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News Release

Dublin

Office transformation agenda a priority for CRE teams in 2012

Pre-letting strategies to increase as office space costs go up and quality supply remains low according to Jones Lang LaSalle research


Dublin, 7th December 2011, - Jones Lang LaSalle’s Q4 2011 EMEA Corporate Occupier Conditions research shows that office occupiers will need to respond to future operational and organisational changes through the more productive use of their real estate portfolios.
 
Vincent Lottefier, CEO, Corporate Solutions EMEA at Jones Lang LaSalle said: “The Eurozone crisis and intensifying threat of sovereign debt contagion will have a lasting impact on Corporate Real Estate (CRE) teams as corporate operating environments change.
 
 “Whilst corporate cash balances are generally in rude health, people are cautious. There is greater focus on strategic planning as well as a new round of shorter-term cost reductions. However, the corporate occupier market is working against this cost saving remit as costs continue to rise and quality supply remains low.  Moreover, many CRE teams have already picked the low-hanging fruit and made cost saves through renewal and renegotiation strategies. This means the promised land of real estate transformation and ongoing cost effectiveness requires teams to tread new paths and be bold.”
 
According to Jones Lang LaSalle, future occupier activity across EMEA real estate markets will be determined by this transformation agenda and the capacity for businesses to finance the activity.
 
Reflecting on the practicalities of delivering transformation in today's market, Dr. Lee Elliott, Head of EMEA Occupier Research at Jones Lang LaSalle said: “Despite overall EMEA office vacancy rates being at double digit levels, the amount of quality supply in the key markets is extremely limited and as transformation takes hold will be under great downward pressure. The sparse development pipeline across the region – a product of declining developer confidence and limited developer finance – will offer little respite.”
 
Jones Lang LaSalle highlights that in this low supply environment, some EMEA office occupiers are moving towards a pre-letting strategy. This creates opportunities to shape office space to meet with requirements and enables developers to obtain funding by virtue of having secured a tenant. 
 
Fionnuala O’Buachalla, Jones Lang LaSalle, Dublin commented – “It is likely that 2012 will see the first pre-let in the Dublin market for a number of years, with the first development being located in the city centre. Current stock under construction is at 0 and this will not change in the short term without pre-lettings.”
 
Vincent Lottefier, concluded; “Is this a win-win situation?  Well for those with a clearly defined and forward looking real estate strategy it is.  But for all CRE leaders needing to respond to the dual pressures of cost and transformation, having a solution two to three years down the line may not cut it for the c-suite.  CRE leaders need to think creatively about their existing office space. They need to drive greater productivity from their existing portfolio by focusing on the workplace and underlying working styles. Squeezing more value from existing floor-space may for many be the only real solution in a market short on quality supply.”