2023年商业地产展望报告.pdf

2023 commercial real estate outlookThe 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.A report from the Deloitte Center for Financial ServicesKEY FINDINGS 2FORMING A ROAD MAP FOR CHANGING TIMES 3NEW CONCERNS ABOUT REVENUE CAUSE NUMEROUS STRATEGY REASSESSMENTS 4STRATEGICALLY POSITIONING FOR WHATS NEXT 8Office10 Industrial10 Housing 11 Retail11 Hotel12 Alternatives:Datacenters,seniorhousing,andlifesciences13THE REGULATORY ENVIRONMENT IS HEATING UP 15UnderstandingandcomplyingwithESGdisclosurerequirements15 Thechallengetomeetexpectations16 Addressingtrendsintaxregulation18MEETING THE GROWING EXPECTATIONS OF THE TALENT LANDSCAPE 21Attractingandretainingtalentthroughthegreat“reshuffle”21 The staying power of relocations and the emergence of“super commuters”23EMBRACING TECHNOLOGY FOR GREATER EFFICIENCY AND NEW OPPORTUNITIES 2425 OperatingefficienciesandtheapplicationofproptechsLookingtothefuture25THE WINDING ROAD AHEAD 27ENDNOTES 28Contents2Most 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,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.KEY FINDINGS3Forming a road map for changing timesTHE WORLD ECONOMY is again in danger Even if a global recession is averted,the pain of stagflation could persist for several years For many countries,recession will be hard to avoid.”1 This,from the World Banks latest global economic forecast,describes how the global economy is currently in a state of heightened uncertainty due to economic shocks that have threatened a pandemic-era recovery.Declines in equity prices reflect not only economic concerns,but also geopolitical instability and lingering disruptions brought on by COVID-19.The real estate industry also faces an unknown trajectory.Megatrends such as record inflation and supply chain disruptions can push and pull property fundamentals in all directions,ESG regulation and changes to tax policy can weigh on decision-makers,and evolving employee expectations often complicate hiring and retention.There is frequently pressure to improve operational efficiencies and adopt innovative emerging technologies that could provide some remedies.This years commercial real estate(CRE)outlook will explore the path forward and offer actionable insights leaders should consider as they plan ahead.“2023 commercial real estate outlook4New concerns about revenue cause numerous strategy reassessmentsA RECENT DELOITTE ECONOMICS report offered several scenarios for the near-term outlook in the United States.2 The most likely scenario(at 55%likelihood)is that economic growth continues through 2022,though tightening monetary policy,peaking employment growth,and continued energy and food shortages slow this near-term growth trajectory.Inflation would remain high through 2022,but gradually settle around 2%by mid-2023 as demand for goods subsides in favor of services,helping businesses alleviate supply chain issues.The Federal Reserve would raise rates to combat inflation through 2022,but slow rate increases as inflation normalizes.Other,less likely scenarios include:(1)Back to the 1970s(25%)where businesses raise prices and wages in lockstep and there is sustained high inflation;(2)COVID-19 relapse(5%)in which vaccines become ineffective,and lockdowns are again imposed;and(3)Next recession(15%),triggered by overly aggressive tightening of monetary policy as governments attempt to tame inflation.Regardless of which scenario comes to fruition,the 2023 Deloitte real estate outlook survey reveals that concerns about the economy are top of mind for most global real estate leaders as they prepare for the remainder of 2022 and 2023(see sidebar,“Methodology”).Revenue expectations for the full year are mixed among those surveyed,and generally more muted than last year.While 40%of respondents expect their revenues to improve compared to last year,48%see revenues decreasing,and 12%expect no change.In contrast,last years survey results were much more optimistic:80%of respondents indicated revenue expectations would be slightly to significantly better than the prior year(figure 1).3 Of course,those expectations came in the wake of a very challenging 2020.Furthermore,with revenue expectations muted,a greater proportion of respondents(33%)are planning to cut costs compared to last year,when just 