A new survey conducted by US-based CoreNet Global, a non-profit association for corporate real estate professionals, has found that the high inflationary environment is having an impact on corporate real estate decision making.
Corporate real estate is the real property used by a company for its own operational purposes. It provides corporations with a productive environment to house employees, manufacture and distribute products and provide services to the market. Corporate real estate touches all classes of property, land and buildings such as office facilities, data centers, manufacturing facilities, logistic centers, corporate headquarters, distribution facilities, retail stores and hotels.
According to the survey, 62 percent say that the current rate of inflation is having an impact on real estate decisions.
Of those:
- More than half, 54 percent, are consolidating locations
- Forty-two percent are reducing the size of leases they are signing
- Forty-one percent are looking for more cost-effective buildings and lower rents
- Thirty-seven percent are signing fewer leases
- 34 percent say that annual escalations are 100 basis points higher than normal
While nearly 60 percent of the respondents say that their company is in growth mode, 75 percent expect the U.S. economy to slip into recession by the end of 2023 and 72 percent expect the global economy to slip into recession by the end of 2023.
Forty-four percent say that compared to prior to the pandemic their overall corporate real estate footprint has decreased; 21 percent say that it has increased, and 34 percent say that it has stayed the same. Between now and 2025, 39 percent expect an increase in the size of their corporate real estate portfolio, 42 percent expect a decrease, and 19 percent say that it will stay the same.
The survey was conducted in June-September 2022 and yielded 175 responses from all regions including North America, Europe, Asia and the Middle East.
CoreNet Global, headquartered in Atlanta, Georgia (US), is representing nearly 10,000 executives in 50 countries with strategic responsibility for the real estate assets of large corporations. The organization’s mission is to advance the practice of corporate real estate through professional development opportunities, publications, research, conferences, designations and networking in 45 local chapters and networking groups globally.
