance is already
occurring with surprising intensity on
an ad hoc, project basis. In the future,
collaboration—possibly driven by
changes in organizational structures—
will be necessary if true workplace
value is to be realized. Partnering with
these shared services must become a
CRE core competency. This leadership
opportunity has the potential to garner
more influence and standing for CRE
within the organization.
Risk: Losing influence and
standing as a specialist
What you can do: Take the lead.
Use real estate and the workplace
as the common ground for greater
collaboration with functional areas such
as IT, HR and finance. Engage with
your support service counterparts to
identify the intersections with CRE and
clearly articulate their value.
The CRE function remains tasked
to deliver operational platforms
in select growth markets. These
markets will be central to driving
corporate competitiveness.
Senior business leaders will have high
demands for speed and quality of
delivery in emerging markets that lack
transparency and are operationally
challenging. Time and costs can
escalate rapidly, while compromises
around the quality of the real estate
solution are inevitable. Delivery is a
significant and often underestimated
drain on the finite resources and
skills of the CRE function. This can
put the reputation of CRE across the
wider business at risk unless carefully
managed.
Risk: Damaging reputation
through delivery failure
What you can do: Don’t let emerging
markets become CRE’s greatest
reputational risk. Manage expectations
and educate the business about the
challenges of delivering real estate
solutions in less transparent markets.
Ensure this is clearly communicated
early in the process.
Executive Summary
Five global trends are
shaping the future of
CRE
CRE teams face increasing pressure. When combined with a lack of investment or injections of new talent into these teams over recent years,
this points to significant risks ahead. However, the many risks produced by the current business climate also present incredible opportunities
for CRE teams. Those that proactively lead their organizations to a more productive workplace will be the winners. CRE teams are now
uniquely positioned to dramatically impact the culture, collaboration and performance of their companies. This position requires a fundamental
rethink of the CRE contribution—one that will shape not only the future form and function of the CRE team, but also its opportunity to add
strategic value and deliver competitive advantage.
Expectations and
pressures build,
heightening the risk of
underperformance
1
Increased demand
is leading to faster-
paced evolution of CRE
outsourcing
2
Workplace transformation
is the key to unlocking
worker productivity and
optimizing portfolios
3
CRE must become a
collaborative change
agent4
Failure to deliver in
emerging markets will
become one of CRE’s
greatest reputational risks
5
54
123

Expectations and pressures build, heightening the
risk of underperformance
Global Trend 1:
• Reporting primarily to the C-suite—
senior company executives such as
the CEO, COO and CFO—has enabled
CRE teams to strengthen the alignment
between business and CRE strategy.
However, economic realities and capital
expenditure constraints have maintained
pressure on CRE teams to implement
short-term tactics, often to the detriment
of longer-term strategic moves. This
focus has been aimed at bolstering
corporate financial performance through
cost savings and/or capital release.
• Most CRE teams are finding it
challenging to continue achieving year-
on-year cost savings targets through
tactical means, as most of the easier
opportunities within portfolios have
already been realized.
• A more strategic set of demands is
therefore gaining significance, such as
driving improved workplace and worker
productivity. These fresh demands apply
further pressure to CRE teams and
expose structural flaws that jeopardize
their future contribution and position.
• Corporate resistance to capital
expenditure, the sometimes small
and fragmented structure of the CRE
function, inadequate access to deep
data and analytics to measure value and
a fundamental skill and knowledge gap
within CRE teams all present barriers to
meeting this rising demand.
• The future qualities perceived as most
required by CRE teams suggest that
these capacity caps and skill gaps will
become even greater obstacles to their
contribution and ultimate success.
6 Global Corporate Real Estate Survey 2013
Only 28%regard
themselves as “well
equipped” to meet the
various tactical and strategic
demands now being placed
upon them
68%view demand
from the C-suite and
senior leadership as being
strongest for improving
the productivity of the real
estate portfolio
72%experience high
expectations to deliver clear
productivity enhancements
for the workplace and 61%
for the workforce
75%of
respondents experience
increasing demand from
senior business leaders
to reduce direct real
estate costs
More than 70%
cite increasing tactical
demands in areas such
as enhancing workplace
utilization rates and
reducing operating
costs
48%view financial
constraints as the greatest
limitation on bringing more
strategic value to their
business through CRE, with
34% citing lack of effective
data and analytics as the
biggest constraint

