Predictions

2021 commercial real estate outlook

Rebuilding to enhance resilience

Shrinking demand for leased spaces. Pandemic-driven talent challenges. The emerging digital imperative. How can commercial real estate (CRE) companies not only better navigate sector challenges, but also break the COVID-19 inertia and gain momentum to thrive in the coming year?

Our 2021 commercial real estate outlook, based on a global survey of 200 senior CRE executives, examines why and how organizations should consider digitization and innovation as an investment from the perspective of operations, technology, talent, and finance. 

Key messages:

  • The unprecedented impact of COVID-19 on the global economy and the commercial real estate (CRE) industry continues to challenge leaders.
  • Digital transformation of the business and tenant experience could become a business imperative. More than one-half of respondents (56%) believe that the pandemic exposed shortcomings in their organizations’ digital capabilities. Companies can strengthen operations and build trust with tenants by adopting a structured approach to digital transformation, bolstering cybersecurity and data privacy efforts, and leveraging and using analytics to make data-backed decisions.
  • The pandemic is disrupting the value proposition of CRE, especially for offices, retail, and hotels, causing most CRE companies to reevaluate existing portfolios. Meanwhile, CRE companies face cost pressures due to softening operating fundamentals: Respondents plan to reduce costs by 20% on average. Optimizing operational costs and using technology to reposition space and for facilities management can improve operational resilience.
  • CRE organizations are feeling the financial impact of the current economic environment—36% of North American respondents, compared to 25% European and 23% APAC counterparts, expect rental collection declines of more than 20% in the next year. To enhance financial strength, companies could focus on bolstering their asset portfolios and digitizing the finance function.
  • More than 50% of respondents acknowledge that their ability to succeed in the postpandemic world will be hampered in the near term by employee concerns about returning to work. Planning and implementing a talent transformation to adapt to the future of work, and prioritizing diversity and inclusion will provide a competitive edge.
     

EXPLORE THE 2021 CRE OUTLOOK

What can you look forward to in 2021?

Discover insights on driving transformation across banking and capital markets,
commercial real estate, and investment management from Deloitte’s survey of
800+ executives from around the globe. View our full collection of 2021 financial
services industry outlooks. 

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