Structural demand drivers and technology reorder customer experience as top real estate priority

In Deloitte’s 2020 outlook surveyed 750 CRE executives— owners/operators, developers, brokers, and investors—in 10 countries during the summer of 2019 to assess how emerging technologies and analytics are helping CRE companies to make more informed location decisions and create a more memorable tenant experience.

According to Deloitte’s survey 92% of respondents plan to maintain or increase their tenant experience–related technology investments.

  • Most respondents rated tenant experience as a top priority. Yet, for a majority, digital tenant experience is not a core competency.
  • Executives acknowledge that the benefits of IoT and AI technologies are not limited to tenant experience. They also can raise operational efficiency and lower costs.
  • When it comes to tenant experience–related technology investments over the next 18 months, 36% of respondents expect their organisations to hold the line, 42% anticipate a moderate increase, and 14% plan to significantly increase.

Interestingly, almost three-quarters of respondents (72%) of Deloitte’s surveyed CRE executives plan to maintain or increase their overall technology investments even if an economic slowdown occurs. In contrast, 81% of the surveyed executives from CRE broker firms and consultants with revenues of US$10 billion or more are likely to maintain or reduce technology investments. This could be because the existing technology budgets of some of the largest brokers and consultants are high, and they are more likely to be further along in capturing and leveraging data and using analytics to generate meaningful insights than smaller firms, suggested Deloitte.

The survey revealed divergent view about how the CRE industry will perform over the next 18 months: 15% are very optimistic, 61% are somewhat optimistic, 14% are neutral, and 10% are somewhat pessimistic. “This is not surprising,” wrote Deloitte in its 2020 real estate outlook paper, “when it comes to economic changes, the industry typically lags the broader economy by six months.”

Regionally, respondents from Asia are the most optimistic, followed by those from North America and Europe. A relatively higher proportion of respondents from Hong Kong, Singapore, Japan, and the United States are very optimistic about the industry’s performance. In contrast, on an average, 18% of Netherlands and UK respondents are somewhat pessimistic about the industry’s performance, which is higher than the global aggregate of 10%.