Is Inflation Affecting Corporate Real Estate Decisions?

The high inflationary environment is having an impact on corporate real estate decision making, finds a new survey from CoreNet Global.

T he high inflationary environment is having an impact on corporate real estate decision making, according to a new CoreNet Global report. According to the survey, 62 percent say that the current rate of inflation is having an impact on corporate real estate decisions.

corporate real estate decision making
(Photo: Adobe Stock by hanohiki)

Of those:

  • More than half, 54 percent, are consolidating locations
  • Forty-two percent are reducing the size of leases they are signing
  • Forty-one percent are looking for more cost-effective buildings and lower rents
  • Thirty-seven percent are signing fewer leases
  • 34 percent say that annual escalations are 100 basis points higher than normal

While nearly 60 percent of the respondents say that their company is in growth mode, 75 percent expect the U.S. economy to slip into recession by the end of 2023 and 72 percent expect the global economy to slip into recession by the end of 2023.

Forty-four percent say that compared to prior to the pandemic their overall corporate real estate footprint has decreased; 21 percent say that it has increased, and 34 percent say that it has stayed the same. Between now and 2025, 39 percent expect an increase in the size of their corporate real estate portfolio, 42 percent expect a decrease, and 19 percent say that it will stay the same.

The survey was conducted in June-September 2022 and yielded 175 responses from all regions including North America, Europe, Asia and the Middle East.

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