Deloitte recently released its annual report on the future outlook of the commercial real estate market. The report, titled 2020 Commercial Real Estate Outlook: Using Digital and Analytics to Revolutionize Tenant Experience analyzes the responses of 750 Commercial Real Estate owners/operators, developers, brokers, and investors in 10 countries. The goal of this study is to predict where the industry is heading and to determine how firms can prioritize tenant experience and use advanced technologies to help enhance efficiency, identify risks, and drive growth. The three key takeaways from the report include: tenant and end-user experience are becoming a top priority, cybersecurity and privacy are critical for the digital tenant experience, and real estate is more than just a physical space.
Continue reading for a deeper dive into these key takeaways from Deloitte’s 2020 Commercial Real Estate Outlook.
Tenant and End-User Experience is Becoming a Top Priority
Tenant preferences have continued to evolve due to increasing urbanization and globalization, changing workforce demands, and technological advancements. As these preferences continue to change, tenant experience is becoming a major priority for CRE firms. This is largely because tenant experience is important for maintaining high occupancy and renewal rates, building lasting tenant relationships, and competing more effectively within the market.
Although creating superior experiences for the direct tenant is a priority, attracting and retaining “end users”, or the day-to-day consumers of a space, is also gaining importance. Providing end-users with a memorable experience is becoming more highly regarded because they are the individuals who physically engage with the property regularly. Therefore, their perceptions are extremely important.
Technology is a major component of ensuring that a desirable experience is provided to both tenants and end-users. In fact, it is such a critical fact in tenant experience that 92% of respondents to Deloitte’s survey plan to maintain or increase their investment in tenant experience-related technology within the upcoming year. Specifically, environmental and security technology investments are being considered as the most important ways to enhance the tenant/end-user experience.
Cybersecurity and Privacy Are Critical for the Digital Tenant Experience
Today, more than 90% of organizations have been hit with phishing attacks and about 1/5 of them have suffered financially. With tenant privacy becoming a top priority for CRE executives, being part of a firm that has effective cybersecurity and privacy systems in place is a growing concern for many executives. With this information, it is unsurprising that 44% of respondents Deloitte’s survey indicated that data and privacy issues is one of their biggest challenges in adopting technologies like Artificial Intelligence (AI). A data governance framework can be developed to help firms overcome this challenge and ensure that their data is both consistent and trustworthy.
Real Estate is More Than Just a Physical Space
As the ways in which tenants and end users engage with their physical surroundings changes, CRE firms are being prodded to shift their mindsets by viewing real estate-as-a-service. What this means is that firms must create augmented and memorable experiences using the available physical space. This will enable firms to move away from simply thinking about the functional uses of the building and instead also considering how these spaces can be used to enhance the tenant experience.
To learn more about the role technology is playing in commercial real estate and how to overcome technology-based changes in the industry, read Overcoming Challenges of Technology Implementation and Adoption in CRE Firms.