“The impact of COVID-19 on the global economy and the CRE industry has made 2020 the most memorable year in recent history,” says Deloitte in its 2021 Commercial Real Outlook, prepared by U.S. real estate leader Jim Berry and others.
“CRE companies have needed to digitize operations, close physical facilities due to extensive lockdowns, and prepare for reopening, while ensuring the health and safety of employees and occupiers and considering the financial health of tenants and end-users.”
That’s how CRE firms have fared in the current environment. How about the future? Deloitte asked 200 senior executives in CRE—including owners/operators, developers, brokers, and investors—how well equipped they are to weather the current economic situation, how they are planning to recover over the next 12 months, and how they are preparing to remain competitive and thrive in the long term.
By their own estimation, the forecast calls for partly cloudy skies. Most survey respondents felt their companies were unprepared in certain important areas and that the industry continues to struggle to adapt their long-term strategies, says Deloitte.
Among the key challenges are:
• Only one-third of respondents agree or strongly agree that they have the resources and skills required to operate a digitally transformed business.
• Less than 50% of respondents consider digital tenant experience a core competency of their organization.
• Only 41% of respondents said their company has stepped up efforts to redefine business processes, job roles, and skill requirements to include the use of technology and tools.
“CRE company leaders have their work cut out,” Deloitte says. “To position their companies to thrive long term, they need to break inertia to move into rapid recovery.”
As epoch-making as 2020 has been, says Deloitte, “2021 could be even more so; the critical decisions and investments leaders make now could come to fruition over the next 12 months. They should strive to be digital—optimizing business, operating, and customer models for a digital environment. Rapid digital transformation will likely be needed to build operational resilience, maintain a strong financial position, develop and retain talent, and create an enabling culture.”
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