As property managers look ahead to the next five years, understanding the key trends is critical to devising the right strategy to combat these challenges and seize the opportunities on offer.
The trends shaping real estate management
1.
Changing ways of work – It may have been more than three years since the first lockdowns, but the ramifications are still being felt. In the US, for example,
office attendance is at 50%, while in
Europe, it is now at 55%, still well below the pre-pandemic average of 70%. Many firms have settled into hybrid working policies, with occupancy levels peaking mid-week. While some are waiting out tenancy agreements pre-2020, many others negotiating new tenancies are looking at landlords to provide flexibility, not just with rent but other running costs. This isn’t just an office worker issue – as one UK sandwich maker with stores in city centres
noted in April 2023, sales remained below pre-pandemic levels. Add to this situation the growing clamour around the four-day workweek, and the idea that there might be a full-time return to the office grows far-fetched.
2.
Sustainability – As one respondent to a
PWC survey said, “There is no single discussion you will have with any peer in real estate that does not end up referencing ESG and decarbonisation.” The survey highlighted sustainability’s importance – 93% of industry leaders said it is the most important factor for successful organisational transformation in real estate. Put simply, if being sustainable isn’t literally and figuratively built into the fabric of the property, the ability to operate profitably will be significantly impacted.
3.
A new generation of talent – Attracting talent has never been harder, and facilities management is no different.
CBRE predicts that the sector will “see a sharp rise in the number of apprentices, graduates and school programmes designed to develop younger talent to bolster the future workforce.” This influx of younger workers will help accelerate the evolving demographics of the property management workforce that are already underway. This will maintain the demand for digital ways of working, with access to apps, tools and services that mirror the user experience we have all come to expect.
4.
High-interest rates – The growth in interest rates in the last couple of years is a dramatic departure from a long-term trend, which saw rates fall consistently over the previous 40 years. While no one can predict whether they will continue to rise or drop back to historic lows, in the short to medium term, it does mean that the cost of finance has increased. While there will always be interest in investing in commercial property, deals will take longer, and distressed sellers will find it harder to divest. Coupled with increasing costs, the ongoing property management expenses will eat into margins. At the same time, occupants will expect high-quality tenant experiences, even if they are not using the spaces full-time.
5.
15-minute cities – While the concept has been around for several years, the idea of a neighbourhood where most necessities and services (such as work, shopping, education, and healthcare) can be reached within a 15-minute walk or cycle has increased prominence recently. Existing commercial property in urban areas could be adapted or altered to meet the needs of such an idea, while new developments may be expected to adhere to similar proposals. For owners and occupants, how these spaces are used could change significantly; where once neighbours might have included similar businesses, now they could be residents, schools or places of leisure.
6.
Smart buildings – The ongoing digitalisation of physical spaces allows property managers to improve the occupant experience at scale while managing costs. Automation, internet of things and data analytics can, when properly deployed, help transform decision-making around offices and other commercial buildings. Landlords and managers can be more responsive to changing situations (whether public health crises, localised disturbances or weather). At the same time, tenants generate data to inform further how spaces are designed and used.
7.
Experiences, not workplaces – Globally,
just a fifth (21%) of the workforce is engaged. With engaged employees less likely to leave, have lower absenteeism and higher productivity, improving this figure is a major focus for many employers. The role of the workplace in engagement is significant. Over the next five years, the major focus will be on how appealing the physical space is and how it supports an all-around employee experience.
How Accruent can help
Real estate is a significant expense for businesses – up to 25% of the total cost for some – so having the tools to manage all aspects of commercial property is critical. As the trends above shape the market, facilities and property managers need to be able to balance limited resources with delivering the experiences their businesses and customers expect.
That’s where we come in. Accruent Lucernex is a comprehensive real estate management solution covering every aspect of property. It empowers property managers, from designing and scoping to building, acquiring and renting out multiple sites in different geographies.
One company that’s seen the benefit is global footwear retailer Genesco. With more than 1500 stores across North America and Europe, the company has used Lucernex to improve processes, negotiate better renewals and lower costs. For instance, it has reduced the time it takes to sign new leases and contracts by 20% and has identified $15,000 in savings on printing equipment leases.
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