The recent wave of the COVID-19 pandemic in China may change the needs and expectations of MNCs regarding office leasing, workplace strategy, and facility management. JLL conducted a survey in June to explore MNCs’ corporate real estate (CRE) strategies and trends. The objective was to understand how MNCs are developing and optimising their CRE strategies to cope with the pandemic while also serving their long-term growth strategies.

CRE plans of most firms have not been affected by the pandemic

Of the MNCs surveyed, 60% stated that their plans were not affected by the recent pandemic; 16% temporarily suspended their CRE plans; 19% of the respondents would reevaluate their strategies; while 4% have cancelled their expansion or upgrade projects. Among major industries, the life sciences sector was the least affected. No company in this sector cancelled its plans. Conversely, 78% of the firms indicated no impact on their leasing progress or plans to resume after business returns to normal. Professional services, financial services and TMT companies remained resilient. Among these, 69% of professional services and TMT firms intend to keep their CRE plans. Regarding the financial service industry, 67% of the respondents’ CRE plans were unaffected. Of the rest, 33% said they would reevaluate their plans but none planned cancellations.

Figure 1: Pandemic’s impact on CRE plans

Source: JLL Research

CRE decisions become increasingly important for firms to achieve strategic goals

The survey found that many companies were now developing comprehensive CRE site selection strategies, with increasing attention to factors such as ESG (Environmental, Social, and Governance), company branding, talent retention, and BCP (Business Continuity Planning). This is in addition to more traditional factors compared to three years ago, such as cost, accessibility, and retail atmosphere. Notably, under the pandemic situation and led by the sustainability objectives, companies are paying considerably greater attention to ESG and BCP today. Such companies also emphasise all these strategic factors in their holistic CRE strategy. Instead of making a simple site selection, companies now aim to leverage CRE decisions to achieve their long-term business objectives, such as talent attraction, company brand building, data-driven transformation, and ESG initiatives.

Figure 2: Importance of each factor for future CRE strategy

Source: JLL Research

Hybrid approaches grow more common as the importance of a workplace reinforced

Before the pandemic, the hybrid workplace model (with a larger share of employees working remotely) was limited among the MNCs in China. However, the recent pandemic forced companies to change their workplace strategies and adopt the hybrid model. MNCs have grown more accepting of hybrid accommodations. Around 70% of surveyed companies allowed 30% or less of their staff to continue working from home. However, despite hybrid approaches growing more common, most firms recognise that office spaces still have irreplaceable value. 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 between employees.

In addition to hybrid approaches, workplace planning shows resilience through multi-functional designs with business continuity plan (BCP) considerations. Most firms suggested increasing emergency stocks and storage space in workplaces out of BCP considerations. At the same time, companies are likely to further increase the number of single-user phone booths as a key facility to promote efficiency in the office. Moreover, entertainment and rest area improvements demonstrate companies’ focus on enhancing the employee experience.

Figure 3: Hybrid approach and workplace design

Source: JLL Research

MNCs’ CRE strategies, to some extent, lead the workplace transformation in mainland China. The survey indicates that MNCs are optimising CRE strategies to stay resilient during the pandemic while also serving their long-term growth strategies. This direction shows the increasing importance of CRE decisions in companies and may shed light on the future of work for all companies in China.

Subscribe

Login

Notify of

new follow-up comments new replies to my comments

Label

Name*

Email*

Website

Company

Δ

Label

Name*

Email*

Website

Δ

0 Comments

Inline Feedbacks

View all comments