Global corporate real estate outsourcing experiences a tectonic shift

April 8, 2019 / By  

With 65% of Corporate Real Estate (CRE) leaders expecting their mandate to grow and become stronger by 2020, the pressure for CRE to add strategic value is increasing. CRE leaders are looking beyond traditional industry drivers and are putting increased emphasis on outsourcing services aimed to add value to overall business growth. Though the objective to reduce cost prevails, new objectives – such as supporting employee experience, increasing use of technology and boosting innovation – are gaining prominence.

According to results from JLL’s Future of Work global survey, 41%[1] of real estate leaders worldwide indicated that they currently outsource CRE services and additional 36% stated that they plan to increase outsourcing of real estate services within the next three years. This global survey captured views of 561 commercial real estate leaders from 30 nations across a range of industries like banking, telecom, healthcare, retail, manufacturing and others.

Despite plans to outsource more services, CRE outsourcing is currently highest in traditional functions like Project Management, Facilities Management and Lease Administration. However, in the future, new-gen services like CRE Technology Solutions, Employee Experience, Energy Management and Data Analytics/Business Intelligence are expected to get higher traction for outsourcing.

Among the new-gen CRE services, CRE Technology Solutions is ripest for growth with 50% of respondents intending to increase outsourcing of their CRE Technology Solutions by end of 2020. This is particularly notable for Banking and Technology sector enterprises where CRE technology is highlighted as the highest future outsourcing priority. The Future of Work survey also found that within CRE technology, investment in “Workspace and Employee Experience Applications” is a top priority for enterprises globally.

CRE technology is also expected to be a much bigger component of CRE spending in the future. Even though CRE technology currently receives the smallest proportion of CRE budgets, it is expected to experience the biggest increase in investment.

After CRE Technology Solutions, another next-gen CRE service that will see more outsourcing is Employee Experience Services. Especially in Asian markets like India and China, that have been hyper focussed on economic growth for the past decade, the need to better manage costs and remain competitive on a global scale means that enterprises have become more concerned not just about the productivity of their real estate portfolio, but also the productivity of their people. They intend to achieve this by enhancing the workplace experience of their employees. 51% of CRE leaders in India and 40% in China desire to achieve stronger agility and flexibility of their workforce. Thus, the need to invest in outsourcing services aimed at boosting employee flexibility and productivity through technology is bound to take centre stage in these countries.

There is no room for doubt that CRE outsourcing is on its way to experience a tectonic shift.  We at JLL believe that enterprises that would ride this wave successfully will emerge as Future Fit.

Learn more about how “Future Fit” corporate real estate leaders are unlocking strategic value.

[1] This includes respondent who either fully outsource, mainly outsource or outsource 50% of their CRE services.

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