Pictured: David Binks

Midlands businesses are to continue to fight their way out of the recession by cutting costs, including those associated with the properties they occupy, according to a major survey by Cushman & Wakefield.

The company's annual Insight 500 research, the largest in-depth survey of senior property decision-makers in the UK, found that companies are scrutinising their real estate strategies to search for ways to use property they occupy more efficiently and to make cost savings.

The survey - which analysed the views of 500 of the UK's largest companies, seven per cent of which are based in the Midlands, found that many companies (32 per cent) were expecting the economy to worsen during the next year.

Of those, 28 per cent said they were looking to cut costs this year with 38 per cent intending to reduce their property space or to use it more efficiently (36 per cent), while nearly four in ten (39 per cent) planned to sub-let their space in 2012.

The survey also asked the key sectors which make up the economy about their views on prospects for the coming year.

Particularly significant was the relative optimism of the manufacturing and logistics sectors, both of which are extremely important to the Midlands economy. 

Nationally, the survey found that manufacturing and logistics were more confident than others about the UK's economic performance, which Cushman & Wakefield said had resonance in the Midlands partly due to the boost by such news as Jaguar Land Rover's plans for a new engine plant on the i54 business park in Wolverhampton, and Amazon's decision to locate a new 700,000 sq ft warehouse at Rugeley. 

The survey found that although the manufacturing and logistics sectors differed in their levels of optimism for growth over the next year, both were concerned about rising prices and the global economic slowdown. The logistics sector was more optimistic than manufacturing about the economic prospects over 2012, although both sectors were ambitious about their growth prospects. 

When asked about their strategy for 2012, the proportion of logistics and manufacturing companies looking to pursue opportunistic or aggressive growth was higher than the average across all sectors (69 per cent and 72 per cent respectively). 

Almost a third of manufacturers (31 per cent) were seeking aggressive growth. While the economic slowdown and increased competition are acknowledged, logistics and manufacturing companies were particularly concerned about increasing costs - particularly of raw materials and fuel - and a decline in demand. 

Due to the present sluggish economy at present, a high proportion of logistics and manufacturing businesses - 56 per cent and 60 per cent respectively - expected the amount of industrial floor space they occupy to remain stable over 2012. 

However, companies in both sectors said they were looking at ways of using their real estate more flexibly and efficiently, including sub-letting surplus space. 

When asked about what influenced their choice of real estate, logistics and manufacturing companies cited two priorities: the availability of suitable workforce, and opportunities for increasing sales. 

When asked about their property portfolio in three years' time, one in four logistics (26 per cent) and manufacturing (24 per cent) companies predicted that it would look very different. The consensus amongst these occupiers is towards consolidation, with property that will deliver more value for the business. 

David Binks, Birmingham-based industrial agency partner at Cushman & Wakefield, said: "As logistics and manufacturing companies look to reduce costs by seeking out efficiencies in the supply chain, the move is towards consolidation, with property that will deliver more value. Future real estate will be smaller, leaner, more cost-efficient, greener and future-proofed."

Scott Rutherford, head of Cushman & Wakefield's Birmingham office, said: "UK businesses continue to grapple with a tough economic environment, although here in the Midlands there seems to be more optimism than other areas.

"The Midlands is also likely to be a key beneficiary of the Government's key infrastructure decisions, including the proposed HS2 high speed rail line.

"Despite this, companies are paying closer attention to the return on investment that real estate brings to the bottom-line, and are placing greater focus on property's strategic suitability."

The Insight 500 survey, carried out by Lighthouse in July-August 2011 amongst the UK's largest companies, identifies key areas of property decision-making where real estate's impact on a company's return on investment can be maximised.