2020 could be a pivotal year for the commercial real estate sector. While a lot has happened globally since the beginning of the year, the cycle is still young, and there is plenty of time for an ever-shifting landscape to find a more stable footing.
This certainly won’t be a typical year in real estate, but some promised changes are still taking shape. Deloitte released its 2020 Commercial Real Estate Outlook in December with some predictions for the coming year. Here are a few of the top commercial real estate trends to watch for the rest of 2020.
Meeting the Challenge of Digitalization
In its latest survey of 750 CRE executives across 10 countries, Deloitte discovered that 64% had increased technology investments over the past 18 months, and more than half (56%) plan moderate to significant investments by the end of this year. On the whole, these are tech investments to improve the tenant experience, such as Internet of Things (IoT)-powered facilities.
Improved Leveraging of Data
Unfortunately, most CRE firms haven’t fully embraced the various ways to capture and use information to improve their business. In many cases, companies are unsure about who owns certain IoT data, the building owner or the developer.
Of those who do capture data internally, only about 40% are using it to make strategic business decisions. A majority, however, are using the data to build more efficiency into their operations.
The CRE industry has just begun to adopt various uses for AI, such as within mobile apps. Going forward, more companies will begin to use AI to analyze trends, predict tenant turnover and behavior, and make better tenant selection decisions.
Better Privacy and Cybersecurity Initiatives
Businesses and consumers are more sensitive about sharing their information, and cyber threats are just as serious as ever. One of the biggest vulnerabilities that CRE firms face is the interconnectivity of internal systems with third-party vendors and providers.
Many CRE companies are making data management and security a higher priority. This can become an additional challenge when firms outsource data management to a third party.
Enhanced Models for Sourcing Talent
A firm’s success generally depends on the strength of its talent. As 2020 unfolds, there will be some additional challenges and opportunities in this area with a shifting economy thanks to the COVID-19 pandemic. The CRE firms that have put models in place for retaining and sourcing the best talent will find it easier to weather any potential economic storms in the coming months.
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