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News release

CHICAGO, IL

Latin America Corporate Real Estate: Portfolio, Outsourcing Growth Potential

Jones Lang LaSalle global survey reveals that Latin America’s economic growth is coupled with a hesitancy to outsource corporate real estate services


CHICAGO, Sept. 4, 2013 — Corporate real estate executives based in Latin America face diverging directions in the region’s economic growth patterns—but they share a reluctance to outsource corporate real estate services. While many corporate real estate trends are global in nature, corporations operating in Latin America face certain challenges that are unique to the region, according to the biennial Jones Lang LaSalle (JLL) Global Corporate Real Estate Trends (GCRES) 2013 report, which polled 630 corporate real estate executives in more than 39 countries.

“Corporate real estate executives in Latin America have been laser-focused on managing rapid corporate real estate portfolio growth, and less interested in outsourcing. Today, they are poised to adopt outsourcing as a means of maximizing real estate potential in a somewhat volatile economic environment,” said Christian Beaudoin, JLL Head of Corporate Research, Americas. “In contrast, executives in the United States and Canada have been dedicated to portfolio optimization and productivity in recent years, and are more likely to have mature outsourcing programs.” 

Rapid portfolio growth presents unique demands
Latin American growth has been outpacing much of the developed world for some time, according to the International Monetary Fund. Economic growth has led to a new middle class and expanding workforce, both domestic and in foreign subsidiaries. One million square feet of new office space is under construction in Mexico alone, according to JLL’s Third Quarter 2013 Global Market Perspective.

Growth has recently slowed in the economic engines of Latin America, Brazil and Mexico, where GDP is expected to grow by less than two percent in 2013. However, the Economic Commission for Latin America and the Caribbean (ECLAC) projects GDP growth in other Latin American countries outpacing the United States and Canada. As of July 2013, Paraguay had gained a 12.5 percent rise in GDP, followed by Panama (7.5 percent), Peru (5.9 percent), Bolivia (5.5 percent), Nicaragua (5.0 percent), Chile (4.6 percent) and Argentina (3.5 percent).

Expansion by Latin American companies is anticipated to be primarily domestic, although Brazilian companies are growing rapidly on the African continent. As a result, real estate executives remain focused on strategies that support the expansion of sales and operations.

Compiled during 2012, the GCRES revealed that 66 percent of corporate real executives in Brazil and 45 percent in Mexico were focused on expanding their portfolios within the next three years. In contrast, only 34 percent of U.S. corporate real estate executives expect to expand their portfolios, and only 20 percent of executives based in Canada are forecasting substantial growth.  

Density and data in the portfolio
While growth is a common challenge, approaches to expansion differ greatly throughout the region. In Brazil, employment growth has slowed since 2011, but only 40 percent of corporate real estate executives expressed a shift toward increased workplace density. In contrast, 78 percent of corporate real estate executives in Mexico are focused on increasing density before adding space.

However, both Brazil and Mexico share a need for portfolio data. In Brazil, for example, 50 percent of executives say they lack access to the data needed to analyze portfolio value and performance.

To outsource or not to outsource
Given relatively low labor costs and less focus on cost optimization, companies in Latin America have been slower than other regions to outsource real estate functions. Globally, less than 25 percent of corporate real estate departments manage all activities in-house, while in Latin America that figure is 56 percent. Similarly, 15 percent of companies globally outsource all corporate real estate work, while only six percent of companies in Brazil do so — and zero in Mexico.

“As domestic growth slows and efficient operations become more of a priority, companies in Brazil and Mexico are beginning to explore the cost savings opportunities that outsourcing can provide,” said Mark Melas, Account Director for JLL in Latin America. “Latin America companies expanding their global footprints may seek to reduce risk by engaging global service providers.”  

Wondering where your firm stands?
Find out how your organization compares in key areas such as outsourcing plans, workplace strategy and resource capacity. Answer five quick questions via JLL’s interactive online tool and receive an instant comparison of your responses with the survey result norms. To request a full copy of the report, visit www.jll.com/globalCREtrends or download a presentation on JLL’s Slideshare profile. Social media users can also engage in the conversation about the future of corporate real estate on Twitter using #CRETrends

A leader in the real estate outsourcing field, Jones Lang LaSalle’s Corporate Solutions business helps corporations improve productivity in the cost, efficiency and performance of their national, regional or global real estate portfolios by creating outsourcing partnerships to manage and execute a range of corporate real estate services. This service delivery capability helps corporations improve business performance, particularly as companies turn to the outsourcing of their real estate activity as a way to manage expenses and enhance profitability.

About Jones Lang LaSalle
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Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.3 billion of real estate assets under management. For further information, visit www.jll.com.