6%planned to make cuts.5Note:Percentages may not add up to 100%due to rounding.Source:The Deloitte Center for Financial Services 2023 Real Estate Outlook Survey.Deloitte Insights| 1When asked to forecast 2022 revenues,respondents were much less optimistic than they were last year 2023 vs.2022 survey results Increase No change DecreaseAnticipated change in revenues80%74%80%85%40%44%37%39%11%15%11%8%12%13%11%13%9%11%9%6%48%43%52%49%Global averageNorth AmericaEuropeAsia/PacificGlobal averageNorth AmericaEuropeAsia/Pacific2022 survey(end of 2021)2023 survey(end of 2022)METHODOLOGYThe Deloitte Center for Financial Services conducted a global survey among 450 chief financial officers(CFOs)of major commercial real estate owners and investment companies.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 2023.Respondents were equally distributed among three regionsNorth 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$100 million and was completed in June 2022.Overall,respondents indicated that sustained high inflation,workforce management,cyber risk and climate-related regulatory action are most likely to impact revenue prospects for the next 1218 months(figure 2A).While North American respondents felt that changes in tax policies were of greatest concern(37%),European respondents are most concerned about the impacts of climate change(33%)and those in Asia/Pacific(AP)cite supply chain disruption as their No.1 concern(40%).2023 commercial real estate outlook6Note:Respondents could make multiple selections.Source:The Deloitte Center for Financial Services 2023 Real Estate Outlook Survey.Deloitte Insights| 2ARespondents views on the biggest challenges to their organizations financial performance varied significantly by regionTop concerns over the next 1218 months37%Changes in tax policies35%Sustained high inflation35%Workforce management33%Climate-related regulatory action33%Accelerating technology capabilities32%Public health mandates31%Increased cost of labor31%Currency volatility30%Supply chain disruptions30%Rising interest rates29%Increased cost of construction materials29%Regional political instability29%Cyber risk28%Climate changeNorth America33%Climate change31%Cyber risk31%Workforce management30%Climate-related regulatory action29%Increased cost ofconstruction materials28%Accelerating technology capabilities28%Public health mandates28%Currency volatility27%Sustained high inflation27%Supply chain disruptions27%Regional political instability27%Rising interest rates25%Changes in tax policies25%Increased cost of laborEurope40%Supply chain disruptions39%Cyber risk38%Sustained high inflation35%Climate-related regulatory action34%Workforce management33%Climate change33%Accelerating technology capabilities33%Increased cost ofconstruction materials33%Increased cost of labor32%Public health mandates31%Changes in tax policies31%Regional political instability29%Rising interest rates23%Currency volatilityAsia/Pacific7Unfortunately,respondents also felt that the industry is not fully prepared to respond to some uncertainties ahead(figure 2B),averaging a response of 3.2 out of 5 for their current state of preparedness for the concerns they identified.On a 5-point scale,5 being the most prepared,respondents from Australia(3.6)and the UnitedKingdom(3.4)feel the most prepared,while thosefrom France(2.6)and China Mainland(2.9)feelthe least prepared.Note:Respondents could make multiple selections.1=ill-prepared,5=completely prepared.Source:The Deloitte Center for Financial Services 2023 Real Estate Outlook Survey.Deloitte Insights| 2B“How prepared is your organization to respond to the following global concerns?”2.63 2.89 3.03 3.05 3.22 3.34 3.36 3.37 3.41 3.44 3.60 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0Level of preparedness Top concern(s)by locationFranceClimate-related regulatoryaction/climate change China MainlandClimate-related regulatory actionJapanSustained high inflationSwitzerlandCurrency volatilityGlobal averageSustained high inflation/workforce management GermanyWorkforce managementSingaporeSustained high inflation/workforcemanagement United StatesSustained high inflationCanadaClimate-related regulatory action/public health mandates United KingdomPublic health mandatesAustraliaSupply chain disruptions2023 commercial