ATLANTA-Space costs are changing rapidly, forcing global corporations to break away from the herd. As a result, companies with “allshore” or multi-shore location strategies are focusing on second- and third-tier markets throughout the Americas, Europe and Asia, according to panelists at the CoreNet Global Summit here.
During “Around the World in 90 Minutes,” moderated by Dennis Donovan, a principal of WDG Consulting, corporate real estate executives shed light on the world's emerging hot spots. “We're looking at cities, not countries,” said Dennis Meseroll, managing director of Tractus Asia.
Asia in general, and China in particular are hot among expanding companies. But “operations in Beijing can cost as much as in Belfast and as much or more than in the US,” he said. “Don't go where everyone's going,” he advised, and at the same time said good data is hard to find in less recognized markets. “Do your homework on the ground, and budget enough time to do a thorough analysis,” he warned.
Dalian, Chongging and Chengdii, China are among the emerging Asian markets Meseroll identified. Others are Bangalore, Hyderbad and Chennai, India. For manufacturing, he listed China's Pearl River and Yungtze deltas and Ho Chi Minh City and Hanoi in Viet Nam.
Roger Nesti, manager of corporate real estate for Kennametal Inc. seconded Meseroll's warnings. He told of narrowing a list of potential sites in China from more than 1,400 before selecting Tianjin Wuging, which prevailed “because of speed,” he said. In the search process a joint venture fell apart, which prompted him to advise, “always have a back up if you're negotiating a JV. And always budget enough time; it always takes longer than you think.” His list of new Asia hot spots includes Kolkata, Nagpur and Vizaz in India.
Europe has had a record year of corporate real estate expansion, according to Rene Buck, principal of Buck Consultants International, “despite 27 different tax rates and 20 official languages.” He pinpoints Glasgow and Edinburgh in the UK, Brno in the Czech Republic, Debrecken in Hungary and Sofia, Bulgaria as upcoming cities for back office locations. For manufacturing: Istanbul, particularly if Turkey joins the European Union, Kiev in the Ukraine, Constanta in Romania, Kosice in Slovakia, and Plovdiv in Bulgaria.
“Nearshore” locations for US corporations, according to Donovan, include Cordoba and Rosario in Argentina; Brazil's second-tier cities of Recife, Curitiba, Puerto Allegre, and Belo Horizonte; Tegucigalpa in Honduras; and all of Grenada, Dominica and Bermuda. Quito, Ecuador was on Donovan's list, he said, “but the recent election of a populist president could impede its emergence as a new option.”
In Canada and the US he sees growth for small sleeper towns. Among the more than two dozen in the US are: Elmira, NY; Urbana, OH; Longview, TX; Centralia, WA; Leesville, LA and Fort Dodge, IA. In Canada, Saskatoon, Saskatchewan; Guelph, Ontario, and Kamploops, British Columbia, are among nearly a dozen he cited.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
