With the new year underway, we connected with three commercial real estate (CRE) experts to discuss the outlook on the industry and results from the recently launched report, “The State of Commercial Real Estate Building Operations for 2023.” The panel of CRE experts included:
- Tim Curran, Executive Managing Director, Property & Asset Management Technologies, Building Engines/JLL Technologies
- Greg Carey, Senior VP and Chief Information Officer, The RMR Group
- Randy Fink, Managing Director, Property & Asset Management, JLL
Each expert spoke on the top three challenges CRE teams can expect to see in 2023. Read through this commercial real estate overview for a roundup of the challenges for the industry (backed by data) and tips from the CRE experts on the panel.
Challenge #1: Property Teams are Working with Fewer Resources
It should come as no surprise to those in the CRE industry that property teams are struggling with labor shortages and reduced resources. In fact, staffing resources to complete work orders is a top challenge for property teams, according to the research. The second biggest challenge to completing work orders is prioritization.
“The technical workforce is shrinking,” said Fink in the recent webinar, “What’s in Store for CRE Building Operations in 2023.” “The workforce is increasingly tech-enabled and that makes it even more difficult to hire sometimes.”
“One of the things that is important is prioritization, and what plays into prioritization as well as staffing,” Fink said. “Being able to prioritize the work on a team involving vendors – because of the short-staffed, in-house capabilities – the additional work that goes into communication, management, organization, follow-up, and customer service when we have in-house teams supplemented with outsourced teams has been an increasing part of managing the reduction in available resources.”
Pro tip: “The pandemic turned everything upside down for a while. And our workforce changed during that period,” said Curran. “The overarching challenge here is ‘do more with less.’”
“How do you do that? One option is to use technology to be more efficient – optimizing what you do, all day long, across your staff is more critical than ever. This is about being excellent at automating, organizing, communicating, and prioritizing,” Curran said.
With that, properties are now turning to technology to help with efficiency and the prioritization of work orders. And when CRE properties invest in building operations technology, they’re also investing in their property teams.
Challenge #2: CRE Property Teams Must Increase Efficiency
“Across all the innerworkings of a building, all the workflows and the processes that happen, across all the personas – engineers, property managers, tenants, vendors, security guards – everyone is under pressure to perform at a higher level,” said Curran.
Many property teams are looking to improve building efficiency by conquering the most time-consuming tasks. Certificate of insurance (COI) management and tenant issue management top the list for the most laborious tasks, according to the data in “The State of Commercial Real Estate Building Operations for 2023.” Survey respondents said these two areas are ripe for automation.
Pro tip: It’s time for property teams to automate processes to free up time and resources, panelists agreed. That means tapping into tools, or software solutions, that manage the complexity of buildings.
“Look for tools and technologies that let tenants be self-sufficient, so they can book their own conference rooms, register their own visitors and allow them to interact with the building in a more digital way,” Carey said.
And in terms of COI management, Fink proposed that property teams could also lean into proptech. “If there is a way to automate so teams can focus on higher-value creation activities, customer service, strategic sourcing, it seems ripe for that.”
As suggested by all three panelists, using technology to manage building and tenant operations has allowed property teams to approach tasks in a hands-free way.
Challenge #3: Tenant Comfort and Experience is Now Table Stakes
According to the research, 67% of CRE property teams say tenant comfort issues are the most common tenant request they get.
It takes a lot for tenants to want to leave the comforts of their homes. And if those spaces are not comfortable for them, it puts added pressure on CRE teams to get their buildings up to par. “The juxtaposition between the controlled environment at home and the office space where you are sharing space with other people is more present for folks. They are experiencing it in a more intense way,” said Fink.
Plus, there’s an added layer to tenant comfort, Curran said. “The extra complexity is that we also have an indoor air quality that we need to hit. There are rules around how much fresh air needs to come in from the outside,” he said. “That makes it difficult because you are trying to tackle the tenant comfort, fresh air quality, sustainability, and the use of energy and our carbon footprint.”
Pro tip: Being able to provide a positive tenant experience while managing building standards is no small feat, panelists agreed. It has become increasingly difficult for humans to be able to control and monitor all the moving parts that come with tenant comfort. CRE teams are leaning on software and technology to do the work for them.
“Empower building engineers to access the building automation system from mobile devices as they are walking through the building. So, if they hear or notice hot-cold issues, they can adjust set points directly from their mobile app, instead of having to go back and forth to the engineering office. They can also interact directly with the tenant to show them what every set point is and how the air is flowing around the office,” said Carey.
With one software solution, properties can manage energy, tenant comfort, and indoor air quality at the same time. This allows property teams to focus their attention on other building issues and prioritize work (See Challenge #1).
The Commercial Real Estate Overview Recap
2023 holds a lot of expectations and challenges for the commercial real estate industry. But property teams don’t have to be in it alone. Proptech is paving the way CRE teams manage and maintain their buildings.
“This is a very challenging time for our industry or a very exciting time for our industry too, depending on how you look at it. There is a chance to shine,” said Curran.
To learn more about what to expect from 2023 and a more in-depth commercial real estate overview, watch the full webinar on-demand, “What’s in Store for CRE Building Operations in 2023.”