Areportfromthe
DeloitteCenterforFinancialServices
2023commercialrealestate
outlook
TheglobalCREindustryfacesuncertainty.Leaderscan
navigatethefutureofrealestatein2023andbeyondby
focusingonstrategicexecution,talent,andinnovation.AbouttheDeloitteCenterforFinancialServices
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RealEstateIndustryservices
AsarealestateserviceproviderDeloittemustcontinuallyevolveandadapttonewclient
expectationsandchangesintheoverallmarket.Ourmulti-disciplinaryapproachallowsusto
provideservicestoaddressourclients’needsandtodelivertheseserviceslocally,nationally,
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insightintotherealestatecapitalmarkets.Weofferabroadrangeofservicesincluding:
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others.Learnmore.Contents
KEYFINDINGS2
FORMINGAROADMAPFORCHANGINGTIMES3
NEWCONCERNSABOUTREVENUECAUSENUMEROUSSTRATEGY
REASSESSMENTS4
STRATEGICALLYPOSITIONINGFORWHAT’SNEXT8
Office10
Industrial10
Housing11
Retail11
Hotel12
Alternatives:Datacenters,seniorhousing,andlifesciences13
THEREGULATORYENVIRONMENTISHEATINGUP15
UnderstandingandcomplyingwithESGdisclosurerequirements15
Thechallengetomeetexpectations16
Addressingtrendsintaxregulation18
MEETINGTHEGROWINGEXPECTATIONSOFTHETALENTLANDSCAPE21
Attractingandretainingtalentthroughthegreat“reshuffle”21
Thestayingpowerofrelocationsandtheemergenceof“super
commuters”23
EMBRACINGTECHNOLOGYFORGREATEREFFICIENCYANDNEW
OPPORTUNITIES24
Operatingefficienciesandtheapplicationofproptechs25
Lookingtothefuture25
THEWINDINGROADAHEAD27
ENDNOTES28KEYFINDINGS
MostglobalrealestateCFOsaremuchmorecautiouswiththeir2023operatingplans:Ourglobal
surveyrevealsthatonly40%ofrespondentsexpecttofinish2022withhigherrevenuesthanlastyear,
and33%expecttocutexpenses.Theycitesustainedhighinflation,workforcemanagement,and
cyberriskastopriskstofinancialperformanceforthecomingyear.
Ownersandinvestorsaretargetingoffices,digitaleconomy,andlogisticsproperties.
Downtownandsuburbanofficesrankfirstandthirdoverallforglobalrisk-adjustedasset
classopportunities.
ESG-relatedactionsarestilltopofmind,butmostfirmsneedguidanceonhowtoimplement
changesandmonitorprogress.Only12%ofthetotalindustrysurveyed,and17%oftherequired
publicREITs,arepreparedtoimmediatelyrespondtoregulatoryaction.
Theevolvingglobalregulatoryenvironmentisexpectedtobringchangestotaxstructureand
modernizationtotheforefront.Potentialchangestotransferpricingandprofit-sharingand
increasesintaxratescouldhavethegreatestimpactoncommercialrealestate(CRE)firms.
Regionalapproachesareemergingtoattractandretaintalent.Firmsarefocusingonincreasing
workplaceautomation,bolsteringdiversity,equity,andinclusion(DE&I)initiatives,acceleratingcareer
growthopportunities,andofferingmorerecognitionandawardsprograms.
Realestatefirmsofallsizesareseekingoutsourcingopportunitiestooptimizeoperational
capacities.Thereiscontinuedinterestinleveragingproptechstohelpoffercomplementary,
innovativeservices.
Whiletechnologybudgetstendtobemorereserved,thosewhoplantoincreasespendhave
opportunitiestoimproveefficiencyandexplorenewrevenueopportunitiesinfundraisinganddigitalassets.
22023commercialrealestateoutlook
Formingaroadmap
forchangingtimes
“HEWORLDECONOMYisagainindanger…
Evenifaglobalrecessionisaverted,thepain
Tofstagflationcouldpersistforseveralyears…
Formanycountries,recessionwillbehardto
avoid.”1This,fromtheWorldBank’slatestglobal
economicforecast,describeshowtheglobal
economyiscurrentlyinastateofheightened
uncertaintyduetoeconomicshocksthathave
threatenedapandemic-erarecovery.Declinesin
equitypricesreflectnotonlyeconomicconcerns,
butalsogeopoliticalinstabilityandlingering
disruptionsbroughtonbyCOVID-19.
Therealestateindustryalsofacesanunknown
trajectory.Megatrendssuchasrecordinflationand
supplychaindisruptionscanpushandpull
propertyfundamentalsinalldirections,ESG
regulationandchangestotaxpolicycanweighon
decision-makers,andevolvingemployee
expectationsoftencomplicatehiringandretention.
Thereisfrequentlypressuretoimproveoperational
efficienciesandadoptinnovativeemerging
technologiesthatcouldprovidesomeremedies.
Thisyear’scommercialrealestate(CRE)outlook
willexplorethepathforwardandofferactionable
insightsleadersshouldconsiderastheyplanahead.
3