What lies ahead for corporates and their real estate?

Martina Williams, EMEA Head of Consulting for JLL Work Dynamics, looks at how recent real estate trends will continue to play out in 2023

From hybrid work to the flight to quality space, 2022 saw companies and employees change their expectations of what real estate can, and must, deliver.

JLL’s annual Top 10 Trends showed us the direction of travel and then the Future of Work Survey and Workforce Preferences Barometer cemented the fact that we’re experiencing a crucial period for organisations across all sectors.

As we start 2023, pressure continues to mount from significant environmental, economic and geopolitical issues. Our latest Global Real Estate Perspective shows heightened uncertainty will no doubt weigh on sentiment in the first half of the year. Understandably, businesses will be more cautious and decision-making processes will lengthen.

Yet longer term goals, such as the net zero imperative cannot be set aside and as our Decarbonization in CREM report has shown, it remains a major objective across the real estate industry. So when money is spent, it must be done so wisely. With both occupiers and investors making quality and net zero their priorities, in the months ahead we’ll see some key trends emerge.

Transformation driven by data

I believe transformation will be the overriding 2023 trend across all sectors, from logistics, to data centres and offices. Enterprises will need to assess their priorities, evolve their ways of working and adapt to survive - and more importantly - thrive.

As companies tighten their belts, they must reconcile short-term priorities such as energy reduction, portfolio optimisation and cost management, with long term transformation goals ranging from shifts in business models to more agile, dynamic operations and people-focused culture, right through to sustainability.

Crucially, every decision made will impact on real estate portfolios – so careful planning based on strategic data-led decision making will be critical for success. Yet according to JLL research, only 13% of organisations currently make use of real-time analytics for up-to-date portfolio intelligence.

In the difficult months ahead, as real estate’s performance and value comes under scrutiny like never before, establishing good benchmarking, data governance and discipline around the metrics that matter, will become an imperative for corporate real estate leaders.

Sustainability remains the number one issue

The one certainty we do have, is that the climate emergency remains urgent. Decarbonisation will remain the most pressing ESG objective for stakeholders across all asset classes.

Sustainable buildings are top of occupiers’ wish lists and with supply in short demand, 74% of corporate real estate executives are willing to pay a premium for space that boasts green credentials. Yet 65% of European office stock is aged 20 years plus, so expect a rise in retrofitting projects that tackle value preservation.

It’s the same story for logistics facilities which, including transportation, are responsible for 11% of global greenhouse gas emissions. Market pressure for accountability means investors, occupiers and landlords are all seeking green accreditations. That’s creating greater need for investment in technology that optimises facility management and boosts efficiency, while reducing energy use and carbon emissions from fleet.

Greener consumer appetites are also transforming industrial manufacturing facilities. Here in Germany for example, despite mounting cost pressures, we’re seeing various automotive companies look to change their real estate footprint as they adapt manufacturing processes and supply chain networks to serve  - for the moment at least - three types of demand: traditional engines, hybrid and fully electric vehicles.

Meanwhile, rapid digitisation and surging demand for online services means increased demand for data centres. Yet they too must walk a tightrope with the net zero carbon agenda. Throughout 2023, the data centres sector will be looking for new ways to embed sustainability, from choice of location - such as finding brownfield sites or buildings to repurpose - through to construction materials and energy efficient operations.

DEI is rising up the agenda

Leaders are now giving greater consideration to how space itself can support diversity, equity and inclusion (DEI). It’s increasingly top of mind as companies look to build resilience by attracting and retaining diverse workforces that foster innovation.

In response to this appetite for change, I’m excited about JLL’s new DEI Standard for the built environment. This will provide organisations with a framework for assessing the intersectionality between physical, age, gender, sexuality, neurodivergent and cultural considerations, as well as best practice and action plans, to help systematically improve diversity and inclusion.

To sum up, many challenges lie ahead – but with challenge also comes opportunity. In the next 12 months, we have a chance to make a real impact on some of the most critical issues facing companies today. By partnering closely, I’m confident that we can help organisations assess, adapt and transform for success.

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