2023 commercial real estate outlookThe global CRE industry faces uncertainty. Leaders can navigate the future of real estate in 2023 and beyond by focusing on strategic execution, talent, and innovation.A report from the Deloitte Center for Financial Services The Deloitte Center for Financial Services, which supports the organization’s US Financial Services practice, provides insight and research to assist senior-level decision makers within banks, capital markets firms, investment managers, insurance carriers, and real estate organizations. The center is staffed by a group of professionals with a wide array of in-depth industry experiences as well as cutting-edge research and analytical skills. Through our research, roundtables, and other forms of engagement, we seek to be a trusted source for relevant, timely, and reliable insights. Read recent publications and learn more about the center on Deloitte.com. ConnectTo learn more about the vision of the DCFS, its solutions, thought leadership, and events, please visit www.deloitte.com/us/cfs.Subscribe To sign up for more information and personalize the content sent to you, including our latest research, articles, and webcasts, please visit https://mydeloitte.com.EngageFollow us on Twitter at: @DeloitteFinSvcs.About the Deloitte Center for Financial ServicesReal Estate Industry servicesAs a real estate service provider Deloitte must continually evolve and adapt to new client expectations and changes in the overall market. Our multi-disciplinary approach allows us to provide services to address our clients’ needs and to deliver these services locally, nationally, and globally. Our team of seasoned professionals can support you with deep knowledge and insight into the real estate capital markets. We offer a broad range of services including: financial statement and internal control audits, accounting and reporting advisory, international, national, state and local taxation, real estate transformation and location strategy, and many others. Learn more. KEY FINDINGS 2FORMING A ROAD MAP FOR CHANGING TIMES 3NEW CONCERNS ABOUT REVENUE CAUSE NUMEROUS STRATEGY REASSESSMENTS 4STRATEGICALLY POSITIONING FOR WHAT’S NEXT 8Office10 Industrial10 Housing11 Retail11 Hotel12 Alternatives:Datacenters,seniorhousing,andlifesciences13THE REGULATORY ENVIRONMENT IS HEATING UP 15UnderstandingandcomplyingwithESGdisclosurerequirements 15 Thechallengetomeetexpectations16 Addressingtrendsintaxregulation18MEETING THE GROWING EXPECTATIONS OF THE TALENT LANDSCAPE 21Attractingandretainingtalentthroughthegreat“reshuffle”21 The staying power of relocations and the emergence of “super commuters”23EMBRACING TECHNOLOGY FOR GREATER EFFICIENCY AND NEW OPPORTUNITIES 2425 OperatingefficienciesandtheapplicationofproptechsLookingtothefuture25THE WINDING ROAD AHEAD 27ENDNOTES 28Contents 2Most global real estate CFOs are much more cautious with their 2023 operating plans: Our global survey reveals that only 40% of respondents expect to finish 2022 with higher revenues than last year, and 33% expect to cut expenses. They cite sustained high inflation, workforce management, and cyber risk as top risks to financial performance for the coming year. Owners and investors are targeting offices, digital economy, and logistics properties.Downtown and suburban offices rank first and third overall for global risk-adjusted asset class opportunities.ESG-related actions are still top of mind, but most firms need guidance on how to implement changes and monitor progress. Only 12% of the total industry surveyed, and 17% of the required public REITs, are prepared to immediately respond to regulatory action.The evolving global regulatory environment is expected to bring changes to tax structure and modernization to the forefront. Potential changes to transfer pricing and profit-sharing and increases in tax rates could have the greatest impact on commercial real estate (CRE) firms.Regional approaches are emerging to attract and retain talent. Firms are focusing on increasing workplace automation, bolstering diversity, equity, and inclusion (DE&I) initiatives, accelerating career growth opportunities, and offering more recognition and awards programs.Real estate firms of all sizes are seeking outsourcing opportunities to optimize operational capacities. There is continued interest in leveraging proptechs to help offer complementary, innovative services.While technology budgets tend to be more reserved, those who plan to increase spend have opportunities to improve efficiency and explore new revenue opportunities in fundraising and digital assets.KEY FINDINGS 3Forming a road map for changing timesTHE WORLD ECONOMY is again in danger ... Even if a global recession is averted, the pain of stagflation could persist for several years ... For many countries, recession will be hard to avoid.”1 This, from the World Bank’s latest global economic forecast, describes how the global e