Today
Three years
from now
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Moderately alignedEntirely aligned
Not aligned Not aware of any corporate goals
Minimally aligned
1%1%
C-Suite
58%
Managerial
26%
Executive Operational Other
14%
Close to 60% of global CRE heads report directly into the C-suite (Fig 1), a relationship that
has continued to develop since the onset of the GFC. This has ensured that the alignment
between corporate strategy and CRE strategy has become, and will continue to be, strong
(Fig 2).
Fifty-two percent of CRE executives describe corporate and CRE strategies as being
“entirely aligned” today. This will increase to 72% in the next three years. This alignment
enables real estate issues or opportunities to be flagged early in strategy development. It
also speaks to the continued rise in importance of the CRE function.
Senior leadership continues to demand swift and decisive action to identify and secure
cost savings. Expectations around the size of cost savings from real estate have been
high and sustained. CRE teams are responding with a range of tactical real estate plays to
generate cost savings (Fig 3). However, the challenge of continuing to deliver sizeable cost
savings year-on-year through tactical initiatives is enormous. Much of the easier cost-saving
opportunities within portfolios have already been taken.
For CRE teams, this is problematic because the inherent inflexibility of real estate portfolios,
together with wider market forces, creates inertia and forces longer-term thinking.
Figure 3: Increasing tactical demands being placed on CRE
Figure 2: Alignment of CRE strategy to corporate strategy, today and three
years from now
Figure 1: Reporting lines for the global head of CRE
QUESTION: How are the demands of senior leadership/C-suite on the CRE team changing in the
following areas?
Base: 545 respondents (those who responded that demands are increasing)
Hard-line reporting into
the C-suite strengthens
strategic alignment
Uncertain economic
conditions mean that
demand for short-term
cost savings through
tactical real estate
initiatives is still a
priority
75%
74%
73%
64%
63%
57%
49%
28%
Reducing direct real estate costs
Increasing utilization of existing buildings in portfolio
Reducing the operational costs of the real estate portfolio
Challenging the business about its presumed space needs
Limiting exposure to future real estate costs
Getting clear on portfolio size/opportunities via data collection
Reducing the size of the portfolio
Running own vs. lease assessments
QUESTION: To what level of the organization does the global head of CRE currently report?
Base: 470 respondents
Note: C-suite refers to senior company executives such as the CEO, COO and CFO; managerial level includes
presidents, vice presidents, managers; executive level includes officers, supervisory roles; operational level includes
administrators, personal assistants and clerks.
QUESTION: To what extent is your CRE strategy aligned to your company’s broader business
strategies/corporate goals?

Global
Americas
Asia Pacific
Well equipped to
meet all demands
28%
37%
21%
25%
Can meet
most demands
65%
58%
67%
69%Europe, Middle East
and Africa
Ill equipped to meet
the demands
7%
5%
12%
6%
Figure 4: Increasing strategic demands being placed on CRE
Figure 5: Company expectations of productivity outcomes from CRE
Figure 6: CRE leaders’ ability to meet new demands
QUESTION: How well equipped do you feel to meet the demands listed in Figs 3 and 4?
Greater engagement with the C-suite and more alignment between business and CRE
strategy has led to an uncomfortably broad range of demands now being placed on CRE
professionals. The result is that only just over a quarter of CRE executives believe that they
are “well equipped” to address such demands (Fig 6). The maturity of CRE outsourcing in
the Americas is reflected in the nearly 40% of CRE executives located here that feel “well
equipped”, while in other parts of the world the perceived ability to rise to the challenge
is limited.
Productivity
improvement is the
standout strategic
priority and leads the
demands being placed
on CRE teams
A small proportion of
CRE leaders feel “well
equipped” to meet the
varying demands being
placed upon them
Reporting to the C-suite brings with it enormous scrutiny over the cost, structure and
utilization of the real estate portfolio as senior leaders demand a more strategic approach
from CRE teams (Fig 4). Their demands seek to provoke a transformation within portfolios,
most notably to support enhanced levels of workplace and worker productivity. Expectations
around delivering improvements in productivity are on the rise across the board (Fig 5). While
workplace productivity improvement was featured in our 2011 report as an emerging trend for
best-in-class workplace strategy, it is now a “high expectation”. It is also taking CRE beyond
the workplace to encompass people, business and asset productivity.
QUESTION: What productivity outcomes is your company expecting the CRE function to deliver?
Base: 545 respondents (those who responded that expectations to deliver in these areas are “high”)
QUESTION: How are the demands of senior leadership/C-suite on the CRE team changing in the
following areas?
Base: 545 respondents (those who responded that demands are increasing)
68%
65%
65%
56%
55%
54%
53%
46%
46%
Enhancing productivity of the real estate portfolio
Transforming the quality of the workplace
Presenting scenarios and solutions to the business
Bringing more flexibility to the portfolio
Enabling remote or mobile working
Driving the sustainability agenda
Aligning CRE with business drivers and functional areas
Delivering a platform for growth in select markets
Attracting and retaining talent
Workplace
productivity
72%
People
productivity
61%
Business
productivity
57%
Asset
productivity
47%

