Occupier_News_Q1_EMEA_FINAL3

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AsiaPacific continues to
demonstrate itsdiversity as a
locationof choice formanufacturers,
occupying almosthalfof the
positionswithin the top 15ofor
EstablishedManufacturing Index.
Given the varyingmaturity levelof
technology adoption andpriorities
acrossAsiaPacific, each country
in the regionhas a specific focus
on areasof innovation topromote
sectorgrowth – such as smart
manufacturing in the formof
automation inChinadue towage
inflationor theofferof a connected
society and strong conditions
fordoingbusiness inSingapore,
despite ahigher costprofile.
*TheWorldBank’s 15thMalaysiaEconomicMonitor report titled “TheQuest forProductivity”
Manufacturingcontinues tobeone
of themost importantbellwethers
ofUSeconomichealth.While
certain factorshavehampered
manufacturinggrowthover thepast
twoyears - includinga strongU.S.
dollar, lowcommoditypricesand
economicandpoliticaluncertainties
– the longer termprospects for
manufacturing in theUSarebright.
According to theNational
AssociationofManufacturers
(NAM)TheUnitedStates is seen
increasinglyasaviable location
forglobalmanufacturers,with
foreigndirect investment in the
sectorexceeding$1.2 trillion in
2015,anall-timehigh.And, in recent
announcements theUSmayalso
becomeabeneficiaryofSouth
Koreanorganizationswishing to
invest in theUSand reduce its large
scaledependencyonChina.
ASIAPACIFIC
UNITEDSTATES
Index leaderMalaysiahas retained
itsfirstplaced ranking.Malaysia’s
infrastructure services are conducive
toproductivitywith thequalityof
infrastructure relativelyhigh,despite
some concerns surroundingwater
availability andpoweroutagesof
late.Whileothermiddle-income
countriesmaybe catchingupwith
Malaysia in termsof infrastructure
standards, a recent reportby
theWorldBank* indicated that
Malaysia stillhas ahigher rank
thanmanyof thesepeers in terms
ofoverall logisticsperformance
in relation toqualityof trade
and transport infrastructure.
Inaddition,new technologies
have theability to radicallyalter
thewaymanufacturers innovate,
produce,marketanddistribute their
products, improvingefficiencyand
competitiveness.Over thepast25
years,American-madeexportshave
quadrupledasa result.Unfortunately
for theUS labor force,modernday
productiondoesn’t requirequiteas
manyworkersas itused to.
Technologicaladvancementsdocarry
other implications forUSemployment
prospects,amarketalreadyhaving lost
nearly5millionmanufacturing jobs
in the last twodecades.According to
NationalAssociationofManufacturers
(NAM),of themore than threemillion
manufacturing jobs thatwillopenup
over thenextdecade,about twomillion
areexpected togounfilledbecausenot
enoughworkersare trained for these
highly skilled, technical roles.
INDIVIDUALMARKETS -THEDETAIL
10
Importanceof rail station< 10minswalk
Preferred location
75%
EMEA
85%
ASIAPACIFIC
(increased)
CBD
40%
32%
56%
URBANCREATIVE
40%
32%
56%
SURBURBANPARK
40%
32%
56%
CBD locations are
preferred across sectors(40% respondents)
mainly real estate
companies
Creativeurban environments
arepopularwithBusiness
services and construction and
architecture sectors
IndustrialTMToccupiers
favour suburbanbusinessparks
53%
NORTH
AMERICA
DESPITEASPIRATIONSCOSTREMAINSAKEYDRIVER INPRACTICE
Similarly, variations in locationpreference are found
indifferent industry sectors. InEMEA,67%offinancial
servicesfirmsmaymoveoffice functionsback to
urban environments,while45%ofTMT sectorfirms
are considering the same strategy. InNorthAmerica,
thepossibilityofmoving from suburban tourban
locationshasoccurred to45%offinancial services
firms and50%ofTMToccupiers,while67%of life
scienceoperators continue to favour suburban areas.
Locationdecisionsoften illustrate the tensions
amongdifferentdrivers andobjectives, as companies
seek the rightbalanceof cost reduction, talent
access, visibility to customers, andflexibility.Most
respondents, especially inEMEA andNorthAmerica,
view these conflictingobjectives asdifficult to
reconcileoutsideof coreurban areas,whichprovide
access to talent,offerbrandingopportunities, and
enhanceflexibility.Approximately43%of respondents
said theirorganizationsplan to relocate suburban
sites tomore central locations, and this trend
has increased yearon year.Tomeet cost targets,
companies relocating tourban areas increasingly
adopt agileworkplace strategies,makingbetteruse
ofmore expensive space.
