The real estate industry is already undergoing a drastic economic, business and social transformation. While most of these trends are already evident, as we kickstart the new year, let’s look at some of the key trends and their implications. Commercial real estate players would not only have broader and newer market opportunities and smarter value drivers but also need to tackle increased data and financial risk.
With technology permeating its way through every process, in 2020 commercial real estate firms will need to understand the emerging trends in order to transform, respond and differentiate themselves.
Customer experience will be a key differentiator
Residential real estate owners are already focusing on offering a resident-centric experience to enhance resident experience and maximize rental income. Commercial real estate firms are also witnessing a similar trend, which is only likely to become more prominent with intensifying competition and rise of disrupting business models. The tenant-landlord engagement will most likely ape the customer-vendor relationship in other industries. Which means, tenant experience will become a fundamental factor driving valuation, appreciation, property portfolio performance and tenancy turnover.
To stay on top of this shift, property owners will need to proactively manage every aspect of lease administration and management to ensure tenant satisfaction and strengthen their relationship.
Regulatory compliance and reporting will intensify
As the property portfolios scale and become more complex, regulatory compliance and reporting and tax demands will intensify further. Growing compliance, risk management and reporting requirements will continue to put property managers under immense pressure. Commercial firms will be compelled to transform process and operations in order to strike a balance between efficiency, risk management, compliance and reporting while containing cost and optimizing resource utilization. Moreover, transparency in reporting and liquidity and better control and data management will be critical to meeting the requirements of demanding institutional investors.
To combat these challenges, commercial real estate companies need to rethink the way they operate. That means partnering with third-party service providers who can help improve operational efficiency and build agility needed to survive and thrive in a rapidly evolving landscape.
Technology will be mainstream
While commercial real estate companies have started to implement newer technology solutions, from an operational standpoint, tech integration is relatively at a nascent stage. Most firms still use simple and basic tech infrastructure. Well that is changing at a lightning speed and this year, 2020, technology will become mission-critical. Digital and data management capabilities will be fundamental in managing property administration, ensuring regulatory compliance and tax reporting, improving process efficiency and driving tenant engagement.
As commercial real estate firms rush to build digital capabilities, they would need to pay close attention to data privacy and cyber security risks and take adequate measures to proactively manage security concerns as well.
Collaboration will be the catalyst to driving efficiency and maximizing occupancy
Property managers can no longer be tasked with lease management, administration and accounting responsibilities as these processes continue to become more sophisticated and complex. To respond to these changing business imperatives the biggest focus would be to recruit the right talent who can dedicatedly manage different operations. However, given the talent shortage, attracting and retaining right resources would be a significant challenge in itself.
Alternatively, firms can either choose to upskill their existing resources or collaborate with providers who can bring skilled resources and technology capabilities to the table at a viable cost. Since the landscape is characterized by volatile and changing trends, it is best to build an ecosystem with partner network that can help deal with complexities quickly and navigate successfully.