With the second quarter of 2012 already upon us it strikes me the much anticipated recovery still has a long way to go here in Europe.  As I look out of my window to a typical London combination of April showers and sunshine, it seems by a strange quirk of fate that the conditions for corporate growth resemble the weather.

On the one hand we still have persistent showers emanating (unusually) from southern Europe and particularly the Iberian peninsula. Talk of rising sovereign debt yields and potential bailouts have resurfaced once again, although thankfully the violent storms from the Aegean that threatened in November and December appear to have subsided, at least temporarily.

Conversely, it appears that after a period of caution and restraint in the second half of last year, corporate confidence is on the rise once again. A recent survey of over 2000 global executives from McKinsey, shows a greater number of respondents reporting improved operating conditions in their economies now, and anticipating further improvement over the next 6 months.

How far and when this shift in sentiment will lead to increased corporate investment and expenditure remains the big unknown for government, financial markets and corporate real estate teams alike. Examples abound of the healthy state of corporate balance sheets, yet much of the evidence still reflects caution. M&A volumes, a key barometer of corporate investment levels, remained depressed in the first quarter reflecting five successive quarters of falling volumes. Only time will tell if this is merely a typical ‘time-lag’ between leading indicators and deal volumes, or a more sustained shift in the corporate climate.

One thing is for sure, investment and expenditure on Corporate Real Estate will continue to be shaped by this broader operating climate. A stable and sunny forecast would be a welcome respite for many of those CRE executives who have grown used to implementing real estate strategy in decidedly inclement weather.