JLL releases the MNC CRE Strategies under the Pandemic Report
Survey results indicate foreign MNCs showing confidence in China market despite the pandemic
In early June, JLL conducted a survey with 150 foreign MNCs across different industry sectors in China on their CRE strategies under the pandemic. The survey aims to explore MNCs’ needs and expectations regarding office leasing, workplace strategy, and facility management in China.
The research used K-Means cluster analysis to quantify and classify surveyed companies across five key dimensions of real estate decision-making determined by JLL. Our study identified a group of “future-proof” MNCs whose leading CRE strategies stand out from the rest.
The leasing strategies of most firms have not been affected.
The life sciences sector has been the least affected.
The hybrid approach has become more common while working in office remains important.
More companies are developing comprehensive CRE site selection strategies with increased attention to strategic factors such as Environmental, Social, and Governance (ESG), company branding, talent retention, and Business Continuity Plans (BCPs).
About 26% of companies show future-proofing characteristics regarding office site selection strategy, workspace planning, facility management, digitalization strategy, and human experience.
The CRE plans of most firms have not been affected by the pandemic
Of all the MNCs surveyed, 77% stated that their plans were not affected by the recent pandemic, and 19% of the respondents would reevaluate their goals, while only 4% have canceled their expansion or upgrade projects.
Among industries, the life sciences sector was the least affected. No company in this sector canceled its plans, and 94% of firms indicated that their leasing progress was unaffected or planned to resume after business as usual.
Professional services and financial services companies remained resilient. At least 84% of the professional services firms retain or temporarily suspend their CRE plans, whereas 8% will reevaluate their strategies. The CRE plans of 67% of the respondents remained unaffected. The rest, 33%, indicated that they would review strategies but no cancellations.
The pandemic impact on CRE plans, by industry
MNCs have become more accepting of hybrid accommodations with a larger share of employees working remotely due to the recent wave of the pandemic in China.
“Although the hybrid approach has grown common, most firms recognize that office spaces still have irreplaceable value,” said Joseph Wang, Senior Director for JLL Shanghai Office Leasing Advisory.
Many MNCs believe physical presence in offices and in-person interactions are key to increasing productivity. Working in offices can also cultivate important functions like cross-department collaboration and innovation, impromptu conversations, and relationship building.
Key takeaways from future-proofing companies
In this survey, JLL analyzes MNCs across five dimensions: office site selection, workplace planning, facility management, digitalization strategy, and human experience. Through their responses, JLL tries to understand how the firms are developing and optimizing CRE strategies to cope with the pandemic while also serving their long-term growth strategies in China.
Many companies are now developing comprehensive CRE site selection strategies with increasing attention to strategic factors such as ESG, company branding, talent retention, and BCP, in addition to traditional elements, such as cost and accessibility.
More and more factors determine CRE strategies
“About 26% of the companies show future-proofing characteristics,” said Daniel Yao, Head of Research for JLL China. “These companies put strong emphasis on strategic factors in their holistic CRE strategy, aiming to leverage CRE decisions to achieve their long-term objectives.”
Ronnie Yin, Head of Sales for JLL China Work Dynamics, pointed out that despite the impact of the pandemic, 51% of the future-proofing companies are committed to increasing investment in facility management. Industry-wise, pharmaceutical, life sciences, and financial services are more willing to increase investment, whereas size-wise, firms with offices larger than 5,000 sqm are more inclined to increase investment.