Corporate Social Responsibility Report 2019 | Cushman & Wakefield

TOP 2019 CUSHMAN & WAKEFIELD RESEARCH

CUSHMAN&WAKEFIELDRESEARCH

TheU.S. yield curve isonce again causing angst,but theworries there too, are likelyoverdone.The spreadbetween theU.S. 10-year and the 3-monthTreasury yieldwas inverted formostofMay and the first halfof June.Thisof coursemakes investors uncomfortablebecause an inverted yield curve hasproven tobe a reliablepredictorofpast recessions. In fact, since 1970, the yield curve has inverted seven times and every time this hasbeen followedby a recession, at various lags.This track record inpredicting recessions is second to none,which iswhy it is attracting so much attention in the financialmarkets. However, the recent curve inversion isoccurring for reasons that arequitedifferent thanones that have signaled recessions in thepast.Typically, recessionsoccurbecauseof theFed’s efforts to address an economy that isover- heatingor showing signs that itmay soondo so.With core inflation stillwellbelow 2% and trending lower, there is very little evidence indicating theU.S. economy isoverheating,or is at the cuspofdoing so.More likely, the recent inversion isdue toother factors, such as a flight toquality in financialmarkets (e.g.,U.S.bonds)due to the tradedis- pute and slowingglobalgrowth. It is unlikely that the current inversion is signaling an imminent recession.Moreover, the current stateof the yield curvedoesprovideopportunities for investors to reengineer theirdebt, switchingout of shorter-termdebt and locking inmore longer-termdebt at lower rates. Aswe look ahead to the second halfof the year and to 2020, certainly there aredownside riskswhichwewill con- tinue tomonitor.But there is also compelling evidence that the economic fundamentals are not the sourceof any risks to theoutlook. Indeed, assumingpolicymisstepsdo notderailmomentum, the IMFprojectsglobalgrowthwill improve in the second halfof 2019 and return to 3.6% in 2020.Few analysts, if any, are calling for aglobaldown- turn tooccur anytime soon.The economic expansion,which in theU.S.willofficiallybe the longeston record come this Julywill in allprobability continue tomove forward.Overall, theglobalbackdrop is stillprettygood, just not as good.Andpropertymarkets haveperformed just finewhengrowthwas “goodbut notgreat’’—this time shouldn’tbe anydifferent.

EXECUTIVE

SUMMARY

BENEFITSOFCOWORKING What are themainbenefitsof implementing coworking aspartof a company’s real estateportfolio?

CUSHMAN&WAKEFIELDRESEARCH

GlobalMacroForecast: StillGood, JustNot As Good

BenefitsbyCurrentCoworkingUsage

BenefitsbyOverallPerceptionsofCoworking

PERCEPTIONS OFCOWORKING

No,not currently using coworking

Yes, currentlyusing coworking

Negative / Verynegative

Neutral

Positive /Verypositive

June 2019

ExecutiveSummary • Global economicgrowthhasdownshifted.RealGDP isprojected togrowby3.3% in 2019—still reasonable, but abigpullback from the close to4%growth registered at thepeak in 2017.

0% 10% 20% 30% 40% 50% 60% 70%

40%

30%

• Demandmetrics forproperty also slowed inQ1 2019but remainedpositive; vacancy isholding steady and rents are appreciating acrossmostproduct types andgeographies.

• While slowdowns areuncomfortable, they arenecessary; there are alsobenefits.

20%

REAL ESTATE

KevinThorpe ChiefEconomist,GlobalHeadofResearch kevin.thorpe@cushwake.com Connecton Twitter andon LinkedIn

RebeccaRockey Economist,AmericasHeadofForecasting rebecca.rockey@cushwake.com Connecton Twitter andon LinkedIn

COSTS

• Although theU.S.-China tradedisputehas taken a turn for theworse, there are economic incentives toget adealdone in shortorder.

0% CREEXECUTIVEPERSPECTIVES ONCOWORKING HOWANDWHYTHEFLEXIBLEWORKPLACEMATTERS 10%

• TheU.S. yield curve is causing angst again,but the recent inversion isoccurring for reasons that arequitediffer- ent thanones thathave signaled recessions in thepast.AU.S. recession isnot imminent.

• Assumingnomajorpolicymissteps, theglobal expansionwill continue;propertymarketshaveproven theyperform justfinewhengrowth is “goodbutnotgreat.”

Attracts / retains employees

Improvedefficiency ofemployees

Increasedemployee engagement / satisfaction

Ability to quickly rampportfolioup / down

Reduced real estate costs

Attracts / retains employees

Networkingwith other companies / employees

Theglobal economyhas cooled and,by extension, so toohave thepropertymarkets.The combinationof fadingfiscal stimulus in theU.S., escalating trade tensions, tighter creditpolicies inChina, four ratehikesby theFederalReserve in 2018 andBrexituncertaintyhas contributed to the slowdown.Trade is slowing this year, as is investment andglobal consumption.RealglobalGDP isprojected togrowby3.3% in 2019—a still reasonably solid ratebut slower than the 3.6%growth in 2018. It feelsmuch slower than thenear-4%growth registered in 2017.

AboutCushman&Wakefield Cushman&Wakefield (NYSE:CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners.Cushman &Wakefield is among the largest real estate services firmswith approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capitalmarkets, valuation and other services. To learn more, visitwww.cushmanwakefield.com or follow@CushWake on Twitter.

WORKFORCE

UTILIZATION

RESPONDENTSWITHPOSITIVEVIEWSOFCOWORKINGARE MORELIKELYTOSEEOPPORTUNITIESTO INCREASETALENT RETENTION,ENGAGEMENTANDEFFICIENCY.

