Our latest research reveals that Future Fit companies outperform others in the industry. They have flourished by delivering on goals like growth, innovation, and sustainability. And their strategic vision and agility have allowed them to succeed even in uncertain conditions.

Here are some highlights from our Future Fit data, which show how organisations that effectively integrate sustainability into their operations and projects are better positioned to thrive in the evolving commercial real estate (CRE) landscape.

• Prioritise future fitness: Dedicate time and resources to plan direction and growth strategies.
• Embrace sustainability: Accelerate efforts to reduce carbon footprints, securing competitive advantage through sustainability.
• Leverage data: Enhance data collection and analysis to inform better strategic decisions.

CRE businesses increasingly turn to sustainability  and technology  to navigate a challenging market landscape. Our Future Fit research highlights how industry leaders are seizing opportunities amid economic pressures and post-pandemic adjustments.

“Real estate businesses have had to cope with structural change and shifting consumer behaviours, but the most forward-looking businesses have quickly adjusted strategy accordingly,” says Azfar Rizvi, our Regional Director, Real Estate Finance. “They’re agile enough to cope with speed of change across the market in areas such as offices and retail, which have seen such huge shifts in recent years.”

Our research, drawing on a broad survey of CRE businesses, outlines the practices that characterise Future Fit companies, offering a blueprint for success.

• Identify ‘quick wins’ to provide a platform for decarbonisation: Reducing energy consumption could deliver significant savings, for example, while energy efficiency could attract tenants because it offers them potential savings and reduces their carbon footprint.
• Build a business case for investment in sustainability based on the lifetime of assets, rather than short-term horizons.
• Collaborate with key stakeholders, including employees, industry partners and tenants, to provide greater opportunities for them to contribute to sustainability.

CRE businesses face new regulation that requires them to become more sustainable – and consider ways of mitigating the impacts of climate change – but the sector’s leaders see opportunity. Almost two-thirds of CRE businesses (65%) believe sustainability investments can drive competitive advantage and 62% recognise it as a key focus for senior executives.

The most advanced CRE businesses are proactive: 60% have now shifted to using at least some renewable energy and 38% generate their own. Monitoring is a critical focus, with 67% of CRE businesses implementing tools to measure and report on their environmental performance.

“Green assets are likely to attract a premium in the future, so even where regulation is not forcing your hand, it makes sense to be an early adopter,” says Azfar. 

“Whether that means focusing on acquiring assets that can be retrofitted or already having strong green credentials, or investing in the existing estate, it’s important to take the long-term view.”

"We continually explore ways to support landlords and tenants through their sustainability journey and offer support through tools such as the Carbon Planner and the Buildings Efficiency Assessment Tool."

Just 21% of CRE businesses define their purpose in terms of environmental and societal contributions. Aligning sustainability with commercial objectives could pave the way for a more positive future.

• Foster experimentation: Adoption of technologies from artificial intelligence (AI) to virtual reality is at an early stage, but first movers have a real advantage.
• Expand beyond operations: New tools provide significant opportunity at an operational level, and sector leaders are embracing innovation in their commercial and strategic decision-making.
• Invest in data collection and analysis: Two-thirds of CRE businesses already acknowledge their ability in this area will drive their future success.

Innovation and new technology is another area where Future Fit businesses in CRE pursue advantage. Many in the sector are focused on leveraging new tools to underpin strategic decision-making – 73% invest in improved data science and analytics capabilities, for example. But the leaders in CRE are determined to prioritise transformation, too. Cross-functional teams and formal change management are becoming common, with 53% and 43% of businesses implementing these strategies, respectively.

There are many opportunities for the sector to drive return on investment in technology. At an operational level, the shift to smart buildings – with energy usage carefully monitored and controlled to reduce the carbon footprint and lower costs – is gathering pace. Smart buildings can also show how occupants use a building, what capital expenditure could be needed, and maximise financial planning. Automation technologies improve back and middle office efficiency, enabling CRE businesses to operate with leaner teams. And AI is beginning to support CRE businesses as they attempt to get ahead of market trends and shifting consumer behaviours.

“This could be using data to fine tune designs, spot potential snags, propose improvements and even tackle key issues including cost overruns, safety worries and workforce shortages,” says Azfar.

A 'fail-fast' mindset is gaining traction, with 56% of CRE firms adopting this approach. Empirical evidence is now a prerequisite for significant investments in three-quarters of these businesses.

• Make more effort to map out the skills required to deliver long-term strategic goals, then work backwards to develop a plan to close any gaps.
• Put purpose at the centre of the employee value proposition, with younger employees in particular now focused on this issue.
• Establish dialogue with the workforce, responding positively to feedback on what matters most to them in the organisation.

Recruiting and retaining top talent is crucial for CRE businesses. However, only 22% have mapped long-term skills needs. Understanding how strategy shapes skill requirements is essential, with two-thirds of firms acknowledging this need.

This will not always be easy, but leading CRE businesses recognise the need to focus on a range of different areas to encourage the best talent to join them and to stay with them. While remuneration will be part of the story, many potential employees also consider other things.

For example, diversity, equity, and inclusion (34%) and career development opportunities (42%). Despite this, remote and hybrid working remains underutilised, with only 3% seeing it as a critical factor.

Azfar says employers in the sector should be trying to set out what they stand for and what they can offer their people.

“The talent of the future is not only more conscious of who they’re working for and the purpose of the organisation, but they also want to clearly understand the long-term ambitions of the business and how they will be able to continue to develop themselves,” he says. CRE leaders recognise this – 35% prioritise organisational purpose as part of their talent strategy.

• Make more effort to map out the skills required to deliver long-term strategic goals, then work backwards to develop a plan to close any gaps.
• Put purpose at the centre of the employee value proposition, with younger employees in particular now focused on this issue.
• Establish dialogue with the workforce, responding positively to feedback on what matters most to them in the organisation.

Recruiting and retaining top talent is crucial for CRE businesses. However, only 22% have mapped long-term skills needs. Understanding how strategy shapes skill requirements is essential, with two-thirds of firms acknowledging this need.

This will not always be easy, but leading CRE businesses recognise the need to focus on a range of different areas to encourage the best talent to join them and to stay with them. While remuneration will be part of the story, many potential employees also consider other things.

For example, diversity, equity, and inclusion (34%) and career development opportunities (42%). Despite this, remote and hybrid working remains underutilised, with only 3% seeing it as a critical factor.

Our research provides a snapshot of the CRE sector’s future fitness. While some businesses have made significant progress, others have opportunities to catch up.

“The key is to have that plan in place for transformation,” says Azfar. “What can leaders in the business do to drive change?” 

By taking action now to prioritise change, your business could be more ready to boost future resilience, meet market demand, reduce costs, or access capital.

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