With the current uncertainty facing the U.S. economy and the threats of a recession looming, building owners continue to tackle the matters of high vacancy rates and evolving tenant demands. Many owners have paused costly amenity projects while looking for more effective ways to utilize their spaces. All of this while an increasing number of companies continue to adopt hybrid working into their long-term strategies, with growing interest in using both physical offices and virtual, remote working to build and strengthen employee relationships.
The past few years have contributed to a shift in thinking and practice for the commercial real estate industry. Rather than approaching the office simply as space people occupy, the building itself is now being scrutinized as to how it can act as its own income-generating entity – looking at how a building, and how it operates, in and of itself can attract and retain tenants. The resulting shift is a hospitality mindset where buildings are equipped to meet all the needs of individual employees. While amenities like a fitness center, coffee shop, or rooftop lounge are lovely perks, occupiers want more than physical spaces.
“Operating with a “business-as-usual” approach should be long behind us. Real estate firms should make informed, innovative plans to meet the evolving needs of investors, tenants, and regulators alike.” – Deloitte’s 2023 Commercial Real Estate Outlook report
We live in a digital-first reality, and the office is no exception. Asset owners and operators are turning to technology to help deliver a competitive offering that is attractive to tenants.
According to Deloitte’s CRE Outlook report, tech budgets are more reserved due to economic uncertainty, but 48% of North American CRE execs still expect to increase tech spend.
Technology enables tenants to have a cohesive workspace environment that provides more agility, better services and amenities, seamless experiences, and network security wherever they go. Future-proofing commercial real estate requires looking beyond individual building systems to what drives occupier experience and navigates the changing dynamics the office industry is facing.
“Only 9% of respondents’ total portfolios could be considered “smart” today, but that is projected to almost double to nearly 15% in five years.” – Deloitte’s 2023 Commercial Real Estate Outlook report
How much emphasis should owners put on technology in the new year? In a recently conducted essensys research report on worker sentiment, the findings show that 81% of the 1,000 U.S. office workers surveyed are frustrated with their current office experiences, and more than half (52%) are envious of the innovative technology available in other office buildings aside from their own.
It’s now up to landlords and operators to outfit buildings with a digital backbone that not only makes it easy to deliver a best-in-class office experience, but also helps it to realize its full potential whether that be from seeing benefits like decreased time to value, increased ROI and the ability to charge a premium for enhanced assets. Additionally, by incorporating leading technology into the building, the needs of tenants can be met at a reasonable cost compared to physically re-outfitting spaces.