Corporate Real Estate Executives Challenged by Excess Space

CHICAGO, Sep 8, 2003 /PRNewswire-FirstCall via COMTEX

A survey issued today by Jones Lang LaSalle reveals that corporate real estate executives (CRE executives) are cautiously optimistic about the economy, but are still struggling to deal with a substantial inventory of excess space. Furthermore, new accounting rules regarding the impairment of excess space have created additional hurdles for CRE executives.

'While the past couple of years have been difficult for CRE executives, some important lessons have been learned,' said Richard McBlaine, President, Strategic Consulting, Jones Lang LaSalle. 'The next real estate cycle should see CRE executives putting greater emphasis on the flexibility of their portfolios. At the same time, the new accounting rules governing the impairment of excess space should ultimately bring additional visibility to real estate markets.'

Among the survey's findings:

-- CRE executives are generally optimistic regarding the economy. Almost half (49 percent) state that they are either 'highly optimistic' or 'somewhat optimistic.'
-- More than a third (35 percent) report that their excess capacity is more than 15 percent of their current portfolio, while 60 percent claim levels above 10 percent.
-- Two-thirds of CRE executives expect to add space by 2005, with
approximately 20 percent expecting to need space imminently in 2003 or 2004.
-- While more than 20 percent of respondents have impaired more than 50 percent of their excess space, almost half have impaired less than 10 percent.
-- "Lack of flexibility in existing portfolio" was cited as the biggest
hurdle in reducing real estate costs. Sphere: Related Content