Figure 7: Major constraints hindering CRE from enhancing its strategic
position
Figure 8: The key requirements of CRE teams
QUESTION: In your opinion, what are the top two constraints that are hindering CRE from
enhancing itself as a strategic value add to your organization?
Structural and financial
constraints present
a significant risk to
addressing leadership
demands
While few position themselves as being “ill equipped” for the challenges ahead, it is clear
that new skills and greater capacity will be required if CRE is to tackle such a broad and
challenging agenda. The existing structure and skills of CRE teams will constrain CRE from
enhancing its strategic position, as recognized by around a quarter of CRE executives
(Fig 7).
However, the primary constraint identified is financial. This may be considered a refreshing
change from the top constraint in our 2011 report, which was “uncertainty around the future
shape and size of the business”. The focus has now shifted to more internal obstacles. The
lack of budget ownership, which often sits with another function, market or business line, can
be considered an aggravating factor.
Almost half of CRE executives recognize that broader strategic agendas cannot be fully
met without some investment and one third feel restricted by the lack of effective data and
analytics to measure value. By comparison, financial constraints are of little concern in Japan
(4%), but having a fragmented team comes in as the top constraint (50%) reflecting the CRE
organizational immaturity in that country.
The future required
attributes of the
CRE team are not
well served by
current structures
and the risk of CRE
underperformance is
high
The qualities required by CRE teams (Fig 8) suggest that the capacity caps and skill gaps
afflicting CRE teams will be even greater impediments to the contribution and ultimate
success of CRE teams in the future. Of the nine attributes that are important to a CRE
organization, only one represents a real estate specific skill set (“Presenting real estate
options and scenarios”). The remaining key requirements are much more focused on broader
business skills. This will need to be addressed through a combination of investment and
fundamental rethinking of the form and function of the CRE team. Without both, the risk of
CRE teams failing to meet senior leadership expectations remains high.
QUESTION: Rank the importance of the following CRE attributes to your organization.
Note: In this table, responses include the top-ranked attribute only. Totals may not equal 100% due to rounding.
26%
48%
Financial
constraints
34%
Data and
analytics
32%
C-suite
commitment
27%
Fragmented
team
Skill and
knowledge
22%
20%
17%
12%
8%
8%
5%
4%
3%
Forward thinking/Challenging status quo
Presenting real estate options and scenarios
Business acumen/Understanding of broader business
Providing data and insights
Focused on innovation
Efficient stakeholder management outside CRE
Improving the internal reputation of CRE
Improving CRE team communication/Relationship skills
Adding new skills (e.g. change management, financial acumen, etc.)

• Amplified by the emergence of a broader
strategic CRE agenda, capacity caps
and skill gaps within many in-house
CRE teams have in turn fuelled growth
in the CRE outsourcing market. Gaining
momentum since 2011, this tendency will
continue over the next three years, and
is now moving at a much faster pace.
• CRE outsourcing is gaining traction
across more geographies, industry
sectors and corporations. Only 8% of
companies have not outsourced any
aspect of their CRE function, a big drop
from 24% in 2011. This indicates that
CRE outsourcing is quickly catching up
to other outsourced functions—such as
IT, HR and finance—that are seen to be
further along the outsourcing curve.
• Most companies firmly view outsourcing
as a long-term, strategic relationship
seeking to add value rather than a
price-driven, tactical transaction. This
holds true regardless of whether or not
they are currently heavily outsourcing
CRE service delivery. These companies
use outsourcing to draw upon expertise
and skill sets not available within their
own organizations and release internal
capacity to focus on addressing strategic
pressures.
• This strategic viewpoint is important,
given the increasing role that
procurement plays in the CRE buying
decision. There is a perception that
procurement teams lack understanding
of the characteristics of CRE services,
and a growing risk that these qualities
will be overlooked in a price-driven
procurement process.
• Procurement involvement may hinder
the strategic influence of CRE teams.
As such, there is an urgent need for the
CRE community to educate and clearly
articulate its value proposition.
Increased demand is leading to
faster-paced evolution of CRE
outsourcing
Global Trend 2:
Lease administration as well
as energy and sustainability
services are forecast to see
the greatest reduction in
full in-house delivery, both
decreasing by
11%
of those identifying active
procurement participation
believe that procurement
has limited knowledge of
what it takes to secure CRE
services
58%
of respondents view CRE
outsourcing as an entirely
strategic relationship,
while 6% see it as a
purely tactical transaction
30%
have retained project
management, build-out and
design in-house—the lowest
level of any service
type—although just 18%
have fully outsourced
these services
12%
increase in full outsourcing
is expected for both portfolio
and facilities management
and lease administration
services—the highest
predicted increase in full
outsourcing over the next
three years
A 9%
have retained portfolio
strategy work in-house and
only 3% have placed this
service in a fully outsourced
delivery model
52%
have procurement teamsactively involved in CREdecision making; 36% citepermanent involvement
69%
over the next three years
8%do not currently outsource
any CRE services. In
Asia Pacific, this rises to
12%. In both cases, this is
very low compared to 2011
at 24%