COMPANIESNOTCURRENTLYUTILIZINGCOWORKING AREMORELIKELYTOSEETALENTATTRACTIONAND NETWORKINGASBENEFITS.

Noneof thesedevelopmentsareoverlyalarmingoreven fully unexpected.Slowdownshappenandmanyof these risks to theoutlookhavebeenon thehorizon for some time.The U.S.-China tradedispute isaconcern,butevenon that front mostwouldagree therearecleareconomic incentives for a speedy resolution. Importantly, theunderlyingeconomic fundamentals thatdrivedemand forproperty remainhealthy. Mostnotably, jobgrowth remains steady.Theglobalecono- my is tracking tocreateclose to29millionnetnew jobs this year.Thatwill translate into79,000new jobsperdayand another250million square feet (msf)ofofficeabsorption in marketsaround theworld.Wecandouble thatfigureon the industrial-logistics side. It isunlikely thatbusinesseswouldbe expandingat this rate if theglobaleconomyweren’t still in reasonablygood shape.

SynchronizedSlowdown REALGDPGROWTH,Y/Y%CHANGE

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7.0

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4.0

© 2019Cushman&Wakefield.All rights reserved.The information containedwithin this report isgathered frommultiple sourcesbelieved tobe reliable. The informationmay contain errorsoromissions and ispresentedwithout anywarrantyor representations as to its accuracy.

3.0

2.0

1.0

PERCEPTIONSOF COWORKING

WORKFORCE UTILIZATION

0.0

REAL ESTATECOSTS

EXECUTIVE SUMMARY

China

Singapore Canada Eurozone AustraliaUnitedStatesJapan

United Kingdom

So yes, theglobal economyhas slowed—and yes, it’s still good, justnot as good.

2017201820192020 Source: IMF,Cushman&WakefieldResearch

GlobalMacroForecast | June 2019

cushmanwakefield.com

2019 Coworking Report This report reveals corporate

Global Macro Forecast This report analyzes multiple factors contributing to economic slowdown and what they mean for property markets around the world.

perceptions of the value of flexible workspace and coworking strategies.

Within theurban environment, successful real estateprojects today arenot just aboutbricks,mortar,glass,metal and otherbuildingmaterials.Successful real estateprojects,whether they areprojects globallyor inChina, are aboutpeople. They are aboutpeople ingeneral across all generations.They are also aboutpeople andwhere theywant to spendmore time in,whether it’sworking, shopping, visiting or living. Influencedbypeople, realestate-associated features, such asdesign, technology, organised activities, etc., all combine to play a key role in encouraging individuals to stay in/use a real estateproject in a city a little longer,whether itbe:

instil a senseofpurpose inChina.By utilising this approach, theplanning and managementofurbanpublic spaces can thenbeperformedby an inclusivegroup who encourages social capital, shared values, a senseofownership and amore enhanced experienceof theplace and the city as awholebyurban citizens around the region. As foroffice space, and inparticular, smartofficebuildings, in the future, these buildingswillnot justbe about energy and sustainability targets.Smartoffice buildingswill also enjoy aprolonged effective economic lifespan. In the future, smartofficebuildings inChinawill also form a virtuous circleby establishing and providingplatforms to furtherpush the user/visitor experience via thegreater inter-sharing and analysisof real estate- related information anddata.What’s more, to augment theofficeworkplace experience, companies inChinawill see officeworkplacedesign,officeworkplace technology andofficeworkplacewellness andwellbeing asbeinghigh corporate priorities as they try to stay aheadof the curve in termsofbusiness competition.

Outlook2020

Demographics

•FOCUS on thedevelopment/ regenerationof schemes thatno longer alignwith thedemographic profileof an area .Designed for denseurban centres and adapted

todifferent ageprofiles and diverse culturalbackgrounds.

ARE YOU EXPERIENCED?

•PROVIDE office space and residential units as apackage to largeoccupiers, facilitating the attractionofnew talent .

ο Urbanpublic space; ο Office space; ο Retail space; ο IndustrialLogistics space; ο Hotel space,or; ο Residential space.

• IDENTIFYANDRETHINK redundant assets (carparking, fuel-filling stations, non-performing retailgalleries) and adapt them to demographicallydriven requirements: lastmile logistics, click& collect,flexibleoffice space,micro living. •CONCENTRATE on residential space for themiddle-incomepopulation , adapted to the increasingly smaller households and todifferent agegroups. DEMOGRAPHIC

WHAT YOU NEED TO KNOW

When consideringurbanpublic space, a ‘place-led’placemaking approachwill

Develop themicro living concept. Promotediversityof residential property at affordableprices.

•ALIGN private-sectordevelopments withplacemaking , creatingwell- designedpublic spaces and successful real estateprojects ensure the development accounts fordiffering expectations that areprevalent across thedemographic spectrum.

Realestatehas notkeptpacewith changingdemographics

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Part 1 Executive summary

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CUSHMAN&WAKEFIELDGREATERCHINARESEARCH

China’s ‘New’Economy Smart,Sharing andGreen 1

Outlook 2020 From the EMEA Research & Insight team, this report addresses the key challenges and opportunities that will define the future of European commercial real estate.

Experiential Real Estate in China Learn how real estate-associated features such as design, technology and organized activities all combine to play a key role in how individuals experience different settings.

Tech Disruptor Series Cushman & Wakefield’s four-part series explores technologies that have the most potential impact to disrupt CRE.

CORPORATE SOCIAL RESPONSIBILITY REPORT 2019 | 33