“Thedwindlingsupplyofsuitable
labourtocarryoutbusinessoperations
remainsafundamentalchallenge.”
28%
IDENTIFYCOSTASTHEKEYLOCATIONDRIVER
10/CUSHMAN&WAKEFIELD
Manufacturing Risk Index
APAC BFSI Outlook
Occupier Strategy Drivers:
Global Survey
10,000,000
11,000,000
12,000,000
13,000,000
14,000,000
15,000,000
16,000,000
17,000,000
18,000,000
19,000,000
1990 19921994 1996199820002002 200420062008201020122014 201620182020
Figure 1:USMANUFACTURING JOBSANDFORECAST
ESTABLISHED INDEX
FINDINGS
>ForconsecutiveyearsMalaysia topsourEstablished Index rankingas
anattractivemarket for locatingmanufacturing facilities
>AsiaPacificcountriesoccupy sevenplaceswithin the tophalfofour
Established Index
>InChina,policieseitherencouragingordirectly funding investments
in scienceand technology, technology transfer, sustainability,and
infrastructuredevelopmentappear tobehelpingChinese-based
companies tocreatea significantcompetitiveadvantage through
criticalmass,although the regiondoes face somecompetition from
neighboringmarkets
>India risesfiveplaceson lastyear -Given thepresentGovernment’s
focuson ‘Make in India’ India iswitnessing increasing investmentsby
globalmanufacturers. It isanticipated that this increase in investment
will further support infrastructure improvementprojects,especiallyas
furtherpoliciesand regulationsactually take shape
UNITEDSTATES
ANDCANADA
SECUREPOSITION
INTOP 10
>BothTheUnitedStatesofAmerica andCanada
secureplacementwithin the top 10
>Strong and supportivepolicies and investment
surrounding research&development and innovation
reinforce the attractionof theUS -offsetting the
higher costs
>Evenprior to the 2016 electionofPresidentElect
Trump,figure 1 identifies the startof a resurgence
inmanufacturing in theUS – inpartdue to some
re-shoring initiativesbut also via a shift in focus
to thehigher value endof theproductionprocess.
While thenewpresident is committed tobringing
manufacturing jobsback to theUS,how this can
bemanagedon any significant scalewithout
increasing the costsofproduction and as such
negatively impacting the competitivenessof theUS
manufacturers is yet tobe seen
>Canada retains a low-riskprofiledespiteheightened
risk exposure surroundingPresidentElectTrump’s
decisions surrounding theNorthAmericanFreeTrade
Agreement (NAFTA)
ASIAPACIFIC
CONTINUESTO
DOMINATE
TOP 10
Source:OxfordEconomics
FORECAST
6
CRE & STRATEGY ALIGNMENT
COST-DRIVENDECISIONSOVER
STRATEGICPRIORITIES
How successful areCREexecutives
in translating theirwiderorganization
strategy intoday-to-day
decisionmaking?
Basedon responses toquestionson their
perceptionofbusiness challenges,we
learn that they’rehaving adi‚cult time
transitioning from traditional cost center
models tomore strategic resourcemodels
that supportorganizationalobjectives.
Thedepthof the challengebecomes
evidentwhenwe compare theCushman&
Wakefield/CoreNetGlobal survey results
with thoseof theConferenceBoardCEO
Challenges survey.Talentmanagement
and innovation are at the topofCEOs’
agenda, so it’snatural to suppose thatCRE
strategieswouldbe alignedwith those
goals. Instead,occupancy cost tops the list
ofCREpriorities, as cost concernsdrive the
potential forportfoliooptimisation.
“Talentmanagementand
innovationareatthetop
ofCEOs’agenda,soit’s
naturaltosupposethat
CREstrategieswould
bealignedwiththose
goals.Instead,occupancy
costtopsthelistofCRE
priorities,ascostconcerns
drivethepotentialfor
portfoliooptimisation.”
4/CUSHMAN&WAKEFIELD
MANUFACTURING
RISK INDEX
2017
OCCUPIER
STRATEGY DRIVERS:
GLOBAL SURVEY
2016
WHATOCCUPIERSWANTSERIES
HAVE YOU READ THIS? FIND A ROUND-UP OF
THOUGHT-LEADERSHIP AND RESEARCH FROM
CUSHMAN & WAKEFIELD’S PROFESSIONALS IN Q1
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