9% 21% 33%
Outsourcing
represents a tactical
transaction, mainly
with the lowest-cost
supplier
6%
Outsourcing
represents a strategic
relationship, where
I assess longer-term
value add with
a partner
30%
15%22% 27% 15%21%
14%18% 22% 23%23%
15%34% 18% 18%16%
12%26% 20% 23%19%
19%28% 24% 11%17%
13%17% 29% 18%23%
18%12% 30% 18%
14%11% 26% 22%28%
22%
17%25% 25% 13%19%
14%21% 22% 22%21%
22%52% 15% 3%8%
19%44% 20% 5%11%
Energy and sustainability services
Lease administration
12%42% 14% 19%13%
11%31% 12% 28%19%
Transaction services
Project management/Build-out/Design
Portfolio and facilities management
Portfolio strategy
Property management
Today
Three years from now
Fully outsourced43Fully-in-house 2
Ninety-two percent of companies are practicing some form of real estate outsourcing. The
extent differs between regions, with a greater number of firms headquartered in the United
States and Australia showing the most maturity. Globally, only 8% are delivering all real
estate services fully in-house, a significant decrease from 24% in 2011.
The balance of services performed in-house or through outsourced models is changing
(Fig 9). Specialist and resource-intensive services remain most likely to be outsourced, with
project management overtaking transaction services as the most frequently outsourced
function since 2011. The majority still prefer to retain sensitive elements such as portfolio
strategy in-house. Over the next three years, there will be further advancement along the
outsourcing continuum as CRE teams seek more support from the market in delivering
tactical and strategic real estate activities.
Figure 9: Outsourcing activity by service line, today and three years from now
Figure 10: Current attitudes toward CRE outsourcing
A large majority of CRE executives maintain that outsourcing represents a strategic
relationship where partnership value is assessed over the long term, as opposed to a
minority who see it as a tactical transaction mainly with the lowest-cost supplier (Fig 10). A
growing number of corporations are looking beyond tactical out-tasking and are seeking to
capitalize on the greater value and synergy that comes from deeper, strategic partnerships.
Only a minority of corporations do not use or want to use key performance indicators (KPIs).
Many are starting to push some of the financial and operational risks to external partners and
we are seeing an evolution toward risk-sharing contracts in some cases.
CRE outsourcing is
developing rapidly
across geographies,
industries and a
broader range of
services. Solutions
are being sought,
creating new models,
new interrelationships
and new points of
engagement
CRE executives see
outsourcing as a
strategic imperative
with value derived from
long-term partnership
and the development of
shared goals
QUESTION: How would you best describe the delivery of the following CRE services, today and
three years from now?
Base: 519 respondents (companies that practice outsourcing)
Note: Totals may not equal 100% due to rounding.
Figure 11: The role of procurement in CRE
The active involvement
of procurement in
the CRE outsourcing
decision creates risks
of undervaluing
partnerships and failure
to deliver needed step
change
Procurement is a business function with increasingly strong links to CRE. Thirty-six
percent of CRE executives describe procurement as being actively involved in CRE “on a
permanent basis” (Fig 11). This proportion becomes higher (47%) for the largest companies
in our sample with global headcounts of more than 100,000. Even for the 33% who report
involvement “on an ad hoc basis”, the trend toward greater integration of procurement and
CRE is clear.
There is a lot that CRE executives can learn from procurement, not least in terms of
processes and vendor management. However, there are signs that this can be an unhappy
marriage in some cases. Fifty-eight percent report that procurement has a limited knowledge
of real estate and the nature and complexity of the services being procured. There is a
responsibility for CRE teams, and indeed service partners, to more effectively educate
procurement and articulate the added value that effective CRE management can deliver. The
risk of not doing so is that outsourced models will become price-oriented rather than value-
driven, and desired capacity expansion and innovation delivery will not be realized.
QUESTION: Please rate your current attitudes toward outsourcing on a scale of 1–5.
Base: 519 respondents (companies that practice outsourcing)
Note: Totals may not equal 100% due to rounding.
QUESTION: Is your internal procurement team actively involved in CRE?
Base: 545 respondents; 373 respondents with procurement involved
36% Involvement on a permanent basis
42% Knowledgeable about CRE
33% Involvement on an ad
hoc basis
58% Limited knowledge of CRE
We hire external
procurement consultants
3%
No involvement
of procurement23%
3% No internal
procurement team
Other2%

However, up to
point to no change in the
quantity, quality, utilization
or density of the workplace
over the last three years
27%
have already overseen areduction in the size of theirreal estate portfolio over the
last three years
31%maintain that the quality
of their workplace has
improved during the last
three years, with 68%
suggesting that space
utilization has also increased
67%
• CRE teams have, where market forces
and tenure allow, already reduced the
size of the occupied portfolio while
simultaneously increasing the quality,
occupation density and utilization rate
of the space. While this is encouraging
in the context of productivity, there
is growing pressure from senior
management for more to be done to
unlock the productivity of workers.
• The standout limitation in driving
workplace transformation and the
creation of more productive spaces
is a financial one. The lack of
investment capital available to underpin
transformation programs is a far more
significant constraint than the cultural
and managerial resistance seen as the
top restraints in our 2011 report.
• This represents a tremendous risk to
CRE teams. While team structures and
outsourced relationships can be shaped
to accommodate a strategic agenda, real
progress will always be stifled without
investment capital.
• Occupancy planning data, a cornerstone
of workplace strategy and planning,
is the most desired planning tool to
enhance future CRE performance.
identify occupancy planning
data as the most desired
technological tool needed to
enhance CRE performance
46%
Workplace transformation is the key to unlocking
worker productivity and optimizing portfolios
Global Trend 3:
• We have seen how the new and
extended CRE agenda shines the
spotlight on organizational productivity.
Workplace is a key driver of that agenda
and represents a unique opportunity
for the CRE function—if appropriately
structured, resourced and focused—
to make a strategic, business-wide
contribution.
regard the lack of investment
capital as the key constraint
to workplace transformation,
followed by 15% who
cite difficulty in changing
management styles to
support workplace change
as the biggest barrier
22%believe that space utilizationwill increase further over thenext three years, with only42% believing that the realestate portfolio will increasein size over this period
79%

