Five factors driving a ‘new era’ for value creation in real estate

European occupiers and investors will benefit from a “new era” for value creation opportunities after a challenging 2023, according to Colliers. The firm said it believed 2024 “will be the start of a transformative three years” for the market. It identified five opportunities for value creation and “transformational” organisational change: Increased momentum to upgrade legacy real estate stock to support ESG commitments and avoid assets becoming stranded owing to high carbon emissions.   Increased buy-side opportunities for real estate investors and corporate occupiers looking to take advantage of higher yields, strong corporate balance sheets and market opportunities following the erosion of real estate asset values during 2023.   More corporates building and fostering enterprise resilience through a flexible real estate portfolio and workplace strategy.  A continued reimagining of the workplace (both physical and virtual) as a key lever for talent attraction and retention, which enables hybrid working strategies that reflect continued organisational and societal change.  The transformative use of data and artificial intelligence to tailor insights on real estate occupancy and use, CRE investment strategy and drive efficiencies across the built environment.  As such, researchers said occupiers and investors can maximise the performance of their portfolios to meet rapidly changing market conditions, investment opportunities, ESG commitments and workplace experience strategy.  Where ESG is concerned, converting sustainability targets into deliverable action plans was underlined as a key area of focus. Colliers cited a flight to quality across EMEA to buildings with strong ESG credentials, on the back of regulatory requirements and corporate net zero commitments. On investment, researchers expected owners and investors to take advantage of asset value corrections experienced in 2023, combined with a “wave” of refinancing this year. Reduced interest rates in H2 2024 are also expected to boost activity. In terms of leasing, Colliers said organisations in more volatile business sectors would continue to pivot away from long-term leasing commitments and towards short-term flex options. That will occur as the role of the physical office evolves, according to the firm. It said that gathering and analysing data from smarter buildings, and turning it into actionable insights, will allow organisations to “get ahead of the decision-making curve”. Andrew Hallissey, executive managing director of EMEA occupier services at Colliers, said: “The commercial real estate industry is trying to balance complex, and at times opposing, considerations. “From demands for flexibility to new regulations and the return of a high interest rate environment, there is no denying that these operating dynamics present significant challenges for all of us – but also a real opportunity to transform the way we all do business and access value creation opportunities across the built environment in 2024 and beyond.”  Photo © Gerd Altmann/Pixabay