Home / Announcements / Occupiers move from pure cost cutting strategies to space efficiencies

Occupiers move from pure cost cutting strategies to space efficiencies

 Corporate decision makers are responding to signs of economic improvement across Europe by shifting focus away from pure cost management to focus on delivering the right space for staff, according to the latest annual European Occupier Survey by global real estate advisor, CBRE. The survey also identified scope for Corporate Real Estate (CRE) outsourcing to grow.

The survey, now in its fourth year, polls corporate real estate decision makers at global corporations collectively occupying approximately 2.7 billion sq ft (250 million sq m) worldwide. The survey shows corporates’ increased confidence in the economic recovery, with less than half [46%] identifying weak economies as a concern. In 2012 the overwhelming majority [70%], reported that the uncertain economic outlook in Europe was a key factor in their real estate strategy, with cost management being the primary objective.


Click to enlarge

Despite such positive signs, cost control remains a priority for corporates. The survey shows almost three quarters [72%] renegotiated leases in the past twelve months [compared to 45% in 2012], to ‘lock in’ deals while office rents are at, or close to, the bottom of the market. However, such efforts to reduce costs are likely to diminish as the recovery continues.

In addition, 61% of companies reported that they have reduced their real estate footprint by occupying space more efficiently. Such space optimisation strategies are increasingly prominent for corporates due to the balancing act between cost savings (reported by 56% as a key driver of alternative workplace strategies) and providing a collaborative working environment (39%) with the aim of improving employee productivity (37%). CBRE notes it is therefore interesting to see that the vast majority of companies are not widely adopting remote working strategies with 75% reporting that less than a quarter of staff work flexibly on a regular basis. This indicates that the office environment is still key which explains the focus on improving the quality of the workplace.

This leads to companies placing greater emphasis on providing staff with the right environment in the right locations. Although cost is the principal factor when companies choose office space [cited by 85%], 45% of companies report that they see the quality of their workspace as integral to attracting and retaining talent. In turn, 73% or three quarters believe public transport accessibility is important to staff, with the provision of ‘value-add’ amenities such as an on-site gym or restaurant [48%] and flexible workspace [48%] also important. Overall, the results indicate that for occupiers, a central, amenity-rich location which provides lifestyle options for the workforce outside the work environment is crucial.

As the economic outlook improves, the shift in corporate focus towards the future is re-focusing attention of the corporate real estate (CRE) function. There is now a greater desire for increased alignment between real estate activities and broader business objectives with 72% of companies surveyed noting this as an area for improvement. This indicates that with the correct management, CRE functions could become facilitators of future growth with the knock-on-effect of increased CRE outsourcing.

Mark Caskey, EMEA (Europe, Middle East & Africa) head of global corporate services, at CBRE, commented:

“It is clear corporates are sitting up and taking note that ideal working environments lead to better employee productivity and enable the best talent to be attracted and retained. Furthermore, labour outlay is more expensive than real estate costs, so improved staff productivity has a greater impact on companies’ profitability. We expect this trend to continue next year and beyond.”

Richard Holberton, director, EMEA research, at CBRE commented:

“While financial objectives still govern the corporate occupier landscape, increasingly there is a greater desire to look toward the future. This has seen a greater alignment between real estate activities and broader business objectives. As corporate real estate teams become more strategic and client focused, scope remains for the trend of outsourcing to persist.”




[1] The European Occupier Survey is an annual survey, conducted in-house by CBRE to analyse the latest occupier real estate trends. This year, over 70 corporate occupiers responded representing leading corporations, covering a range of sectors with the Banking & Finance 22% and Technology & Telecoms 20% subsets the largest groups, a further 14% was accounted for by the manufacturing sector.















About Caroline Hill


Leave a Reply

Your email address will not be published. Required fields are marked *