There is no doubt that CRE portfolios have undergone a process of transformation over the
past three years (Fig 12). Ongoing pressure on operating costs has led more than two thirds
of CRE executives to increase the utilization rate of space on a global basis.
The quality of space has also been a focus, with two thirds of CRE executives pointing to
improvements in the space occupied from either a design or environmental point of view.
Occupational densities have increased as well, with 62% noting an increase in the ratio of
headcount to unit of space.
The transformative pressures that have been felt by CRE will only intensify over the next
three years (Fig 12). CRE teams will be faced with the challenge of further increasing
densities and utilization rates without negatively impacting quality or worker experience. This
suggests that demand will increasingly be for modern, flexible, densely occupied space of a
high quality, which supports creative and collaborative work and enables talent attraction and
retention.
Figure 12: The extent of workplace transformation over the last three years
and envisaged over the next three years
Figure 14: Technological tools most desired to achieve future vision
Figure 13: Constraints in delivering workplace transformation
The standout limitation in driving workplace transformation and the creation of more
productive spaces is recognized as a financial one (Fig 13). The lack of investment capital
available to underpin workplace transformation is a far more significant constraint than the
cultural and managerial resistance that has often been highlighted in accounts of workplace
programs and also seen in our 2011 report.
This is not to underplay the impact of these softer, people issues. Rather, it is to note that
presently, the constraint being placed on capital investment is most powerfully impacting
the workplace transformation agenda. This leads to a tremendous risk because without
investment capital, any real progress will always be stifled. CRE teams must make a stronger
case for further investment if the productivity agenda is to be fulfilled.
Workplace productivity
is being addressed
through CRE, but there
is recognition that more
could and should be
done
Numerous constraints
have limited the
scope of workplace
transformation to date,
but key among these
has been the lack of
investment capital and
occupancy planning
data
It is clear that some key technological tools need to be in place to support workplace
planning. Forty-six percent of CRE executives need occupancy planning tools to help them
deliver to a higher level in the future (Fig 14). Occupancy planning is core to the delivery
of any workplace solution and also in measuring productivity gains. A lack of adequate
technological tools has been identified and key industry players are working toward
developing more comprehensive solutions.
46%
33%
33%
31%
26%
Occupancy planning data
Portfolio dashboards
Financial modeling
Rental benchmarking
Lease management
QUESTION: In your organization, what is the single most limiting factor in driving workplace
transformation?
Note: Table excludes “Others” (6%) and “None” (4%). Totals may not equal 100% due to rounding.
QUESTION: What technological tools would most enhance your performance as a CRE
professional?
Notes: In this table, responses include the top-ranked attribute only. Less desired tools are “retail network planning”,
“electronic documents” and “other” choices.
QUESTION: To what extent has your global corporate workplace transformed over the last three
years/will transform over the next three years in terms of quantity, quality, utilization and density?
22%
15%
14%
10%
7%
7%
7%
5%
2%
Lack of investment capital
Difficulty in changing management styles
Employee resistance
Lack of management engagement
Lack of sustained C-suite sponsorship
Lack of opportunity through real estate tactics
Complexity arising from cultural diversity
Difficulty in building a compelling business case
Technology deficiencies
IncreasedDecreased
The last three years Next three years
Quantity Quality Utilization Density
48%
31%
42%
36%
67%
73%
68%
79%
62%
72%
6% 4%
12%
7%
15%
9%

• Advancing a more challenging strategic
agenda—one that focuses specifically
on workplace and worker productivity—
requires closer association with other
corporate support functions.
• IT, HR, finance and CRE are already
collaborating in the pursuit of current
workplace strategies. For the majority,
this remains an ad hoc, project-based
activity. However, this collaboration is
happening much faster than previous
industry predictions.
• The formation of collaborative
organizational structures, such as
shared services, is likely to increase
over the next three years. This presents
a leadership opportunity for CRE teams
to really drive the adoption of strategies
that enhance workplace and worker
productivity.
• CRE teams can take a strong leadership
role in these structures and become
company-wide change agents. This will
extend the relevance and impact of CRE.
CRE must become a collaborative change agent
Global Trend 4:
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
51%
45%
are collaborating with the IT
function within their organization
on an ad hoc or project basis, with
almost one third pointing to more
formalized collaboration or shared
services integration
14%
39%
of respondents reside within a
dedicated CRE department
report that their organization
has no global head of CRE,
pointing to decentralized
and fragmented CRE
structures for some
8%have the CRE function contained
within an administrative or
shared services group

