The commercial real estate landscape experienced a great deal of change during 2022, with spiking interest rates, inflation, and the reverberations of conflict in Ukraine sending shockwaves across the entire U.S. economy.
While it appears that these factors will stabilize heading into 2023, all stakeholders should remain vigilant as they reevaluate their property and investment strategies to ensure they are maximizing returns and minimizing their costs. Prominent commercial real estate industry trends are likely to shape this upcoming year’s events and transactions include automation, increased mixed use developments, investments in proptech and more.
With so much potential volatility on the horizon in 2023 within commercial real estate markets, it is important for all stakeholders to stay mindful of emerging trends as they seek long-term success across their portfolios.
Automation and the Future of Real Estate
Automation is considered one of the driving forces behind this year’s commercial real estate trends. With economic pressures and supply chain disruptions, many companies are focusing on ways to cut costs through automation. Although new technology investments may be limited, even modest optimisation efforts can result in significant macro-level changes when applied across an entire real estate portfolio.
By properly leveraging existing resources for automation, such as artificial intelligence tools, workflow systems or software robots operating rules-based tasks, organizations can reduce time consuming manual processes as well as decreasing overheads. Strategically implemented automation may provide the competitive advantage corporate real estate clients need to succeed in a challenging business environment.
Impact of Climate Change on Commercial Real Estate
The impact of climate change is having a major effect on commercial real estate, and it’s becoming increasingly clear that the sector needs to adjust its strategies if it is to remain profitable in an era of extreme weather conditions.
This means higher construction standards, and better energy efficiency measures; as well as anticipating the effects of increasing floods, hurricanes, droughts and other extraordinary events that can be devastating to buildings. With frequent power outages projected due to these conditions, commercial property owners need to factor in backup sources of electrical power and other emergency supplies if they are to keep their businesses running smoothly.
Increased Investment In Proptech
Real Estate professionals across the world have found themselves stuck in a loop of traditional methods when handling property transactions. However, with the introduction of Proptech, also known as Property Technology, Real Estate experts are now equipped with innovative tools that enable them to buy, sell, research, market and manage properties effectively.
Prop tech ultimately allows for a seamless realignment between real estate and technology to provide an exquisite experience while navigating real estate matters. The fact that this market is steeped in different tech-related terms – such as Real Estate Tech (RETECH), RealTech, and CRE Tech – only serves to highlight the ever-growing importance of prop tech to the modern real estate typology.
Property companies are recognizing the potential for proptech solutions to make their operations more efficient and effective. According to a recent survey by JLL, 64 percent plan on increasing their investment in proptech during 2023 in order to leverage its many benefits.
Proptech provides the opportunity for transforming the property sector with automated solutions that streamline processes from leasing and tenant management to building maintenance and operations. Companies that invest early in proptech will be well-poised to take advantage of the improved efficiencies it can offer.
They can also position themselves at the forefront of technology within this competitive arena. Investing in proptech now has become an imperative for businesses hoping to stay competitive and maximize the return on investment while meeting customer needs in a timely manner.
And More Mixed-Use Developments
Mixed use developments offer different uses such as residential, entertainment and commercial in the same complex, improving the quality of life for their inhabitants and thus making them a prime choice for developers. This type of development promises tremendous potential for social and economic progress due to its immediate proximity to jobs and services that help create a strong community around it.
As 2023 goes along, the commercial real estate landscape will continue to evolve in response to changing economic conditions. Stakeholders should remain proactive and adapt their strategies as needed to ensure they are getting the most out of their investments. Automation, mixed use development, proptech investment and other commercial real estate industry trends will all play a role in shaping the market in the coming year.
By staying informed and being willing to adjust their plans accordingly, investors can maximize their profits even in these challenging times.