Commercial Real Estate – What to Expect in 2022
The commercial real estate industry took a hit in 2020, and while 2021 offered some improvement, it was not enough to lift many companies out of the red zone. Deliotte Insights conducted a report on commercial real estate outlook in 2022. These were their key findings.
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Optimism Prevails for Commercial Real Estate in 2022
While many do not expect to be out of the woods, cautious optimism arises for commercial real estate.
80% of respondents from this report expect their institution’s revenues in 2022 to be slightly more significant or significantly better than 2021 levels.
The North American market also assumes vacancy levels will continue to lower; however, firms will need to evolve their unused office spaces towards their growth goals.
Only a quarter of respondents say their companies are increasing technology investments to bolster portfolio and asset management capabilities.
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Concerns Still Exist for Commercial Real Estate in 2022
Managing existing debt is an explicit concern in North American respondents. The pandemic-driven surge in debt workouts and lender inflexibility forced commercial real estate investors into a difficult position.
Owners are stretched thin while tenants continue to pay below the market, or, in some cases, no rent.
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Looking Forward
Commercial real estate leaders should consider the following developments as they plan their strategy for 2022:
- Overcome pandemic-related financial concerns, connect with tenants to create stronger relationships, invest in their success, and make it easier to conduct business.
- Keep an eye on large-scale, government-funded infrastructure investment along new or improved transit routes. A gateway to a major metro area allows for more financial success.
- Expand internal financial department capabilities and systems to improve performance and allow more relevant KPIs, predictive forecasting tools, and quicker access to capital markets.
- The most valuable enhancement to improve tenant experience is providing sustainable energy-efficient properties, dynamic building designs, flexible leasing models, additional amenities, and interactive mobile apps for communication.
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