Jones Lang LaSalle welcomed 120 professionals to their 17th South Coast Metropole Breakfast this morning at the Chilworth Manor Hotel in Southampton. Michael Green, the Lead Director from the Southampton Office and Andrew Burrell, Head of European Forecasting Teams, reported on the assessment of the global and national issues that will affect the Metropole economy over the next 12 months. Andrew provided us with an overview of the current economic situation, but more importantly provided some pointers to help us understand the challenges that the next economic cycle will bring us, and how we can best.
Michael Green said “This time last year we faced three problems – a massive debt crisis, a weakening US economy and a faltering Eurozone. We faced one adrenalin rush after another, bad news following bad news dashing any hopes that we were even close to finding the road to recovery.
Even the term “green shoots” was dropped unceremoniously from the sound bytes of our the politicians for fear of ridicule
It all looked pretty scary. We faced the possibility of a messy and ill-tempered break-up of the Euro, the States falling back into recession and years, if not decades of zero growth and high inflation.
But, a year on, the US has not fallen back into recession and is actually doing ok-ish, backed by a third round of quantitive easing to help drive down stubbornly high unemployment rates. The Eurozone is still hanging on in there, and the UK economy, although still flat, is ever so slowly, beginning to show some signs of life. 2012 was always going to be a tough year, but that doesn’t mean that shouldn’t be planning for the future, because short of an unlikely full scale break-up of the Eurozone, growth will return, and we best be ready for it when it comes.”
Andrew Burnell said that we are stuck in the post-credit crunch rut where the UK economy is 4% smaller than it was in 2008 and the outlook is highly uncertain. Short-term noise obscures strategic focus. The conditions are tough, but growth will return. It is important now to plan for the opportunities.
Andrew followed onto say, “troubles lie in the developed world with encouraging signs, but the Eurozone crisis will not go away. The outlook for the next 12 months will remain fragile but an improvement is in prospect. The future will be different but not always in obvious ways. It is critical to understand global markets, dynamic sectors and urban drivers. We need to understand the challenges of the next real estate cycle. The rising demand for experiential and productive real estate, the sustained impact of sustainability – people don’t understand the impact. Also the growing trap of obsolescence, in offices it’s a big problem. The resetting of capital markets- people just do not understand the implications but need to understand the structural changes and also the intensification of competitive urbanisation; the Google offices are productive, creating space whereas the Apple shop is an experience rather than going in to buy the product.”