The next wave of
collaboration will be
crucial to CRE success
and is leading to
structural change
Increased and
potentially formally
structured collaboration
between support
services could represent
a new elevation
opportunity for CRE
As the workplace productivity agenda takes hold over the next three years and programs
of transformation are financed and pursued, more formal collaboration structures will be
required. This could see CRE being absorbed into an administration or shared services
structure (Fig 17). It will force alignment between functional teams and, in turn, lead to
further alignment with broader business strategies and goals. This means a core skill for
CRE executives going forward will be to actively collaborate with HR, IT and finance. This
integration is expected to increase significantly across all three disciplines, with HR the
frontrunner at a staggering 67% increase over the next three years.
It is natural for CRE professionals to be anxious about the development of shared services
models over the medium term, but they do present opportunities. Rather than being
perceived as a threat to influence or specialization, CRE teams should embrace these formal
collaboration structures as vehicles for delivering positive change across their organization.
We believe CRE teams should be taking a strong leadership role in these new configurations
to establish creative and productive workplaces. Adopting the position of company-wide
workplace change agent (rather than a tactical specialist) will extend the relevance of CRE
and mitigate any risk of becoming marginalized.
Figure 17: Level of shared services integration, today and three years from
now
QUESTION: How would you describe the collaboration of CRE with the following business
functions today and in three years’ time?
QUESTION: Within what department does the global head of CRE reside?
Note: Table excludes “Others (7%). Totals may not equal 100% due to rounding.
Almost 40% of respondents globally have a dedicated CRE department in which a global
head of CRE resides (Fig 15). This is more common as the size of the company increases.
Forty-nine percent of the largest companies within our sample—those with a global
headcount exceeding 100,000—have a dedicated CRE department.
As senior business leaders demand a more strategic CRE agenda, notably around the issues
of workplace productivity, CRE teams are being required to exert influence over a broader
range of corporate functions. The work that CRE teams will undertake going forward impacts
everyone within the organization, all of the time. Collaboration with other support functions
will become just as necessary as a strong relationship with leadership if transformation is
to be achieved. This will be most required with those support functions that have a vested
interest or contribution to make to the productivity agenda—notably HR, IT and finance.
For most, CRE
represents a dedicated
function within the
organization Figure 15: Department within which the global head of CRE resides
Workplace
transformation
demands greater
collaboration with other
corporate functions
CRE has a track record
of collaboration, but
this is primarily ad hoc
and project-focused
Collaboration between support functions is already in evidence in the pursuit of current
CRE strategies (Fig 16), although for the majority, this remains an ad hoc, project-based
and temporary relationship. CRE executives recognize that collaboration occurs regularly
between the heads of these departments at a slightly more strategic level. On average,
across the three support functions, 15% identify collaboration at the functional head level.
Figure 16: Level of ad hoc collaboration, today and three years from now
QUESTION: How would you describe the collaboration of CRE with the following business
functions today and in three years’ time?
Note: In this table, percentages combine top-ranked “ad hoc” and “project-based” collaboration responses.
39%
15%
10%
8%
2%
2%
1%
1%
14%
Dedicated CRE department
Corporate office/General management
Finance
Administration/Shared services
Procurement
Human resources
Supply chain and logistics
No global head of CRE
Information technology
Today Three years from now
HR
IT
Finance
41%
30%
45%
34%
31%
26%
Today Three years from now
Change
HR 67%
44%
26%
IT 48%
46%
31%
Finance 18%
60%
51%

• The dual emphasis on building
operational platforms in emerging growth
markets and right-sizing portfolios in
mature or developed markets, identified
in our 2011 report, continues.
• Portfolio sizes in developed western
economies will flat-line or reduce
in volume, with more companies
anticipating a decrease in portfolio size
than those anticipating an increase.
• Portfolio growth will be strongest in the
world’s emerging economies, which
also tend to be the least transparent
real estate markets. Operating in these
opaque environments represents a
potential reputational risk to CRE over
the next three years.
Failure to deliver in emerging markets
will become CRE’s greatest reputational
risk
Global Trend 5:
• There is a real danger that the pursuit
of growth and need for competitive
advantage in emerging markets will lead
to unrealistic demands being placed on
CRE teams.
• The task of delivering new operational
platforms in emerging markets has
been underestimated by CRE leaders.
Platform building in emerging markets
can rapidly erode CRE team capacity
and divert resources from meeting their
broad and extended agenda. Managing
expectations and educating senior
leadership will be crucial.
Respondents are very
bullish about expected
portfolio growth in
Latin America;
of respondents see
delivering a platform for
growth in select markets
as an increasing strategic
demand imposed on CRE
teams by senior leaders
46%
Emerging countries continue
to receive a lot of attention
with 44%
China
19%identify lack of transparency
within real estate markets as
the single greatest challenge
when expanding into
emerging markets
state that they will dedicateno more than 50% of theirtime (or none at all) toemerging markets; 34%anticipate spending no morethan one day per week on
these markets
62%
see the lack of suitable real
estate offer as their greatest
challenge. This was greater
among respondents in Asia
(14%)
10%
of respondents anticipating
net portfolio growth in
31%
Brazil
over the next three years,
38% in India, 20% in Russia,
12% in Turkey and 8% in
South Africa
expect growth in
and 16% in Mexico, while
net portfolio growth is back
from decreasing to stable
(1%) in the United States
The majority are anticipatingportfolio reduction in most
European markets,
in France
-15%
and -12% in the United Kingdom,while the drop is more moderatein Germany (-5%) and in theNordic countries (-14%)

