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What Is The 2019 Commercial Real Estate Outlook?

Re-Leased 17 December 2018

Technology has redefined how the commercial real estate (CRE) industry does business. This has caused agencies and self-managing landlords to seek out high value software applications to drive further fiscal growth.

If we take a look back at the year that was, it's clear that risk was at the forefront of 2018 and here’s what was involved: making calculated investments in technology and embracing change through innovation, iteration and end-to-end business enhancements all gained significant traction. According to Deloitte’s 2019 Commercial Real Estate Outlook report, agility is the key to winning in the digital era, and that’s essentially the idea of building further upon the successes of 2018.

Deloitte surveyed over 500 global investors and C-suite figures and sought their input for their perspective on their planned capital allocation and CRE investments to inform their 2019 outlook report. But what the report does a really good job of is dissecting what is driving decision makers moving forward into 2019 – these are key insights for all property professionals to take close note of.

Deloitte have covered the idea that successful, technology driven CRE companies attract more capital investment extensively in their 2018 literature, and as it’s outlined for the year ahead, the outlook for 2019 does remain a double-down on much of the same sentiments. The diversification of portfolios, attracting the right tenants, and thinking strategically about how to increase the investor pool are all sound ways for CRE companies to kick goals in 2019.

CRE companies should invest in digital skill sets in 2019 or risk falling behind the pack

While technology adoption is still a king requirement for 2019, what CRE companies need to do is hire and retain a top shelf, digital workforce. What does that really mean, though? Put simply, the modern workforce is seeing its average age decrease and this means that with a younger workforce comes a more digitally plugged-in collective mindset, and therefore a different set of skills that the CRE industry is typically used to seeing.

As a historically late adopter of technology, the CRE industry has had a lot of catching up to do and in many ways has been forced to rapidly shift its approach (and for good measure, as we’ve seen a number of successful companies go fully tech first), but there is a ways to go for the wider global market to truly reap the rewards of a tech-talented workforce.

RELEVANT READING: What Is WALE And Why Is It Important For Commercial Property Investors?

As Deloitte highlight in their report, investors place a lot of value on companies that gear up their mindset for the employment of new talent needs that’s centred around technological savviness. If CRE businesses go the other way, they run the risk of damaging their future growth prospects, as a high number of baby boomers will be transitioning into retirement or moving away from senior position over the next 5 years, according to Deloitte. These are, most likely, the people currently in positions of power in CRE companies, so a succession plan needs to be crafted to address hierarchy adjustments on the fly. The importance of agility can't be undervalued.

Seeking out top talent should be a top priority

What can CRE companies do to attract the new wave of top talent? CRE leaders need to look at ways to improve all verticals of their business – from business development, marketing, and to administration and beyond – to make sure that there is a holistic improvement on business and staff output.

What can be often overlooked is the value in providing up-skilling and mentorship to internal resources – that being current employees. By providing these opportunities to current employees, CRE companies can find themselves empowering existing teams to revisit their professional goals in-line with wider company goals. This will do a great deal for employee morale and confidence moving forward into 2019 and beyond.

PropTech companies that disrupt the industry should offer products that help property professionals automate their key workflows

PropTech companies – or in other words, companies that offer a technology solution that disrupts and innovates key CRE workflows – are increasing in not only standardised popularity but also in adoption, too. Investors want to see that CRE companies are investing in PropTech to demonstrate their willingness to change, adapt and improve their core service offering.

Not surprisingly, as outlined by Deloitte, PropTech fundraising was the highest in 2017, compared to previous years, sitting at around $13 billion globally. There weren’t many investments in new PropTech companies that entered the landscape in the first half of 2018, which shows that investors favour well-established PropTech companies that have a validated product in the market. This is why conducting research is important for commercial real estate companies shopping for property management software.

In Deloitte’s report, they cite that (globally speaking) nine out of ten CRE professionals believe that PropTech companies have a significant influence on the industry, which is a telling tale of how people within the commercial real estate industry view the value of PropTech applications in comparison to their traditional counterparts. Agility is the key to succeeding in 2019, and looking ahead it's commercial property companies that need to be fully invested in technology, change and organisational agility to succeed in 2019.

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How did our 2018 predictions fare now that we can reflect on the year that was?

Looking Back: Here Is Our AU & NZ: 4 Commercial Property Management Trends In 2018 and our UK: The Top Movements For Property Management In 2018 Coverage

Read AU/NZ Predictions Read UK Predictions

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