Four strategic questions that commercial real estate must now ask itself

TORONTO, June 23, 2022 /CNW/ – It’s finally here. canada The commercial real estate sector is poised to transition from the reality of the pandemic to our next normal. To make the most of this next phase in our industry, companies need to tie their strategic direction more closely than ever to the real needs of true Canadians.

Pedestrians walking past retail stores (CNW Group/EY (Ernst & Young))

Pedestrians-past-retail stores (CNW Group/EY (Ernst & Young))

The last two years have not only changed the way we work, shop, learn and interact. You changed people, period. Hybrid working models are here to stay. Most employees say they will leave a company if they don’t get the flexibility they want. This flexibility encompasses a wide range of employee preferences—from where and when they work to the amenities most likely to attract and retain talent. Consumer attitudes about what people actually need (or are willing to give up) and how they access those purchases have also changed. That includes 56% who say they are now less likely to date unless they have to. At the same time, we crave human interaction in ways that virtual and remote options just don’t allow. Through December 2021, 85% of holiday shoppers said they would return to malls and spend more time (and money) in malls. Logic dictates that as the clients and customers who populate offices, shops and other types of business premises change, the way we target our offerings to them must change as well.

Across the industry, we need new strategies that are able to balance these evolved preferences. Deepening your understanding of what these changes mean and adapting accordingly can help commercial assets remain relevant or become increasingly relevant over time. Putting people at the center of your plans allows you to adapt your offerings and portfolio to today’s reality in a meaningful and profitable way.

Thinking through these key questions now can be a great way for commercial real estate executives to engage with this process, understand how stakeholders have changed, and translate those insights into sound long-term and short-term strategic planning:

  1. As restrictions ease and people re-enter the world, how do our properties enable the human connections and experiences people crave? Individual comfort will play a major role when returning to the office. We can anticipate a wide range of preferences beyond work models, spanning areas such as entertainment, restaurants and more. It’s crucial to consider the purpose of your properties, the experiences they provide to their users, and how they enable connection points while underpinning security. People are hungry for socialization. Make it happen by developing properties that bring families, friends, co-workers and peers together in the ways they are looking for next.

  2. Where are the opportunities to build for an inherently hybrid future? Multipurpose will be key in a post-pandemic commercial real estate market. Properties, or even collections of properties, that allow physical space and virtual connectivity in one place will allow tenants to bring an important duality to their brands. Consider how your assets can proactively address this reality through new services, offerings, designs, layouts, and more. Working with tenants to realize these opportunities can also be helpful.

  3. Are we diversifying our portfolio based on today’s changed reality? Many of the executives we speak to attribute their success over the past two years to the fact that they had already rebalanced their portfolios prior to the pandemic. This diversity of assets enabled executives to leverage more opportunities to capitalize on shifting customer and consumer perceptions while mitigating risk. If you haven’t already looked at your existing wealth through the diversification lens, start now. Rest assured: this does not have to lead to a major change. It could mean venturing into new assets that will allow you to tap hot spots in emerging markets (think logistics, home delivery, fulfillment, etc.). At the same time, it could be so easy to review your existing assets and ask yourself: What purpose could this space serve in our new world? Be curious about your own space and the way it might evolve along with new stakeholder expectations.

  4. Do we have the right people in place to initiate truly innovative solutions? Traditional thinking provides invaluable context. It is also important to reinforce these internal skills with additional skills to help you develop new concepts, ideas and plans. Whether that means bringing in data scientists to get more clarity on who is using your space, how, when and why, or bringing in environmental, social and governance (ESG) specialists to take your sustainability efforts to the next level, there’s plenty to do think about. Align your business plans and talent strategy to ensure you bring the right mix of people and perspectives to the table and build a diverse chorus of voices ready to move your business forward

bottom line? A new normal requires a new direction. And commercial real estate players ready to boldly connect what they’re doing next with what stakeholders want now can benefit.

About EY

EY exists to create a better world of work, to help create long-term value for customers, people and society, and to build trust in capital markets. Backed by data and technology, diverse EY teams in over 150 countries provide confidence through security, helping clients grow, transform and operate. Across insurance, consulting, legal, strategy, tax and transactions, EY teams are asking better questions to find new answers to the complex problems facing our world today.

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This press release has been issued by Ernst & Young LLP.

EY LOGO (CNW Group/EY (Ernst & Young))

EY LOGO (CNW Group/EY (Ernst & Young))

SOURCE EY (Ernst & Young)

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