2013-20162009-2012
9.2
7.6
2.5
2.7
2.0
0.8
-0.3
3.3
0.7
0.1
0.1
8.3
7.2
2.9
4.2
3.5
2.7
1.7
4.8
1.4
1.4
0.8
China
India
Africa
Brazil
Global
Australia
United States
United Kingdom
Germany
Japan
France
Figure 18: Global GDP Growth Rates 2013-2016 vs. 2009-2012 (% growth per annum)
Companies’ intentions with respect to portfolio growth are polarized, with relatively strong
growth anticipated in emerging markets and anemic growth in the developed world. These
intentions are very much in line with GDP growth projections (Fig 18).
Source: IHS Global Insight, 2013
Subdued global
economic growth rates
are forcing corporations
to address portfolio
sizes in developed
economies
While portfolio sizes are set to increase marginally in the United States, overall portfolio sizes
in Western Europe will reduce over the next three years (Map 1). This will prolong the trend
toward higher vacancy rates in developed real estate markets, which have edged upward as
a result of space rationalization and consolidation. In line with the emphasis on productivity
outlined in this report, corporations have reduced portfolio size in developed markets by
improving utilization rates, increasing occupational densities and optimizing portfolios across
markets.
There is significant opportunity in the current global economic climate to generate
competitive advantage by creating new or enhanced operating platforms in emerging
markets. Emerging economies continue to be in focus with the percentage of CRE
executives anticipating portfolio growth in such markets being consistently high (Map 1),
continuing the trend identified in our 2011 report. A key difference is the emergence of Africa
as a focus for growth, with 8.5% predicting growth in South African portfolios, for example.
This trend aligns with our finding that 46% of CRE executives cite the delivery of operating
platforms for growth in select markets as an increasing strategic demand from senior
business leaders (refer back to Fig 4). It is also consistent with the fact that just under a third
of CRE executives believe that their organization has become less risk averse over the last
three years. This reduced risk aversion is particularly marked in the Americas and shapes
attitudes toward emerging markets, specifically Mexico and Brazil.
But selective growth
opportunities will
continue to be actively
pursued in emerging
markets
Map 1: Net portfolio growth anticipated over the next three years
Map 2: Global real estate transparency 2012
Source: Global Real Estate Transparency Index, Jones Lang LaSalle, 2012
30% + Net Portfolio Growth
Negative Net Portfolio Growth (20%-10%)
Rest of
region
Negative Net Portfolio Growth (10%-1%)
Stability (0% Net Growth)
1%-10% Net Portfolio Growth
11%-30% Net Portfolio Growth
Country
Not covered
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
QUESTION: Over the next three years, how will your portfolio evolve in each of the following regions?
Note: Net portfolio growth percentages in this map are obtained by deducting responses anticipating portfolios to decrease from responses anticipating portfolios to increase.
Other possible responses (“remain the same”, “do not know” and “not applicable”) were left out.

Figure 20: Time likely to be spent by CRE on emerging markets over the next
three years
Delivering real estate
solutions in emerging
markets presents a
significant reputational
risk for CRE
The time and cost implications of delivering real estate solutions in many of these select
growth markets are considerable. This is not typically the concern of senior leaders, but
without effective management of stakeholder expectations, the status of the CRE team could
be threatened. The possibility of not meeting the expectations of senior management is high
and delivery failure can damage the reputation and standing of the team.
This risk is intensified by the fact that few CRE teams seem to be planning to dedicate
much time to this strategic priority. Only 19% are likely to spend more than half of their time
on delivering in emerging markets (Fig 20). There is a sense that the size of the task and
its complexity may be underestimated and this may place even more pressure on current
team capacity and skills, further undermining the ability of the CRE team to deliver on its
broadening agenda.
QUESTION: How much of your time as a CRE professional is likely to be focused on developing/
emerging markets over the next three years?
19%
34%
28%
14%
5%
None
Minimal (up to 20%)
Moderate (20%-50%)
Majority (50%-80%)
Major (>80%)
Many of the target
markets for growth
will present substantial
transparency and
potential delivery
challenges
While establishing operating platforms in new markets is a strategic imperative, delivery is
also a tactical demand, which in this context is particularly challenging due to market opacity.
The transparency issue is well recognized, with 19% specifically identifying real estate
market transparency as the issue (Fig 19).
Figure 19: Perceived challenges of platform delivery in emerging markets
QUESTION: In your opinion, which of the following is the single greatest challenge when
expanding into developing/emerging markets?
19%
18%
17%
10%
7%
7%
8%
14%
Real estate market transparency
Political transparency
Economic transparency
Lack of suitable real estate offer
Lack of unified real estate standards
Start-up costs
Others
None
It is revealing to compare Map 1 with Map 2 drawn from Jones Lang LaSalle’s 2012 Global
Real Estate Transparency Index, which shows the levels of market transparency around
the world. There is a clear correlation between markets that have high portfolio growth and
markets that have low levels of transparency.
In practical terms, opaque markets equate to a slower speed to market, higher barriers to
market entry and costs and complexity around the routes to market entry. It is echoed by the
fact that some CRE executives point to the limited real estate offering or absence of standard
market practices within emerging markets as challenges. CRE teams need to enable the
pursuit of growth, but the wider business may be ill-informed about the practicalities of
expanding within an opaque, emerging market.

