2024 commercial real estate outlook: Finding terra firma

This year’s commercial real estate outlook aims to help leaders find solid ground that the industry can build upon to meet new foundational realities. Survey results suggest that many firms aren’t ready to meet ESG regulations, while others need to ramp up their technology capabilities if they want to remain competitive.

Here are some of the key findings from Deloitte’s 2024 commercial real estate industry outlook:

• Expense mitigation is a top priority for most respondents and revenue expectations dropped to their lowest level since we began our survey in 2018. Top areas for expense mitigation are in talent and office space.
• Respondents point to the cost of capital and capital availability as the weakest among real estate fundamentals. About half of respondents expect the cost of capital (50%) and capital availability (49%) to worsen through 2024, up from 38% and 40%, respectively, last year.
• Many real estate firms aren’t ready to meet ESG regulations. Nearly 60% surveyed say their firms lack the data, processes, and internal controls necessary to meet compliance standards.
• Most respondents plan to use outsourcing to drive efficiency. Their primary goals are gaining the technological capabilities to streamline processes and adding agility and resilience to their operations.
• Real estate firms should address years of amassed technical debt by ramping up their technology capabilities. Many respondents (61%) admit their firms’ core technology infrastructures still rely on legacy systems, although nearly half of them are making efforts to modernize.