Just how accurate were 2023’s real estate predictions?
Insight
Expect the unexpected
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Trying to predict anything about commercial real estate the past few years has proven difficult.
But that hasn’t stopped the industry from trying. Whether the forecasts were right or wrong, there are lessons to be learned that can help us see where we’re headed. Let’s take a look at what came true for real estate in recent months, and where estimates failed to materialize as expected.
Predicting the Economy
Despite the cost of goods, labor and debt being considerably higher than a year ago, the economy proved more resilient than expected. With the accepted view being that the biggest adjustments are now behind us, inflation and interest rates around the world are largely stabilizing.
2023 Prediction - The economy faces a hard landing
FALSE – The economy is doing better than expected.
Predicting RTO
The office sector has had a torrid time of it since Covid hit with global vacancy recently hitting a new all-time high of 15.9%. However, as leases expire, many occupiers are consolidating several smaller sites into one central trophy office, focusing on premium space and net zero carbon buildings.
2023 Prediction - No one wants offices anymore
FALSE – Top quality spaces are in high demand. But not all offices were created equal.
Predicting Physical Retail
Retailers are upping their game by finding inventive ways to enhance in-store experiences hosting events, live performances, holiday-themed dining experiences, or pop-up markets. Augmented reality and virtual reality applications are also drawing customers into physical stores for interactive and immersive experiences.
2023 Prediction - Physical retail is dead
FALSE - A new wave of clicks-to-bricks retailers is helping boost foot traffic in malls.
Predicting Sustainability
The economic environment made it harder to justify the business case for investing in sustainable buildings right now. BUT the need for action is only growing as climate risk made a dramatic impact on many cities. Reporting requirements are tightening prompting an uptake in sustainability tech investment.
2023 Prediction - Sustainability will drive real estate decisions
TRUE – The onus has shifted from setting targets on carbon emissions to creating a clear path forward for change.
Predicting AI
Generative AI has truly taken off. The rapidly expanding AI ecosystem and its supporting infrastructure is already driving new demand for real estate across markets globally, while AI + human valuation is transforming investment, risk management and portfolio valuation analysis.
2023 Prediction - Real estate will embrace AI
TRUE – AI is providing insights into how people use offices, predicting future workspace requirements and creating dynamic office designs.