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Four efficiency challenges facing financial services real estate teams

Banks under pressure to increase workplace productivity

SINGAPORE, CHICAGO, LONDON 12 NOVEMBER 2013 - According to results from the 2013 Jones Lang LaSalle Global Corporate Real Estate Survey, commercial real estate teams at banking and financial services companies need to tackle four main risks that collectively impact real estate productivity.

These risks are outlined below and can be viewed in more detail within a new report, entitled The Productivity Imperative: 2013 Corporate Real Estate Trends for Banking and Financial Services:
  1. Staffing and portfolio efficiency
  2. Workplace productivity expectations
  3. Interaction with procurement teams
  4. Managing emerging market expansion
1. Demonstrate CRE staffing efficiency
Data gathered from 147 banks across the world reveals that banks possess an average CRE/total company staff employee ratio of 1:2,412. This varies significantly by the size of the bank, but on average, is below the 1:4,000 ratio of other large organisations and is the lowest ratio in the private sector.
Jeff Schuth, International Director, Corporate Solutions, Jones Lang LaSalle said “Banks were early pioneers in outsourcing real estate services, primarily in the search for cost savings. But over the last ten years other sectors have now caught up and, in some instances, even overtaken them. Financial services organisations have a diverse range of real estate space requirements that requires careful management; this cross-sector analysis raises the question whether there is still room for improvement.  Banks are now turning their attention to new issues related to workplace productivity, closer business alignment for proactive portfolio management and more advanced partnering models which have a more strategic focus and integrate their service requirements,” 

2. The workplace must work hard
Despite this backdrop of potential staffing inefficiency, banks lead the way in wanting to extract maximum productivity from their workplace. 81% of financial services corporate real estate teams are under increased expectations to deliver workplace productivity gains. This compares to 72% across all other industries.
Claudia Hamm-Bastow, Head of Workplace Strategy, EMEA, Jones Lang LaSalle commented, “There is clear pressure from business leaders to improve the productivity of their workplace. Banking executives understand that the quality of the work environment has a direct impact on organisational culture, client centricity and ultimately profitability. After years of sole focus on cost reduction or avoidance, creating a positive employee experience is moving into the limelight with a strong emphasis on creating spaces that people are attracted to work from and excel in.”
3. Balancing procurement power
With 48% of financial services corporate real estate teams revealing that procurement teams are actively involved in real estate decisions, the procurement function has a greater influence on corporate real estate in banks than any other industry. 

Commenting, Iain Mackenzie, International Director, Corporate Solutions, Jones Lang LaSalle said: “Banks are facing greater regulatory and cost cutting pressures in their operating environments. Over the past two years, we have seen the positive influence that procurement teams can have by introducing structure and accountability to real estate decisions. This works best when procurement professionals look beyond short-term cost cutting and focus on the wider value that real estate services can bring to the business in the long term, such as boosting workplace productivity.”
Source: The Productivity Imperative, Jones Lang LaSalle

4. Emerging market transparency challenge
According to McKinsey and Company, formal banking services reach reaches only 37% of the population within emerging markets. This represents a significant revenue and international expansion opportunity for banks. However, many of the markets where banks are looking to expand across or into, do not possess the optimum infrastructure or real estate market transparency metrics. This can make real-estate decision-making or implementation difficult, especially when success in a global banking environment required optimised cost structures.
Commenting in closing, Stuart Hicks, President, Banking Industry Group, Jones Lang LaSalle said; “The banking world is changing rapidly and real estate teams can’t afford to stand still. Each of these identified risks can seriously impact real estate productivity. Those teams who can demonstrate independent analysis or cross-sector benchmarking will be best prepared to deal with each topic”.
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About Jones Lang LaSalle
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 $46.7 billion of real estate assets under management.
Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 26, 700 employees operating in 80 offices in 14 countries across the region. The firm was named ‘Best Property Consultancy’ in three Asia Pacific countries at the International Property Awards Asia Pacific 2013, and won nine Asia Pacific awards in the Euromoney Real Estate Awards 2013. 
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