This report summarizes the global aggregated findings of Jones Lang LaSalle’s second Global Corporate Real Estate
Survey. The research collection phase was concluded in December 2012.
The response to the Survey was unprecedented. Through a combination of online and telephone fieldwork, we received
636 survey responses from CRE executives spread across 39 countries. This represents a 24% increase in respondents
from our 2011 survey and illustrates both the growing maturity of CRE, as well as the importance placed upon the future of
the industry.
The respondent pool also reflects a broad cross section of the corporate community. Our base sample, as used within this
report, covers 545 companies, each employing more than 1,000 people worldwide.
As evident from the figures herein, our survey responses were well balanced and reflective of the views of CRE leaders
drawn from a diverse range of sectors, domicile and operational locations, as well as companies of varied size.
Jones Lang LaSalle was supported by market survey experts Kadence International in collecting, compiling and
segmenting the research data.
Responses by region where respondents are based
(companies above 1,000 employees only)
Responses by industry sector
About the Survey
Asia Pacific
155 Europe, Middle East
and Africa
216
Americas
174
Responses by department respondents sit in
Responses by organization size (number of employees)
10%
5,001-10,000
31%
10,001-50,000
18%
1,000-5,000
25%
More than 100,000
16%
50,001-100,000
government
other33%
8% consumer
products
8%
energy
8%
professional
services
12%
banking and
financial services24%
technology, media and
telecommunications28%
manufacturing
and industrial
17%
55%
dedicated CRE
department
15%
corporate or general
management
10% finance
9%
administration or
shared services
1% IT
1% HR
1% supply chain
and logistics
6% others

Jones Lang LaSalle Global Corporate Research Team
Dr Lee Elliott (Lead Author)
Head of Corporate Research, Europe, Middle East and Africa
lee.elliott@eu.jll.com
+44 0 20 3147 1206
Based in London, and with more than a decade of property research experience, Lee is responsible for delivery of
Jones Lang LaSalle’s Corporate Research program in EMEA. He is also responsible for delivering insight into occupier
markets and CRE trends at a global level.
Christian Beaudoin
Head of Corporate Research, Americas
christian.beaudoin@am.jll.com
+1 312 228 2020
Based in Chicago, Christian is responsible for the delivery of Jones Lang LaSalle’s corporate research program in the
Americas. He is focused on corporate strategy and the trends facing large companies and their global growth
opportunities. He has over twelve years of diverse commercial real estate experience, including research, design,
development and construction.
Tom Carroll
Director of Corporate Research, Europe, Middle East and Africa
tom.carroll@eu.jll.com
+44 0 20 3147 1207
Tom has international experience providing research advisory and strategy support to corporate clients, including
Deutsche Bank, Microsoft, AstraZeneca, UBS and Credit Suisse. He has also developed a number of white papers on
issues ranging from CRE organizational design to surplus asset disposal and emerging market strategy.
Anne Thoraval
Director of Corporate Research, Asia Pacific
anne.thoraval@ap.jll.com
+65 9616 1656
Based in Singapore and with more than a decade of strategic research experience in Europe and Asia, Anne is
responsible for the delivery of Jones Lang LaSalle’s Corporate Research program in APAC. She also contributes to the
Corporate Research platform across the globe.
Holly Yang
Regional Director of Corporate Research, Asia Pacific
holly.yang@ap.jll.com
+65 6494 3844
Based in Singapore, Holly has been with Jones Lang LaSalle for more than ten years in Asia Pacific leading a team
of marketing, research and strategy specialists. She has spent more than 11 years working in CRE, and has over 25
yearss of experience researching and reporting on corporate trends across the globe.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management
firm offering specialized real estate services to clients seeking increased value by owning,
occupying and investing in real estate. With annual revenue of USD 3.9 billion, Jones Lang
LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of
its clients, the firm provides management and real estate outsourcing services to a property
portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment
Management, has USD 47.0 billion of real estate assets under management.
About Jones Lang LaSalle Corporate Solutions
A leader in the real estate outsourcing field, Jones Lang LaSalle’s Corporate Solutions
business helps corporations improve productivity in the cost, efficiency and performance of
their national, regional or global real estate portfolios by creating outsourcing partnerships
to manage and execute a range of corporate real estate services. This service delivery
capability helps corporations improve business performance, particularly as companies turn
to the outsourcing of their real estate activity as a way to manage expenses and enhance
profitability.
Acknowledgements
Jones Lang LaSalle gratefully acknowledges the assistance of those CRE professionals
who participated in this survey. We are also grateful to Kadence International, our research
partner for this project.
We welcome any feedback on the published results to continue to improve future editions
and make them as meaningful as possible for our readers. If you have any comments or
would like to participate in future surveys, please email insightteam@jll.com.
Visit www.jll.com/globalCREtrends to explore the global trends in more detail.
See how CRE executives based in your region responded and compare your
answers with the global survey results. Additional reports for specific countries
and industry sectors will be posted to this site as they are released throughout
the year.
COPYRIGHT © JONES LANG LASALLE 2013. All rights reserved.

Risks Ahead: Global Corporate Real Estate Trends 2013

Recommended

Recommended

More Related Content

What's hot

What's hot (16)

Viewers also liked

Viewers also liked (16)

Similar to Risks Ahead: Global Corporate Real Estate Trends 2013

Similar to Risks Ahead: Global Corporate Real Estate Trends 2013 (20)

More from JLL

More from JLL (20)

Recently uploaded

Recently uploaded (20)

Risks Ahead: Global Corporate Real Estate Trends 2013