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China

Corporate Real Estate Trends 2015: China leading at the speed of change

JLL Survey reveals that a maturing CRE function is taking a key role in delivering on corporate strategy


Shanghai, Aug 5, 2015  - JLL's (NYSE:JLL) new research China Corporate Real Estate Trends 2015 reveals that, China's corporate real estate (CRE) teams are facing increasing expectations from the C-suites on delivering a broadening strategic mandate to increase productivity, and drive sustainability goals and workplace initiatives. As the CRE function has made great strides towards maturity, resistance to outsourcing declines, however, integration with other business units remains a challenge that CRE teams need to overcome to fully unfold their value across the organization.

With responses from 43 China-based CRE executives at companies with over 1,000 employees, this China edition of JLL's biennial Global Corporate Real Estate Trends report examines the current state and future direction of the CRE profession specific to companies operating in China. 

The report identifies three major themes how the CRE function is actively engaged in transforming corporations from the inside out, helping domestic firms and multinational corporations (MNCs) alike shape their response to the country's more sustainable pace of economic growth:

  1. Evolution: Since 2012, the China's CRE profession matures and China's CRE teams are evolving into more strategic and business-driven roles. Increasing centralization is contributing to greater recognition of the strategic value that CRE can contribute and an increasing openness to outsourcing.
  2. Expectations: China's CRE teams experience growing senior leadership engagement in their work, with expectations and demands leapfrogging. While some of these are demands faced by CREs globally, CREs in China have higher mandate focused on productivity outcomes, as well as the national focus on environmental sustainability. Approximately two-thirds of China's CRE leaders expect to implement a range of workplace transformation initiatives over the coming years.
  3. Integration: Integrating with other business units and functions offers an opportunity to strengthen CRE role within the organization – the lack of integration and C-suite commitment were identified as two of the top constraints for CRE in China.   

"China's CRE teams overall are beginning to resemble their global counterparts in terms of work styles, structure and use of outsourcing. As their function matures, some team have become extremely advanced in their views of corporate real estate." Julien Zhang, Head of China-Desk for JLL China, says "While driving cost-savings is important, the CRE function in China is most valued as a source of innovation to deliver on corporate strategy. They are now at the forefront shaping corporate agenda when it comes to attracting and retaining talent, supporting cultural change and driving the sustainability agenda."

The China market poses unique challenges and the China CRE story diverges from global trends in significant ways. To continue to innovate, support growth and rise to increasing C-suite demands, Julien advises China's CRE teams to focus on three major areas:

  1. Obtaining greater senior management backing: Improving their general business skills and building stronger relationships with internal leaders are critical goals that can help overcome the lack of sustained C-suite commitment.
  2. Improving data and analytics capabilities: With enhanced data and analytics capabilities, China's CRE teams undoubtedly will be better positioned to demonstrate forward thinking, and could use predictive analytics to present persuasive, fact-based innovations to senior leadership. Data and analytics also provide a path to benchmarking CRE performance characteristics, which would help China's CRE professionals determine the best way forward.
  3. Continue making the case for using outsourced service providers to supplement in-house capabilities: Overcoming lack of trust and perceived value of outsourced services will require new processes for assessing providers, as well as requiring CRE service providers to adjust their offerings and capabilities to match the needs and preferences of this growing market.

Julien Zhang concluded: "As C-suite expectations continue to grow in tandem with expanding real estate portfolios in China, CRE teams will need to continue to innovate and be able to take on intensifying demands across many strategic areas. We have seen some great examples of extremely advanced Chinese CRE teams that are moving into property development and monetizing corporate property holdings. This is a very encouraging development and an exciting progress."