CRE Inflection Point: Which Way Will the Industry Go?

Overall, optimism prevails, according to Deloitte's 2022 Commercial Real Estate Outlook. North Texas-based Wyn Smith weighs in on how the market forces are playing out locally.

The commercial real estate industry is poised at the forefront of the recovery. That’s according to a survey and report titled the “2022 Commercial Real Estate Outlook,” released by Deloitte Touche Tohmatsu, a multinational professional services network with offices in over 150 countries and territories around the world.

“After nearly two years of change not seen in many generations, the CRE industry is at an inflection point. Which way will it go?” Deloitte asks in its summary.

Combined disruption means change in how CRE is developed, financed, and used, the report says.

2022 can set a foundation for the next several years

More than 400 senior executives at large commercial real estate firms around the world responded to the survey, which found that two-thirds of respondents say they expect their companies to be partially or completely remote in the future.

Wyn Smith, Deloitte’s senior real estate partner for audit and assurance in North Texas, says that organizations should be forward-looking and that the Dallas region is experiencing much of what other areas are feeling.

“Optimism prevails, according to our recent CRE outlook, and that may define forward activity,“ Smith told us. “Rather than merely riding the current wave, organizations should be driving toward long-term positive financial results, with a specific focus on new technologies, tools, and the skillsets to utilize them.”

Smith, who has 25 years of experience in the areas of IPOS, mergers and acquisitions, and spin-off transactions, says the larger CRE market is seeing significant M&A activity.

There’s money to be invested, and long-term fundamentals matter, he says.

“These market forces are playing out locally as well,” Smith said. “Dallas is an incubator for top industry talent but hasn’t escaped the resignation and hiring trend. These same technologies and tools being used to drive financial results could also be a draw to top talent looking to work with innovative companies.”

Overall, the report says, “optimism around fundamentals prevails,” as 80% of respondents think their company’s revenues in 2022 will be slightly or significantly better than 2021 levels.

Two years of unprecedented change shape the talent landscape

Deloitte also says companies are dealing with increased demands to prioritize environmental, social, and governance (ESG) issues as they face aging technology infrastructures, a tightening labor market, and increasingly differentiated competition.

Deloitte’s report, which published late last year, underscores how the pandemic has altered the outlook of employees in the industry. It reveals that some employers, who are battling hard for talent, aren’t responding quickly enough to these shifts. 

The respondents say that they want more purpose-driven work environments to focus more resources on ESG goals. They foresee their workplaces offering more flexibility in benefits and in working remotely, according to the report.  

A version of this story first appeared in the print edition of DALLAS® Commercial Real Estate 2022, published by Dallas Next for TREC and the Dallas Regional Chamber. Read more in the digital edition of the magazine below, and request the next print edition here.


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