New Chapter in CRE
It’s been an interesting start to the 2023/2024 CRE financial year. A few focal points have come to the surface, and we believe they will be crucial components in shaping the year to come.
McKinsey released its report on the lasting impacts of the pandemic on commercial real estate. Office and retail space utilisation has changed forever. The concept is not new, but the report highlights the extent of the impact and of course, it varies from location to location.
We still think technology is the driver of so much of the change that is affecting CRE; tenants, the market and the industry itself. Technology untethered workers across the business spectrum to a degree that no one anticipated, and technology is the enabler of increased efficiency and productivity.
The E gap we noted last week is an affordability issue for many CRE tenants wanting to do their bit for the environment but can’t afford to upgrade to premium buildings. It doesn’t mean they don’t want to; their budgets are simply not at that level. The opportunity to change this situation is huge and many landlords are going to have to adapt.
The consequences of the above are profound and will continue to impact the markets for some time. 3.33 years later and the direction is becoming clear. We are at a crossroads. What’s next for the office markets?
The Property Council of Australia releases its Office Market Report shortly. It is always a much-anticipated series of events across the country. Whatever the numbers, it is just the start of the next chapter of the CRE journey.