Corporate RE Execs Take Bullish View of Q4

ATLANTA-Executives in corporate real estate generally have an upbeat outlook about this year's fourth quarter, judging by the latest CoreNet Global Confidence Index survey. GlobeSt.com has obtained results of the survey prior to its general distribution.

The Q4 rating is 4.55, which is considered optimistic—off just slightly from the 4.65 reported in the first index, published this past July and reflecting the outlook for the second half of 2013. The rating is based on a scale of 1 to 7, with 7 representing an extremely optimistic environment. The index was developed in conjunction with Dr. Roy Black, director of the real estate program at Emory University's Goizueta Business School in Atlanta.

A majority of survey respondents—54%—rated their outlook on the global economy for Q4 as optimistic. Forty percent were neutral on the question, and only 5% came in at the pessimistic end of the scale, an incremental increase from the 4.2% who took this position in July's survey.

When the question turned to the executives' growth prospects for their own companies in Q4, the future appeared even brighter. Seventy-two percent rated their confidence levels in the prospects for business expansion as optimistic or better, with 8% counting themselves as very optimistic. Eight percent also took a pessimistic view of the outlook for their own companies' growth and expansion, while 20% of respondents were neutral.

“We continue to see both through the survey and anecdotally that corporate real estate executives are optimistic about their own company's prospects and the global economy overall,” says Angela Cain, CEO of CoreNet Global, which has just wrapped up its three-day CoreNet Global North American Summit in Las Vegas. “We believe this is based both on flexible and emerging workplace strategies, availability of capital and greater efficiencies in cost reduction, among other factors.”

In announcing results of the inaugural survey in July, CoreNet Global cited the strength of the private sector as the main driver of otherwise sluggish economic growth. “The [US] private sector is now in a strong growth mode of 3.5 percentage points of GDP,” Moody's Analytics' chief economist, Mark Zandi, told GlobeSt.com in July. “Consumers and business are doing their part to support the recovery.”

Although the executives polled by CoreNet Global manage real estate portfolios that range between two million and 110 million square feet globally, they do so within the context of a broad base of economically diverse multinational companies. Among the sectors they represent are the following: 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.

Black calls the survey results “very encouraging for the near- to middle-term future of corporate real estate. In the future, this index should provide a valuable gauge of trends in the marketplace.”