In a world where uncertainty is always cohesive with opportunity, the global commercial real estate industry stands at a crossroads. Deloitte’s 2025 commercial real estate outlook provides a compass and a guide for real estate leaders seeking solid ground amidst shifting tides.
1. Expense Mitigation: A Top Priority
Revenue Expectations and Talent Optimization
- Revenue Expectations: The survey reveals a sobering truth—revenue expectations have dipped to their lowest level since Deloitte began tracking in 2018. Real estate firms are recalibrating their compasses, focusing on expense mitigation.
- Talent and Office Space: The heart of this recalibration lies in talent and office space. As remote work reshapes our understanding of the workplace, optimising office footprints becomes paramount. But how do the numbers stack up?
By the Numbers:
- 50% of respondents expect the cost of capital to worsen through 2024.
- 49% anticipate a decline in capital availability during the same period.
- 61% admit their firms’ core technology infrastructures still rely on legacy systems, but nearly half are actively modernising.
2. ESG Compliance and Sustainability
Environmental, Social, and Governance (ESG) Regulations
- ESG Compliance: Nearly 60% of surveyed firms lack the data, processes, and internal controls necessary to meet ESG compliance standards. The urgency to bridge this gap is palpable.
- Green Initiatives: Value creation lies in green and decarbonization initiatives. Sustainable practices not only benefit the environment but also attract investors and tenants.
By the Numbers:
- 60%—the gap that must be closed to align with ESG standards.
- $1.5 Trillion: The staggering amount of commercial real estate debt maturing before the end of 2025, according to Bloomberg.
3. Outsourcing and Technological Agility
Streamlining Operations and Modernization
- Outsourcing for Efficiency: Real estate firms plan to leverage outsourcing to gain technological capabilities and enhance agility. It’s time to address accumulated technical debt.
- Legacy Systems: While 61% still rely on legacy systems, the tide is turning. Nearly half are actively modernising their tech foundations.
By the Numbers:
- 38%—the percentage of respondents who expect the cost of capital to worsen in 2024.
- 40%—the corresponding figure for capital availability expectations last year.
4. Building Resilience: The Road Ahead
Paving the Way Forward
As we step into 2025, these insights would be key:
- Risk Mitigation and Portfolio Structuring: Proactive property portfolio structuring enhances efficiency and sustainability. Identify risk areas and optimise portfolios.
- Green and Decarbonization Initiatives: These aren’t just buzzwords; they’re value drivers. Investors and tenants seek sustainable practices.
- Technology Transformation: From data analytics to smart building management, innovation is key. Modernize your tech stack.
The next 12 to 18 months are pivotal. Real estate leaders must reimagine strategies, adapt to changing norms, and seize opportunities. Deloitte’s 2025 commercial real estate outlook suggests that recovery is on the horizon after two years of muted revenues.
