In a recent CBRE survey, we explored our occupier clients’ priorities. ESG, closely followed by a focus on sharpening portfolio performance, were revealed as the top two recurring occupier topics. It is clear that moving into 2023, in the face of growing economic challenges, that longer-term ESG commitments will increasingly battle for airtime with short-term cost-saving pressures.
We are at a unique inflection point in the real estate sector where external conditions have fundamentally challenged the status quo, and corporate real estate leaders are grappling with a diverse range of critical issues simultaneously.
The survey leverages our unique access to over 50 occupiers from all industry types and sizes, to help understand the key topics our clients are focusing on, now and into the future.
Top 12 challenges are:
- ESG
- Sharpening Portfolio Performance
- Return to Office
- Skills & Talent
- Labour Supply & Location Selection
- Digital & Technology
- Economic Challenges
- Business Analytics & Data
- Logistics, Manufacturing & Supply Chain
- Home & Third-Party Flex Spaces
- Critical Environments for Digital Advancement
- Landlord & Tenant Relationships Redefined
ESG
ESG came out on top as the number one overall corporate priority. Key ESG challenges include:
- Reaching net zero targets in an increasingly challenging financial environment
- A desire to be associated with environmentally high-quality real estate
- Wishing to be known as a leading organisation for diversity, equity and inclusion, workplaces and policies
Sharpening Portfolio Performance
Key Sharpening Portfolio Performance challenges include:
- Managing expenses efficiently, whilst seeking to realign real estate portfolios with the new realities of hybrid working
- Creating the best places and spaces to meet both employees' and business' strategic needs
- Meeting environmental, safety and health commitments
Return to Office
Many companies are more uncertain about their plans for the Future of Work than they were last year. With board-level pressure to implement mandates, the balance still needs to be struck between employee engagement and office occupancy. Key challenges on Return to Office include:
- Implementing effective hybrid-fit working practices for the future
- Attracting people to spend regular time in the office
- Board level pressure to implement mandates
Skills & Talent
The pandemic transformed the way we work, and advances in technology, societal demands and economic changes continue to redefine the workforce, which has resulted in several challenges for occupiers. Key challenges surrounding Skills & Talent include:
- Defining new roles and/or skills to promote optimal performance in ways of hybrid working
- Building a people pipeline from unconventional sources to fill vacancies
- Creating quantifiable behaviour change within talent groups, from changing how people use the office to how often they use the office
- Building inclusive environments
Labour Supply & Location Selection
Aligning corporate and location strategies to identify the opportunities and risks in talent attraction will help secure the right location and deliver potential cost savings. Key Labour Supply & Location Selection challenges include:
- Attracting and retaining talent
- Reducing cost by relocating roles to lower labour-cost locations
- Rightsizing portfolios to respond to the impact of hybrid working
- Entering new markets
Digital & Technology
Having the right digital strategy will help occupiers identify the best digital outcomes to meet business, asset and workplace needs. Key Digital & Technology challenges include:
- Addressing the variable demands from occupiers based on the hybrid workplace model
- Asset performance that reduces OPEX and CAPEX, including ESG and carbon targets
- Complexity of the PropTech market; finding the right solution and integrating it into current infrastructure
Economic Challenges
After some positive readings in the immediate post-pandemic period, various factors have combined to cause a weakening in the short-term outlook. Key Economic Challenges include:
- Rising energy prices, higher interest rates and cost of capital to corporates
- Some rebalancing of demand away from manufactured goods towards services
- Inflation persistence and uncertainty around the speed and scale of monetary policy response
- Labour market challenges including shortages in certain skills markets
Business Analytics & Data
Interpreting Data at scale can be challenging, but it’s imperative in order to drive proactive business decisions and operational transparency. Key Business Analytics & Data challenges include:
- Turning data into insights
- Data governance, quality and reliability
- Integrating datasets across disconnected real estate functions to drive decision-making with context
- Benchmarking and automation
Logistics, Manufacturing & Supply Chain
Development and manufacturing costs, alongside supply chain resilience, are a huge point of concern in the face of economic uncertainty, but this isn’t the only challenge the industry is facing. Key Logistics, Manufacturing & Supply Chain challenges include:
- Maximising cost-efficiency of Logistics & Manufacturing operations and assets
- Tackling rising operating costs, primarily labour and energy
- Planning and executing the required supply chain for the business
- Delivering ESG improvements in a challenging financial environment
Home & Third-Party Flex Spaces
Developing a flexible portfolio strategy helps future-proof organisations against unforeseen changes, but more challenges are:
- Creating a real estate portfolio that can react to changes in business strategy and space demands
- Providing an effective workspace for employees, to help with client attraction and retention
- Aligning with balance sheet pressures and constraints
Critical Environments for Digital Advancement
The rise of digital work and growing digital ambitions requires occupiers to have robust and diverse storage processing capabilities, but this comes with its own challenges.
- Creating an informed strategy for change, incorporating real market commercials and capabilities, whilst accommodating IT and business aspirations
- Reducing cost of existing and legacy IT environments and infrastructure
- Delivering ESG and Sustainability improvements related to IT infrastructure
- On-premise IT impacting real estate decisions and reducing business agility
Landlord & Tenant Relationships Redefined
Landlords & Tenants must work more closely to help satisfy the changing demands of employees, both in terms of the physical product, the amenities and services provided, and the supporting digital infrastructure.
Key Landlord & Tenant Relationship challenges include:
- Bringing the right people around the table to collaborate in a way that maximises benefits, especially those that rely on multiple parties/cross-functional inputs
- Defining the minimum requirements for each party, and what the right middle ground is to meet the objectives of each party (Landlord, Occupier, Investor/Developer)
- Ensuring flexibility in the provision of space, services and amenities, and simplifying the procurement process moving towards an on-demand/space as a service product
Learn more?
Do you want to know more about solving the future challenges for occupiers, contact:
Sweden: Anders Hansén
Denmark: Mikael Jahn
Finland: Niko Penttinen
Norway: Christer Farstad
