2023 commercial real estate outlook: Top trends to know
Many commercial real estate (CRE) property owners and operators are facing new and intensified challenges as the industry continues to shift. From the evolving workplace, to a strain on operations due to labor shortage, to an enhanced focus on ESG reporting and sustainability initiatives, CRE property teams must contend with more obstacles than ever before.
Building Engines, a JLL company, partnered with the Building Owners and Managers Association International (BOMA) to survey over 250 commercial property professionals about the state of CRE building operations and their thoughts on the 2023 commercial real estate outlook.
Here are the top trends to know as we head into the new year.
Top Commercial Office Trends for 2023
It’s no secret the CRE industry, especially in the commercial office sector, is rapidly evolving as companies implement remote and hybrid work models.
Interesting findings from The State of Commercial Real Estate Building Operations for 2023 report include:
• Only 10% of respondents who work in the commercial office sector saw their portfolios decrease over the past year.
• 64% of property teams in the commercial office segment will increase their investment in proptech in 2023.
• The majority of property teams (84%) have at least some tenants who have implemented a hybrid work model.
• 44% of CRE property teams aren’t sure what percentage of rentable square feet (RSF) they plan to change to accommodate flex space over the next two years – a missed opportunity for teams to adapt to an evolving workplace.
Top CRE Tech Trends
Property teams need to accomplish more tasks with fewer resources amid labor shortage strains and recession concerns. Saving time through greater efficiency has become more important than ever.
CRE property owners and operators are tapping into proptech to help meet their efficiency goals. The research from Building Engines shows where teams will focus on as they look to enhance their tech stack.
Top findings from the report include:
• 43% of property teams expect to increase investment in proptech over the next year.
• 46% of property teams say certificate of Insurance (COI) management and tenant issue management (i.e., work orders and incidents) are the most time-consuming aspects of their building operations. These are key areas of focus to enhance the tech stack.
• 20% of property teams are prioritizing mobile/app technology when equipping engineers.
• 68% of property teams say software to assist with building operations/equipment maintenance is a top priority in 2023.
• The number of property teams planning to invest in smart buildings/IoT technology has increased 53% since last year.
• 50% of the CRE professionals who say their buildings or square feet have increased say their investment in CRE software would also increase over the next 12 months.
Top Tenant Experience Trends for 2023
Improving tenant satisfaction is a top priority for property teams as the workplace continues to evolve. Those who don’t have a tenant engagement strategy could be left behind. The Building Engines research shows that many CRE property teams are missing a huge opportunity to engage with tenants in meaningful ways.
• 63% of CRE professionals don’t use or aren’t sure if they use tenant survey and polling data to guide business decisions, missing a huge opportunity to improve tenant satisfaction.
• 77% of CRE property teams say email is their most common method for communicating with tenants.
• Only 8% are using notifications via a tenant app to communicate with tenants, which means there’s an opportunity for teams to become more efficient by cutting out manual tasks (such as sending emails).
• 39% of property teams plan to add amenities over the next few years, while 34% aren’t and 27% aren’t sure.
• Fitness centers, tenant lounges, and outdoor spaces were cited as the most common amenities teams are adding to commercial buildings.
Top CRE Sustainability Trends for 2023
Sustainability continues to grow in importance for the CRE industry, especially as governments implement more green building mandates and tenants increase their demands for such properties. Here are the top findings on sustainability in The State of Commercial Real Estate Building Operations for 2023 report:
• 61% of CRE property teams are prioritizing energy efficiency/expense reduction in 2023.
• Health and wellness, while still a priority in the top five for 2023, has fallen from No. 2 in 2022 to No. 4 (tied with building planning and design) for next year.
• ESG reporting and the path to net zero/carbon neutrality have made their way onto the sustainability priority list for 2023 (24% and 20%, respectively).
• 49% of CRE property teams are focusing on energy management/sustainability when it comes to enhancing their tech stack.
2023 Commercial Real Estate Outlook
What are you focusing on in the year ahead? To gain more insight while you strategize for current and future challenges, download the free report, “The State of Commercial Real Estate Building Operations for 2023.”