Avison Young last month released its global 10 Trends for 2023 – exploring dominant themes and emerging trends that are influencing commercial real estate around the world.
“Understanding social, economic, environmental, geopolitical and business drivers is key to how we navigate clients through the current landscape and help them devise critical real estate strategies that have resilience for the future,” said Dr. Nick Axford, principal and chief economist for Avison Young. “Although economic uncertainty is a key feature of the current environment, our global 10 Trends demonstrate that significant opportunities remain.”
Among the trends influencing real estate strategies and business decisions:
• Higher for longer: Higher interest rates are here to stay, meaning money has a cost again as we enter a new era for commercial real estate pricing.
• Operational excellence: Mainstream asset classes require more operational intensity and investors are targeting niche sectors with a greater focus on what goes on inside the building.
• Doctor’s orders: Medical office and related property sectors are seeing increased investor demand, with data analytics helping to identify the best opportunities.
• (De)globalization 3.0: What started with changing economic cost-benefits, post-pandemic risk reduction and climate change has been given a new impetus by the war in Ukraine – driving re-shoring, near-shoring and friend-shoring.
• Critical mass: Growth in the use of cross-laminated timber as a structural element in commercial construction is supporting decarbonization of real estate.
• New lease of life: Green leases have been around for a while, but will become more prominent as regulation drives increased transparency around building performance, and the rights and obligations of landlords and tenants need to be incorporated into lease contracts.
• Cities revitalized: Cities are coming back to life post-pandemic, but flexible working is here to stay and some areas face challenges. Data analytics help make sense of what’s hap- pening in real time.
• Maximum impact: Cities face challenges. Increased private sector focus on social value (the “S” in ESG) and the search for value-add investment opportunities at scale are driving increased private sector engagement and public-private partnerships for urban regeneration.
• Cost of living: Investment in residential real estate has seen dramatic growth. The affordable housing sector can be challenging but the opportunity is huge and demand is only going to increase.
• Metaverse or Betterverse?: Focusing on the keen interest around cryptocurrencies and virtual worlds risks missing the ways that the underlying technology behind Web 3.0 is already benefiting real estate.
The global 10 Trends have been prepared based on the market knowledge and experience of Avison Young experts from around the world, along with additional resources.
Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, its clients collaborate with an empowered partner who is invested in their success. Its integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Its goal is to work with its clients to create healthy, productive work- places for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community.
Learn more at avison-young.us.
