Many commercial real estate (CRE) property owners and operators are facing new challenges as the industry continues to shift. From the evolving workplace where remote and hybrid work have become the norm, to a strain on property teams grappling with labor shortage, to a new focus on ESG reporting and sustainability initiatives – and everything in between – CRE property teams have more on their plates than ever before.

To shine a light on what CRE property teams are focusing on as they face a rapidly changing industry, Building Engines, a JLL company, partnered with the Building Owners and Managers Association International (BOMA) to survey over 250 commercial property professionals about the state of CRE building operations.  

 These are the top commercial real estate trends to know based on the data. 

Top 5 Challenges for Commercial Real Estate Operations – and How to Tackle Them

Top 5 Challenges for Commercial Real Estate Operations – and How to Tackle Them

Here are five challenges facing commercial real estate operations (as outlined in the Counselors of Real Estate report) and where attention can be focused.

1. Operational Efficiency is Key in 2023

As property teams work to accomplish more tasks with fewer resources amid labor shortage strains and recession concerns, saving time through greater efficiency has become more important than ever. In one of the biggest commercial real estate trends for 2023, property teams are examining their building operations strategies to determine where they are spending most of their time so they can tap into tools to help meet their goals. 

When equipping engineers, what is your biggest priority?
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For 2023, prioritizing and managing work is a top concern for property teams. Lack of staffing resources could explain why prioritizing and managing work has become more crucial. Survey respondents cited it as their top challenge to completing work orders. That was followed by prioritization of work orders and ordering parts as the next biggest challenges. For property teams working with smaller teams, technology that can help streamline and automate processes will be an important contributor to success. That’s especially true for commercial offices, as property teams noted faster responses to work orders as one of the most common tenant requests.

2. Hybrid Work is the New Norm for Tenants

What percentage of your tenants are using a hybrid work model?
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Remote and hybrid work models are leading to new commercial real estate trends for 2023. It’s no secret the CRE industry is rapidly evolving as companies implement these new working models. According to our research, more tenants now use a hybrid model (defined as employees splitting time between the office and working from home). Only 16% of respondents didn’t know or said it’s not applicable to their situation.  For those property teams who are unsure if their tenants have created a hybrid work plan, there’s a missed opportunity in not knowing how tenants are using their buildings. That’s because remote and hybrid work is forcing tenants to make decisions about their lease renewals. 

Tenants have many important questions to answer about the evolution of space for their organizations. As property teams face the new workplace in today’s remote and hybrid work era, CRE landlords need to get involved from the start to stay ahead of potentially negative outcomes such as space reduction or nonrenewal of leases.  

CRE landlords can tap into their data to help answer the questions tenants are asking about how their space needs are evolving. This is known as providing data as a service to tenants. CRE owners and landlords should look to help answer these questions and influence tenant decisions. 

The State of Commercial Real Estate Building Operations for 2023

 3. Tenant Engagement Needs a New Strategy

Another one of the big commercial real estate trends for 2023 relates to improving the tenant experience and tenant satisfaction – especially as workplaces continue to evolve. In fact, our research shows that in addition to investing in building operations tech, CRE property teams are looking to tenant experience technology to help meet their goals. 

Are you currently using tenant survey or polling data to help guide your business decisions?
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But many property teams may be falling short. Our research shows that 63% of CRE professionals don’t use or aren’t sure if they use tenant survey and polling data to guide business decisions. That means they’re missing out on a huge opportunity to improve tenant satisfaction. For those property teams looking to enhance their tech stack to create a better tenant experience, an app that connects a building operations platform with a tenant experience component could be key. This technology creates a seamless experience for tenants and property teams alike because you can engage and connect with every person in the building in a more streamlined and time-saving way than manually sending emails. Additionally, every event registration, booked resource, and tenant survey sheds light on what tenants love – and what they don’t.

4. The Bigger the Spaces, the Greater the Proptech Needs

To understand who has the need to increase their tech spend in 2023, we analyzed whether an increase in square footage correlates to an increase in tech spend. Half of the CRE professionals who said their buildings or square feet had increased also said their investment in CRE software would increase over the next 12 months. 

These respondents also noted their tech investment would be focused on several areas, including: 

  • Building operations and equipment maintenance (73%)  
  • Energy management/sustainability (54%)  
  • Tenant experience (53%) 

Interestingly, prioritizing smart buildings/IoT – for example, indoor air quality sensors – has grown since last year. While our research showed that only 17% of property teams had these technologies on their list in 2022, that figure has grown to 26% for 2023. That means the number of property teams planning to invest in smart buildings/IoT increased 53% since last year – something to keep an eye on as one of the evolving commercial real estate trends for 2023.

5. Energy Efficiency Still a Top Goal for CRE

Sustainability continues to grow in importance for the CRE industry, especially as governments implement more green building mandates and tenants increase their demands for such properties. 

Sustainability priorities
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When we asked respondents what their property teams would prioritize in 2023 in terms of sustainability, energy efficiency/expense reduction notched the top choice (61%). This result was perhaps not surprising given the fact that respondents noted energy management/sustainability as a top area for enhancing their tech stack (see #4 above).It’s also not surprising that the majority of CRE property teams are focusing on energy efficiency. The high cost of energy management in commercial real estate eats away at the bottom line and it can cost you more if your buildings aren’t sustainable. Teams looking for tools to effectively reduce energy consumption, improve tenant comfort, and exceed indoor air quality standards are increasingly turning to an intelligent HVAC optimization management system for help. 

Learn More Commercial Real Estate Trends for 2023 

It’s clear commercial property teams face some new challenges as the industry continues to evolve. As inflation remains unstable and the industry braces itself for a potential recession, CRE professionals need more help than ever before understanding the shifting commercial real estate trends for 2023.

Download the free report, “The State of Commercial Real Estate Building Operations for 2023,” for more actionable insights to help CRE property teams strategize for the year ahead.