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CFOs Focus on Real Estate as Key Driver of Cost Savings and in Preperation for Strategic Growth

Regardless of what the future holds for global business, real estate will continue to become a more and more prominent part of the corporate ecosystem.

5/25/2011

Real estate has never been so valued by the C suite as in the economic downturn. Stuart Hicks reports how CFOs around the globe turned to real estate for savings first. Now European multinationals are picking up the outsourcing bug and are adopting new strategies to maximize output while containing costs.

One of the positive effects of the Great Recession is that corporate real estate executives gained a prominent seat at the C-Suite table as CFOs around the globe turned to their organizations' real estate as a key driver of cost savings. Since then, real estate continues to be a critical strategic force for the C-Suite as corporations not only continue to focus on cost reduction but prepare for growth.

Jones Lang LaSalle's Stuart Hicks reports how companies are seeking to increase the utilization of all of their assets, whether it is in their corporate headquarters space, worldwide workforce, or manufacturing facilities and data centers. Though most companies are beginning to enter a cautious growth mode, firms are placing a strong emphasis on providing a compelling rationale for each square foot of their real estate footprint in response to Wall Street expectations for growth and cost management as well as M&A activity.

In the United States, the mandate will be less focused on increasing square footage in a portfolio, and more aimed at supporting business growth in a flexible manner while managing total occupancy costs and reducing risk. It will also involve making strategic repositioning decisions to eliminate underutilized or redundant space. Occupiers will be challenged to adopt organizational structures that can drive global initiatives, balance growth and consolidation, control risk and enable quick decision making.

Positioning for smart growth in the face of changing demographics, labor costs, energy costs and world politics is leading companies to carefully evaluate entire operational footprints - office, distribution and manufacturing - and to develop the right commercial real estate organization, governance and guiding principles that can drive global initiatives and produce results, while supporting a company's appetite for strategic growth.

Regardless of what the future holds for global business, real estate will continue to become a more and more prominent part of the corporate ecosystem. Executives today need to focus not just on where their space should be located but how to develop smart, profitable workplace strategies that serve their employees, customers, and other stakeholders beyond the traditional office space box.

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