Cushman & Wakefield Holds Global Conference

3 Aug, 2005, New York, NY

Global economy, international security among topics

Heightened international security, global economic changes, strategic structuring of corporate real estate and an increased interest in corporate social responsibility are developing trends on the global horizon, executives were told at Cushman & Wakefield's International Occupier Conference, held in midtown Manhattan.

"The world has changed since 1991 when Cushman & Wakefield was mostly a U.S. brokerage firm," said Arsh Chaudhry, managing director, Client Solutions, Cushman & Wakefield. "Our International Operations have had enormous growth, accounting for 26 percent of last year's revenue. Within the next few years, the International offices are expected to account for half of Cushman & Wakefield's revenue. It's vital for real estate professionals to be aware of issues concerning the global market."

International Security

International locations have always been linked with security challenges and concerns for business and real estate owners.

"Pre-9/11 there was anti-U.S. sentiments abroad and laws in foreign countries that impacted the security of corporations," said Christopher Grniet, vice president and Northeast regional manager of Kroll Schiff & Associates, a security consulting company. Mr. Grniet's parent company, Kroll Worldwide, has a strategic alliance with Cushman & Wakefield. "Post-9/11 anti-U.S. sentiment has increased in certain parts of the world. In addition, we also have to take into consideration added international government security scrutiny and that the economic impact is a key factor in attacks. Consider the London bombings. The terrorists carried out the attacks during morning rush hour, when people were on the way to work. They wanted to create fear that would prevent people from functioning at their jobs, which will ultimately prevent the economy from functioning."

According to Mr. Grniet, companies can take several measures to reduce the risk of threats posed to them and their personnel. Companies need to first conduct research to understand the history, workforce conditions and government regulations and practices of the location in question. Performing security risk assessments, speaking to other professionals who've had experience and collaborating with host governments and officials will allow companies to reach this understanding.

It's also important to reduce exposure whenever possible. Mr. Grniet advises companies to observe local customs and holidays, use local personnel and reduce or eliminate national branding exposure, especially if its name contains "America" or "U.S."

Global Economy

Lawrence J. White, Ph.D., a professor at New York University's Stern School of Business, set the stage with an overview of the global economy. The U.S. economy is fairly strong, due in part to its high savings rate, human capital, openness of economy and flexibility of its labor markets. However, Dr. White pointed out, there are some "dark clouds" on the horizon.

"Several factors could have a negative impact on the U.S. economy," said Dr. White. "Continued trade deficits mean the U.S. is increasingly indebted to non-U.S. markets. In addition, inadequate private savings, the cost of anti-terrorism and rising energy costs are issues that need to be addressed."

On the global front, Dr. White labeled the European economy "so-so" in comparison to the U.S. Though some countries, such as Ireland, are in good shape economically, taking into consideration developing eastern European countries alters Europe's overall unemployment rate and GDP per capita.

Japan is also performing "so-so," although it is a rich country and operating at a high level, it has had relatively slow growth. Contrarily, China and India are looking at rapid growth, but are starting from a low operating level. After China announced it will allow the yuan's value to float against foreign currency other than the dollar, it's certain the country will continue to be a major force in creating global economic changes, including possible effects on interest rates and real estate investment in the U.S.

Corporate Real Estate Structures

The primary goal of corporate real estate is to provide a property portfolio that will best enable a business to operate efficiently and effectively. At its core, corporate real estate is a support service to a business.

"Current trends in corporate real estate reveal we're steering away from a focus on simple transaction management," said Andrew Simon of Simon Partners, a corporate advisory and consulting firm. "Rather, we need to create a framework for real estate decision-making, as well as develop reporting and delivery processes to let businesses know what we're doing and if we're doing it properly."

It's crucial for third party service provider, like Cushman & Wakefield, to develop a strong relationship with business owners, stresses Mr. Simon. Providers need to understand how a business operates in order to understand what kind of real estate will fit its needs.

Corporate Social Responsibility

Already an important issue in Europe, corporate social responsibility will become an increasing concern for the U.S, said James Charnaud, managing director, Client Solutions, Cushman & Wakefield.

Corporate social responsibility ranges from caring for employees to paying attention to the environment to donating to charitable causes. Though it encompasses all aspects of a business, corporate social responsibility will have particular implications on commercial real estate. For example, a bill will be brought to U.K. Parliament in two years requiring all buildings to display standardized notifications regarding energy efficiency. Companies devoted to corporate social responsibility will look for specific characteristics in a building, and real estate professionals will have to find space that meets these needs.

"Research has shown that companies that are better-run take social responsibility more seriously," said Mr. Charnaud. "These companies understand the effects they can have on the environment."

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Cushman & Wakefield is the world's largest privately held real estate services firm. Founded in 1917, the firm has 175 offices in 50 countries around the globe, and 11,000+ talented professionals. Cushman & Wakefield delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, and investors through every stage of the real estate process. These solutions include helping clients to buy, sell, finance, lease, and manage assets. C&W also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services. To find out more about Cushman & Wakefield, please call 1-800-376-3133.

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