EXCERPTED from CoreNet Global's 2012 State of the Industry Report to be published March 31, 2012
© CoreNet Global 2012
CRE departments' tasks will be comparable to the goal of squaring the circle
For any of the more rosy forecasts economists have begun offering with the new year, CoreNet Global Chairman-elect Jim Scannell, Senior VP Administrative Services, The Travelers Companies, has a word of caution.
Companies haven’t stopped cost cutting since the 2009 recession ended, but some of them are getting back to the level of restricting travel again. It’s a sobering sign, because growth and expansion are still on their agendas, and it’s a tough balancing act.
“The economy is one of the biggest issues we’re being impacted by,” Scannell notes, adding that even with opportunity in some geographic markets, economic problems in other places are holding some companies back. “Look at all of the big multi-nationals; all of them are facing this challenge. Corporations don’t want to over-extend themselves. It’s a real challenge moving forward.”
Scannell predicts that what lies ahead of us are “the tightest expense controls ever.”
One thing is apparent: Uncertainty can be equated to the unevenness of the global economy: Some regions seem more viable for corporate investment and growth than others. Thomas Glatte, head of Real Estate & Facility Management for Germany-based BASF Group, addresses some of those contradictions:
In 2012, how will multinational companies balance out their global growth strategies considering the fiscal and sovereign debt issues confronting the mature economies of the U.S. and Eurozone versus the strengths of emerging economies like Brazil, India or Russia?
Glatte
No guts, no glory should be the slogan for the months ahead but, as past experience has proven, caution will prevail for most companies. We will see a slow-down in major investment decisions and a substantial raise of ongoing project reviews or delays. Major spending will be seen only for real "no brainers" and the current overall economic situation to speed up the global shift of business attention towards the big emerging markets in Asia is a huge factor.
As a result of this imbalance, are companies retreating to the value protection mode we saw in the 2009 recession?
Glatte
Companies will have to make sure that refinancing and cash flows are secured. Reducing debt will prevail elaborate spending. However, the companies that make it through these stormy waters, will have a cutting edge in the years after the crisis.
What other pressing issues will affect your organization, or those of your clients, in the coming year, and why?
Glatte
CRE organizations will have to bridge the gap between again increased cost awareness and still required investments to maintain growth momentum. CRE departments' tasks will be comparable to the goal of squaring the circle.