Study: Corporations optimistic despite 9/11.

Global corporations are placing greater emphasis on building security in the wake of Sept. 11, but remain surprisingly optimistic about their businesses, as evidenced by a new global survey by Ernst & Young that reveals many plan to expand operations in the next 12 months.

The global survey of real estate executives released in Cannes last week; at the annual MIPIM conference, suggests that amid rumblings of a period of expansion in the U.S. economy, corporations -- though mindful of Sept. 11 -- are now setting their sights on renewed growth.

The web-based survey -- Trends in Global Real Estate Survey: The Latest in Technology, Security, and Corporate Real Estate Strategy -- was conducted. in mid-February and includes responses from corporate end-users and real estate investors with properties in 70 countries. The survey shows a dramatic change in attitude toward business expansion and security issues from the immediate aftermath of the attack on the World Trade Center in New York.

"Overall, the survey reveals a far more positive attitude toward many aspects of the global economy than most corporations were showing in the immediate post Sept. 11 period and there are some positive indicators revealed here for the real estate sector," said Mark A. Smith, managing partner of Ernst & Young's global real estate advisory services practice.

For example, Smith says, the survey, indicates that 42% of the respondents plan to expand their businesses and acquire or invest in additional real estate in the next year. At the same time, almost 40% plan to maintain the amount of real estate they currently occupy. Less than 20% expect to vacate real estate they currently occupy. "It's clear that facility expansion is on the minds of many global corporations. What remains uncertain is how robust this next stage of expansion will be," Smith said.

The events of 9/11 have had a clear impact on how corporations view the physical security of their employees and this may translate into long-term changes with a significant impact on real estate strategy and decision-making.

Roughly one-third of corporations responding to the survey indicated that they would be less likely to lease space in a high profile building like the World Trade Center as a direct result of the September attacks. However, 85% indicated that concentrations of employees should not be affected by the events of 9/11 -- an indication that corporations are not planning an immediate exodus from central business districts.

"All this suggests that real estate investors around the world -- many of which also participated in the survey -- may be on point when they unanimously indicate that they have made little or no change in their investment strategy as a result of 9/11," said Dale Anne Reiss, of Ernst & Young's real estate group. "While high profile buildings around the world may have slipped in some tenants' eyes -- at least for the time being --real estate investors in the world's biggest cities seem to be confident that the overall impact on their investment strategy will be minimal."

Interest in security at the senior management level has increased since September. About 65% of respondents admitted "board level interest" in security issues, a change from the days before 9/11. Only a very small number of respondents -- 4% -- have committed additional expenditure to physical security. However, almost half the respondents believe additional spending is necessary and are in the process of evaluating where new monies will be spent.

The survey also asked questions about technology and found that corporations still have a long distance to go in embracing applications that could make their tracking of facilities and real state more efficient and cost effective.

Several technology applications -- such as enterprise-wide technology solutions, handheld devices, and even Computer Aided Design systems -- have failed so far to penetrate most corporations. Online procurement technology also appears to be among the technologies firms are slow to adopt since only 31% of survey respondents say they utilize web-based systems to procure commodity items for their facilities.

However, the web has so far failed to strike a chord with corporations seeking to execute real estate transactions. Only 15% of respondents have used the web to pursue such transactions, indicating hat the long feared disintermediation of real estate brokers by the web remains a long way off.

The survey revealed some surprising responses regarding corporate real estate strategy. Some 44% of respondents, for example, indicated they are exploring ways of raising capital from their owned real estate portfolio.