Beyond the tragic, heartbreaking human toll of war, the biggest armed conflict in Europe since 1945 is already bringing massive change to corporate strategy, location decisions, and both corporate and commercial real estate.

Growing numbers of global corporations, which began setting up operations in Russia following the breakup of the former Soviet Union in the early 1990s, are signaling that they will cease business operations or even exit the country because of the Russian invasion of Ukraine. Here’s a sampling of recent headlines:

  • Exxon has announced it is stopping its Russian oil operations and will make no additional investments in the country
  • Boeing has closed its office in Moscow and has ceased providing parts, maintenance, and technical support services to airlines in Russia
  • Ford has closed its three plants in Russia
  • Apple has paused all product sales in Russia
  • Shell has announced it will end its $3 billion partnership with Russian state energy company Gazprom
  • BP said it will divest its $14 billion stake from Russian oil giant Rosneft

As reported by the BBC, companies do not want to be associated with the Russian regime and what’s happening in Ukraine. Their Russian business may be profitable, but “the rest of the world is more important when it comes to a reputational risk like this,” said Chris Weafer, chief executive of consulting firm Macro-advisory Limited, who has worked in Moscow for the past 24 years.

Ukraine, a country with a large, highly educated population of some 42 million, is strategically located within Europe. It, too, has attracted substantial investment – offices, manufacturing plants, retail operations and other facilities – from U.S. and other multinational corporations in recent decades. 3M, BASF, Bayer, Citibank, Nestle, and Toyota are just a few of the leading corporations with operations in Ukraine.

Major real estate service providers including CBRE, JLL, Cushman & Wakefield, Colliers, and others entered the market, as they did in Russia, to serve their corporate clients.

In good times and bad, and in both peace and war, corporate real estate (CRE) must align with the business to be successful. In the context of Russia, that might mean exiting locations, canceling leases, disposing of surplus assets, or other strategies.

For Ukraine, the path forward for CRE is exceedingly unclear, perhaps impossible to navigate, in the near term as bombs continue to fall.

Those business and real estate implications, of course, pale in comparison to the human impact and suffering that the conflict – just a week old at this point – has brought. Approximately 1 million Ukrainians have fled the Russian juggernaut, and hundreds, perhaps thousands, of lives have been lost.

Our thoughts are very much those of JLL, with business and corporate clients in both Ukraine and Russia. Here’s a message JLL posted on its website yesterday:

“We are deeply concerned by the attacks on Ukraine and condemn the invasion by the Russian military. We are witnessing an absolute tragedy unfold in plain sight and like millions around the world we are profoundly saddened. These actions are in direct contrast to our purpose and core values, and we strongly encourage all parties to find peace and end this war.

“Our immediate priority has been the safety of our people, clients and suppliers both inside Ukraine and across Eastern Europe. We are investing significant resources to protect our people in Ukraine and have teams working tirelessly to support our relief efforts. We have been moved by the compassion and unwavering support shown from our JLL employees around the world to all those who are impacted. 

“In Russia, we are in the process of helping our people and clients adjust to the rapidly changing situation. Our focus is guided solely by the safety and wellbeing of our people and the commitment to help our clients as they consider actions regarding their own operations moving forward.

“Our thoughts are with our colleagues, their families, and the people of Ukraine. We stand by you.”