Commercial Real Estate (CRE) predictions for 2024
CRE: What’s in store in 2024
As we embark on a new year, the Commercial Real Estate (CRE) sector in Australia stands at the threshold of exciting transformations and advancements. Against the backdrop of a cost-of-living crisis, a slowing economy, technological breakthroughs, and evolving societal preferences, it’s crucial to explore the predictions that are likely to shape the Australian CRE landscape in 2024.
Flexible Workspaces Take Centre Stage
Australia, like many parts of the world, is witnessing a surge in demand for flexible workspaces. With remote work becoming more prevalent, co-working spaces and serviced offices are expected to proliferate. Property developers and landlords are likely to adapt their offerings to cater to the changing needs of tenants, emphasising collaborative environments, cutting-edge technology, and amenities that enhance work-life balance and ensure that flexible ways of working are catered for. As this change in working environments takes hold, businesses need to ensure they are considering their future space requirements when developing their overall property and asset strategies.
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Tech Integration Redefines Properties
In 2024, the integration of advanced technologies, including artificial intelligence, virtual reality, and the Internet of Things (IoT), will redefine commercial properties across Australia. Smart buildings, featuring energy-efficient systems, advanced security measures, and personalized tenant experiences, will become the new standard. Those in the industry who embrace and implement these technologies will gain a competitive advantage in attracting and retaining tenants. Some service providers are utilising monitoring technology on high value assets as a way to determine servicing needs. There is a trend emerging to move away from the set, preventative maintenance schedules and towards a hybrid reactive/preventative model, based on the information provided by the monitoring technology used throughout these “smart” buildings.
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Sustainability
Sustainability remains a pivotal factor in the Australian real estate landscape. Expect to see an increased emphasis on environmentally friendly practices, green building certifications, and renewable energy sources. As tenants become more environmentally conscious, developers and investors who prioritise sustainability will likely find themselves with a growing market share. There are a number of initiatives being implemented across the industry which have been having a significant impact to sustainability initiatives and net zero targets, including:
- Establishment of an Environmental, Social and Governance (ESG) framework – a structured way to identify and implement sustainable initiatives
- Recycling and upcycling over replacement and upgrade. The current trend is recycling everything from buildings to fitouts, even workstations – recognising savings from both diversion from landfill and replacement costs
- Solar power implementation. It’s not new, but it does have an impact, with some Grosvenor clients installing roof solar reporting negative electricity usage when combined with other simple solutions (modified BMS, HVAC, and lighting).
Adaptive Reuse Gains Traction
Facing changing consumer behaviours and economic uncertainties, adaptive reuse and repurposing of existing buildings will gain momentum in Australia. Unused spaces may find new life as mixed-use developments, residential areas, or community spaces. Creativity in envisioning and executing such transformations will be a crucial skill for developers, investors and government departments.
As Australia’s commercial real estate sector moves into 2024, the landscape is marked by opportunities for growth and innovation. Technological advancements, changing work dynamics, and a heightened focus on sustainability will shape the industry. Success in this dynamic environment requires adaptability, innovation, and a strategic approach to meet the diverse needs of tenants and investors in the unique context of the Australian market.
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