_Colin Fitzgerald: what are the global CEOs thinking?

I’ll be honest with you here: I’d had a long day in the office and I clicked it open with fairly minimal enthusiasm. But within a few pages I was so engrossed that I very nearly missed my stop (a dramatic and rather embarrassing leap through the closing train doors saw me just about make it home as planned). 

The survey is based on the responses of more than 1,000 CEOs from around the world, including Australia, China, India, Japan, the UK and the US. It’s fair to say it’s pretty comprehensive and it provides an incredibly valuable insight into commercial property on the world platform.

As I sat on the train reviewing the survey responses, happily oblivious to the stressful disembark that awaited me, I was particularly struck by a quote from one of the CEOs interviewed. It said: “As a CEO, you have to recognise that your business will be radically different in the next five to ten years.”

That’s absolutely spot on. The world is rapidly changing; so too must your business if you have any hope of keeping up. 

Over the past year, I’ve really noticed the increasing focus businesses are placing on operational efficiency. Thanks to ongoing turbulence in the world of politics and economics, businesses are sensibly becoming much more cautious; they’re looking at their expenditure and wanting to make sure they squeeze costs as much as possible. This focus is reflected when looking at the top five priorities for global businesses in 2017. The top priority is now ‘operational’; a stark contrast to last year when this didn’t even make it into the top five (cyber security, 2016’s top priority, now sits at number five).

When it comes to efficiency, there’s a golden opportunity that a lot of companies aren’t taking advantage of: real estate. It never ceases to surprise me how huge global companies with vast revenues and thousands of employees have no centralised real estate function. They really are missing a trick when it comes to adding value.  

The survey highlights that 43% of CEOs are reassessing their company’s global footprint as a result of the changing pace of globalisation and protectionism. This means that almost half of the companies interviewed are changing, whether that means shrinking, consolidating, growing… or maybe even a bit of all three. CEOs are looking at their global footprints and thinking: “where do we need to be? Where should we be going next?”. More than 20% of CEOs identified expanding into new geographical markets as a key strategic priority for the next three years.

Reflecting businesses’ increasing focus on cost is the vast number that are scaling back their presence in expensive locations and opting for more affordable ones instead. 

Take India for instance. It’s been a very dominant location for quite some time, but now CEOs are now looking further afield to the Philippines and Eastern Europe, realising that they offer significantly cheaper cost bases and have far more affordable real estate, as well as highly educated people who cost two thirds of their counterparts in India. Many CEOs are also scaling back on headcount growth – another indicator of focus on operational efficiency.

This focus is again prominent when looking at tech hubs in America. While Silicon Valley is synonymous with thriving tech talent, it’s very expensive. Look over to cities such as Dallas and Houston in Texas, and you’re presented with much more attractive options which offer far more affordable accommodation and salaries. It’s no coincidence that tech hubs such as Homeblis, Dialexa and Capparsa are steadily popping up there. 

Changing global footprints also ties into changing workspaces. Top talent seek spaces that supercharge innovation and inspire collaboration and creativity. Sure, Silicon Valley is the iconic location for tech, but if you have a cutting-edge modern office space in Dallas, potential employees may well be tempted – particularly when they see how much further their salaries could go. 

So, what’s the key learning from the Global Occupier Sentiment survey? I’d say it’s this: as businesses accepts disruption is the norm and continues to search for cost effective talent, all while driving to increase efficiency and creativity, it's the location that really matters.  

That’s where my International Occupier Services team comes in. If this post has made you think it’s time you reviewed your company’s global footprint, please don’t hesitate to give me a call. Just maybe not when I’m on a train.