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Corporates exercise optimistic caution in real estate decisions

According to Jones Lang LaSalle’s Q2 EMEA Occupier Conditions research

London, 21 June 2010 – Jones Lang LaSalle research reveals corporates are currently exercising cautious optimism in their real estate decisions.  Vincent Lottefier, CEO EMEA Corporate Solutions at Jones Lang LaSalle, said: “Despite this watchful mood, corporate real estate (CRE) teams are formulating strategies and plans in preparation for growth as and where it returns.  These plans are driven less by pure survival instinct and more by the need to strike a balance between maintaining short-term corporate profitability and enabling medium-term strategic objectives.”

Lee Elliot, Head of EMEA Occupier Research at Jones Lang LaSalle, added: “Market recovery is, however, supply driven and the window of opportunity for occupiers to secure high quality premises in tenant friendly market conditions is now around 12-18 months, but will reduce further at the prime end of the market."

Jones Lang LaSalle’s research also highlights four principal areas where CRE teams will remain most active as 2010 progresses.  First, is the need to fully optimise the portfolio in order to reflect the new operational reality and strategy of restructured businesses.  Second, there will be alternative workplace considerations to consider as occupiers seek to improve the utilisation and density of occupation and consequently reduce costs.  Third, there will be reflection as to whether property is core or non-core and also increasingly whether a premium needs to be paid to ensure operational flexibility or alternatively whether it makes more sense to own.  Finally, any manifestation of growth within these plans is likely to be focused on the opportunity presented by the emerging markets of the region.  The remainder of the year will see occupiers starting to establish a foothold in these markets.

Vincent Lottefier concluded: “Plans that have been carefully developed over recent months await full implementation and are likely to play out at least in part of the second half of the year.  The scale of this activity remains to be seen.  What we do know however is that it will be activity not born purely out of survival instinct but rather through careful consideration of the longer term future and needs of the business."