real estate outlookNote:Percentages may not add up to 100%due to rounding.Source:The Deloitte Center for Financial Services 2023 Real Estate Outlook Survey.Deloitte Insights| 3“How do you expect each of the following aspects of real estate fundamentals to change for the property type you specialize in over the next 12 to 18 months compared to current levels?”Worsen No change Improve37.6%40.0%34.9%28.9%21.6%37.1%29.3%25.6%23.8%22.9%18.2%21.3%22.2%20.2%36.9%36.2%42.2%52.9%57.1%40.7%50.4%Cost of capitalCapital availabilityProperty pricesVacancy levelsLeasing activityTransaction activityRental rates8Strategically positioning for whats nextDESPITE OVERALL PERFORMANCE reservations,there is still some optimism about real estate fundamentals,with 66%of respondents expecting improving or stable conditions from last year.Over 57%of respondents(figure 3)expect leasing activity to improve,with corresponding optimism about tightening vacancies and rental growth.9When asked about which property types present the most attractive risk-adjusted opportunity over the next 12 to 18 months,downtown and suburban offices were among the top responses globally where respondents selected them 36%and 35%of the time,respectively(figure 4).European respondents identify suburban office the most at 35%;AP respondents highly favor digital economy properties(data centers,cell towers)at 43%,while logistics spaces(warehousing,distribution centers)place well ahead in North America at 43%of the time.Note:Respondents could make multiple selections.Source:The Deloitte Center for Financial Services 2023 Real Estate Outlook Survey.Deloitte Insights| 4Respondents weighed in on the most attractive risk-adjusted investment opportunities through 2023Ranked by asset class,12-to 18-month time frameNeighborhood retailOffice downtownDigital economy(data centers,cell towers)Office suburbanSenior careLogistics and warehousingLife sciences/biotechSingle-family rentals/build to rentMultifamilyStudent housingHotel/lodgingMallsSelf-storageIndustrial(excluding logisticsand warehousing)36.2%35.1%35.1%34.9%34.2%33.8%33.8%32.2%31.6%31.1%29.8%28.4%27.6%27.3%2023 commercial real estate outlook10We take a closer look in the following pages at core and alternative sectors according to our respondent rankings:OfficeHOW DID WE GET HERE?The return to office,slowed by lingering health concerns and shifts in employee expectations,has been gradual.Occupancy levels in top US markets through late July came in at 44%of prepandemic levels,4 and office vacancies increased to near record highs through Q1 2022topping just shy of 15%on average globally,20%in the United States,14%in AP,and 7%in Europe.5Owners,investors,and local governments alike are exploring alternate uses and conversions to combat vacancies,with varying degrees of success.Residential conversions,an early strategy to capitalize on rising residential rents and limited inventory,proved difficult to implement.For instance,only 3%of New York City office stock is viable for conversion.6 Finding an obsolete office building at an advantageous price,at a high enough vacancy to facilitate remaining tenant buyout/relocation,and with the right floor plate to convert into a residential building is proving difficult to execute in the current market.However,office buildings to life science conversions soared to meet demand for lab space.7 While costly,lab and R&D conversions from offices increased by 49%in 2021 from the prior year.8WHATS NEXT?Hybrid work has staying power and many employees now expect top-of-the-line office space as a tradeoff for departing the comforts of work-from-home.9 The difference between high-and low-quality assets perhaps has never been wider.Class A office buildings,on average,are selling for US$50 more per square foot(15%)than prepandemic,while Class B buildings increased by just US$6 per foot(6%).10 Class B and C buildings could face challenges to bring in tenants in a market flush with available space,though they present some of the greatest opportunities at a market discount.Office owners and investors in lower quality buildings must often consider making upgrades to aging assets or conversions for alternate uses or risk obsolescence.While costly,conversions to undersupplied property sectors can provide opportunities to