Mega trends reshaping real estate - #TechCBRE

Mega trends reshaping real estate

Property is in the midst of a transformation powered by new technology

To find out more about the technologies that are transforming real estate, how they are achieving superior outcomes and their potential for the future, read on or contact CBRE's James Pearson – james.pearson2@cbre.com or call +44 7880 054 252

Driven by technology, changing industry-wide culture and wider business disruption, investors and occupiers are looking harder than ever at ways in which they can deliver advantage across their portfolios, their buildings and their people.

And at the heart of this transformation is the clear evolution in occupier, investor, and, increasingly, end users’ requirements.  

CBRE Research has identified three major drivers of need that span each of these stakeholders: productivity, efficiency and experience. Our clients have also spoken about the importance of visibility and flexibility. Together, they are redefining real estate as we know it.

The occupier focus

Our latest 2019 EMEA Occupier Survey revealed that the top five real estate objectives for businesses are:

  1. Alignment with corporate goals
  2. Employee engagement
  3. Talent attraction and development
  4. Strategic portfolio management
  5. Cost reduction

This shows a demonstrable shift from 2018, where businesses told us their focus was on:

  1. Cost reduction
  2. Alignment with corporate goals
  3. Strategic portfolio management
  4. Employee engagement
  5. Corporate growth or contraction

This points to a clear rebalancing of corporate real estate (CRE) objectives across EMEA: CRE is seen as a key enabler or blocker of corporate goals, people are becoming more crucial to this, and the importance of cost reduction has steadily declined but remains a top five driver. Therefore, the balance between the efficiency, productivity and experience of real estate has never been as integrated or as critical to continued advantage as it is today.

Why are these the needs?

Traditionally, the industry has focused on the capital (such as buildings, spaces), the customer side of the market (filling those buildings and spaces through signing leases with occupiers), and the associated management demands that come with the relationship between the two.

But the industry has woken up to the fact that there’s a third stakeholder in its sights - the consumer. It’s no longer enough to focus simply on a property’s total returns, running this efficiently, or providing purely functional workspaces at affordable densities.

The war for talent is intensifying at the hand of the shift to digital and mobile, and structural economic and demographic changes. Corporations must attract and retain the right people if they are going innovate their businesses – and to do this, they must provide a much better employee experience.

Consumers have tightened their grip on real estate and readdressed the balance between occupiers and investors across the market as a whole. And in doing so, people - whether they are retail consumers or employees in an office or logistics asset - stand firmly at the heart of great places.

The hierarchy of real estate needs

A clear hierarchy underpins corporate real estate. Assets, businesses and people need to be productive first and foremost. Assets must increase in value, businesses (occupiers) should drive up revenue and shareholder value, and people must innovate and grow their businesses. And acquiring or providing spaces that enable this growth in productivity is absolutely essential - it’s not a nice to have.

Once this is secured, the next step is being productive as efficiently as possible. Of course, efficient business practice in itself can improve productivity, but when it comes to real estate, investors, occupiers and consumers alike need to ensure they are managing their assets as efficiently as possible. To do this, they must consider how they could optimise their occupancy and energy management more sustainably and if they can enable their employees to use their time more efficiently. The crux is to boost productivity at the most efficient cost point possible.

The final building block is experience. Developing a rich array of services, amenities and programming that engages both employees and consumers will undoubtedly lead to better attraction and retention. There’s a tangible correlation between sustainable space management and well being, while the businesses’ ability to provide consistent digital experiences is critical to their capacity to embrace technological advances. And the interaction between businesses’ digital and physical space is critical in determining what a great experience actually means.

Increasingly, the pinnacle of this hierarchy is being able to run productive, efficient and experiential buildings all at the same time, whether that’s through the spaces we design, build and occupy, the way we use and manage them, or how people experience them. The way in which investors and occupiers achieve this is fundamental to their success - and technology is increasingly the answer.

A needs-based approach

Starting with needs rather than technology is critical to success. Looking at the array of technologies developing around the globe and our clients’ insights, CBRE Research has identified five mega trends that currently make a big impact on stakeholder needs within the real estate context, and will continue to do so in the future:

What’s occupying the occupier?

CBRE’s latest 2019 EMEA Occupier Survey asked occupiers which technologies they expect will have the biggest impact on their business operations:

  1. Artificial intelligence and machine learning
  2. Internet of things
  3. Robotic process automation (RPA)
  4. Virtual and augmented reality
  5. Physical automation
  6. Blockchain
  7. Cryptocurrencies
  8. 3D printing

Two things are clear: data is highly important to occupiers, while more futuristic (and complex!) technologies such as blockchain, cryptocurrencies and 3D printing are not currently considered to be game changing.

What is certain, however, is that while there are hundreds of technologies out there, they must all be appraised in the right way, based on their capacity to boost productivity, efficiency and experience across both procurement and use for investors, occupiers and end users.

Read on to find out more about the technologies that are transforming real estate, how they are achieving superior outcomes and their potential for the future.