Last year’s upheaval has changed the real estate market and accelerated some trends that were already in evidence, delegates heard at Real Asset Media’s Global Outlook 2021 – Key trends for real estate briefing, which was held online recently.
“We’ve identified ten key issues that have the potential to profoundly influence our world and the role of real estate within it,” said Nick Axford, principal, global director of research, Avison Young.
The first is (De)Globalisation 2.0: the pandemic, travel restrictions and concerns over our carbon footprint have given added impetus to regionalisation and localisation and have led to the de-risking of supply chains. “To give an example, 40% of Fortune 100 companies had direct suppliers in Wuhan, the epicentre of the pandemic, highlighting the level of risk,” he said.
The second key trend is No Place Like Home: as many people have adapted well to remote working, find they are productive and glad they do not have the daily commute, but they do miss the exchange of ideas and impromptu team meetings. “Flexible working is here to stay but there’s a big future for the office,” said Axford.
The third issue is Workplace Experience: in order to encourage people back to the office, landlords and employers will have to personalise the space and offer seamless tech integration and a curated experience. The soulless open place office is dead, he said.
This leads to the fourth trend, Portfolio Metamorphosis: operational flexibility will be needed to adjust to ever-changing needs in a cost-effective way, with a huge range of options to choose from. “Covid-19 has provided a real Ctrl-Alt-Delete moment, an opportunity to bring about change and experiment,” said Axford.
Managing Expectations is the fifth issue, with the realisation during 2020 that relationships count and the way you negotiate and deal with people is crucial.
The sixth trend is Hyper-local: the rapid growth of online shopping in all areas of retail has made the last mile absolutely crucial and led to a lot of re-purposing to click and collect and innovation in micro-fulfilment at a local level.
Love Thy Neighbourhood is the seventh trend: as urban centres have hollowed out during the pandemic and people have re-discovered their local areas, it has sparke a new interest in suburban retail and local offices, which had a better rental and value performance.
Eighth on the list is Risky Business: capital has been re-allocated to take environmental issues into account. “Investors have realised that climate change in the future is investment risk today,” said Axford.
Building a Recovery is the ninth issue: a key plank of countries’ strategies will be investments in infrastructure, both traditional like railways and new like data centres or electric charging points.
The tenth and final trend is Measure for Measure: how do you measure national success correctly? While GDP remains an important statistic, there is more of a focus on quality, rather than quantity of growth as well as the need to balance profit with the impact on people and the planet.
“Our purpose as a global real estate advisor is to create real economic, social and environmental value,” said Axford.