NEWS RELEASE
Contact:
David Harrison
+1.410.804.1728
[email protected]
CoreNet Global Index Predicts Upbeat Economic,
Corporate Climates for Second Half of 2013
New market entry, availability of capital, increasing flexibility among drivers
ATLANTA (July 11, 2013) -- The global economic outlook is strong for the second half of
2013, while the prospects for corporate growth and expansion are also increasing, according to
the views of corporate executives surveyed in June for the new CoreNet Global Confidence
Index, developed in conjunction with Dr. Roy Black, Director of the Real Estate program at
Emory University's Goizueta Business School in Atlanta.
The index is a new macro-economic measure based on the viewpoints of corporate real estate
(CRE) executives serving large, multinational companies from multiple industry sectors. The first
index rating is 4.65, based on a scale of 7 with 7 representing an extremely optimistic
environment. Professor Black, who led the design of the Confidence Index model, characterized
its first outcome as “a classic case of corporate economic resiliency following the challenging
overhang of 2009.”
According to the predictive survey, nearly two-thirds (62.5 percent) rated their outlook on the
global economy for the coming six months as optimistic to very optimistic, compared to a year
ago. Almost one-third (31.3 percent) were neutral on the question, with only incremental
pessimism registered (4.2 percent).
By contrast, the World Gross Product measure of all economic growth globally shows a flat-line
trend of +2.3 percent from last year to this year. It also projects an increase to +3.1 for 2014,
making the CoreNet Global index trend a possible harbinger of future growth. In a similar way, a
July 9 International Monetary Fund report cited by CNN characterized the global economy as
“stuck in neutral.”
Still, executives in the CoreNet Global survey ascribed even higher confidence levels to the
likelihood of their companies' growth for the second half of 2013. A strong majority rated their
confidence levels in the prospects for business expansion as optimistic (54.2 percent), very
optimistic (14.6 percent), and extremely optimistic (4.2 percent). One-fifth (20.8 percent) were
neutral on the question, while less than a tenth (6.3 percent) expressed pessimism.
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Moody’s Analytics’ chief economist recently offered supporting evidence by pointing to the
strength of the private sector as the main driver of otherwise sluggish growth. “The (US) private
sector is now in a strong growth mode of 3.5 percentage points of GDP. Consumers and
business are doing their part to support the recovery,” Mark Zandi told Globe Street on July 9.
Internal corporate business factors relating directly to the size, cost and location of massive real
estate and workplace portfolios provide the basis for the rating of confidence levels of the
executives who directly influence the growth and contraction of corporate property holdings.
“As a leading professional association for CRE executives, CoreNet Global is projecting the
demand for office, industrial and other types of corporate real estate and correlating those
internal business conditions to prospects for economic and business growth that, in turn, have
direct impact on the wider economy,” said CoreNet Global CEO Angela Cain.
Key findings of the first CRE confidence measure include:
-
As part of the trend reflected by the index, almost three quarters (72.4 percent) indicated
that market entry, new products, mergers and acquisitions, and on-shoring will drive
growth. Opportunities to improve cost performance by relocating are also viewed as
likely growth drivers by over half of the executives responding (52.4 percent).
-
Most companies (72.4 percent) reported the likelihood that flexible, open workplace
strategies will increase while space per work setting and/or work settings per supported
worker will be reduced. A related driver shows that a move to higher-quality work spaces
could occur (40.4 percent) because of poor-quality spaces that do not support
contemporary work practices.
-
The availability of capital to fund real estate portfolio growth is not regarded as a limiting
factor with almost two-thirds (62.6 percent) expecting sufficient levels of financial
capacity and affordability for changing the size of the portfolio.
-
Many CRE executives (62.5 percent) have increased the flexibility of their lease-hold
strategies, saying it’s unlikely that tenure constraints will prevent changes. One outcome
is they now have the ability to trade off under-performing assets for more productive
facilities on an on-demand basis.
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Respondents also identified two limiting factors. One is surplus space, with half (50
percent) indicating some degree of misalignment between employment levels,
unoccupied space and the growth rate of the company. Another limiting factor is
continuing cost management pressure (35.5 percent).
The index methodology is informed quarterly by the direct polling of nearly 90 CoreNet Global
Corporate Partners, comprised of an economically-diverse mix of multinational companies
representing the following sectors: aircraft and aerospace; automotive; business services and
consulting; consumer goods; distribution and logistics; education; energy; petroleum and
mining; financial services; government; health care; hospitality and entertainment; insurance; life
sciences and pharmaceuticals; manufacturing and industrial; media; real estate; retail; software;
technology; telecommunications; transportation and utilities.
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Corporate Partners manage real estate portfolios that typically range between 2-million square
feet and 110-million square feet globally. The types of real estate managed are office space
(84.8 percent of total average portfolio), industrial (34.8 percent), laboratories (32.6%); research
and development (32.6 percent), data centers (39.1 percent), retail (26.1 percent), other
including mixed use development (19.6 percent).
Types of Property Assets Most Used by Responding Companies
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
A list of CoreNet Global Corporate Partners is available via:
http://www.corenetglobal.org/Sponsorship/content.cfm?ItemNumber=12755
CoreNet Global (www.corenetglobal.org) is the world’s leading professional association for
corporate real estate and workplace executives, service providers, and economic developers.