2023 commercial real estate outlook

The global CRE industry faces uncertainty. Leaders can navigate the future of real estate in 2023 and beyond by focusing on strategic execution, talent, and innovation.

The Deloitte Center for Financial Services conducted a global survey among 450 Chief Financial Officers (CFOs) at major real estate owners and investors. Survey respondents were asked to share their opinions on their organizations’ growth prospects and forward plans for workforce, operations, technology, and culture. We also asked about their investment priorities and anticipated structural changes in the year ahead in the face of global uncertainty. Respondents were equally distributed among three regions—North America (the United States and Canada), Europe (the United Kingdom, France, Germany, and Switzerland), and Asia Pacific (Australia, China Mainland, Japan, and Singapore). The survey included real estate companies with assets under management of at least US$100M and was completed in June 2022.

Key messages

• Most global real estate CFOs are much more cautious with their 2023 operating plans: Our global survey reveals that only 40% of respondents expect to finish 2022 with higher revenues than last year, and 33% expect to cut expenses. They cite sustained high inflation, workforce management, and cyber risk as top risks to financial performance for the coming year. 
• Owners and investors are targeting offices and digital economy and logistics properties. Downtown and suburban offices rank first and third overall for global risk-adjusted asset class opportunities. 
• ESG-related actions are still top of mind, but most firms need guidance on how to implement changes and monitor progress. Only 12% of the total industry surveyed, and 17% of the required public REITs, are prepared to immediately respond to regulatory action. 
• The evolving global regulatory environment is expected to bring changes to tax structure and modernization to the forefront. Potential changes to transfer pricing and profit-sharing and increases in tax rates could have the greatest impact on commercial real estate (CRE) firms. 
• Regional approaches are emerging to attract and retain talent. Firms are focusing on increasing workplace automation, bolstering diversity, equity, and inclusion (DE&I) initiatives, accelerating career growth opportunities, and offering more recognition and awards programs. 
• Real estate firms of all sizes are seeking outsourcing opportunities to optimize operational capacities. There is continued interest in leveraging proptechs to help offer complementary, innovative services. 
• While technology budgets tend to be more reserved, those who plan to increase spend have opportunities to improve efficiency and explore new revenue opportunities in fundraising and digital assets.