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Colliers identifies top five value creation opportunities for European commercial real estate

After a challenging 2023, global property management and investment firm, Colliers, believes that 2024 will be the start of a transformative three years for commercial real estate (CRE) bringing value creation opportunities for occupiers and investors.

In its new market commentary ‘Engage, activate and accelerate performance: next generation real estate strategies’, Colliers presents insights from a diverse range of its experts from across EMEA. The new report offers valuable guidance to corporate occupiers and industry stakeholders on how to maximise the performance of their real estate portfolio to meet – and harness – the rapidly changing CRE market conditions, investment opportunities, ESG commitments and workplace experience strategy.

Andrew Hallissey, Executive Managing Director for Occupier Services, Colliers EMEA said: “The commercial real estate (CRE) industry is trying to balance complex, and at times opposing, considerations. From demands for flexibility, to new regulations and the return of a high interest rate environment, there’s no denying that these operating dynamics present significant challenges for all of us – but also a real opportunity to transform the way we all do business and access value creation opportunities across the built environment in 2024 and beyond.” 

According to Colliers the top five value creation opportunities for European commercial real estate are:

1. Increased momentum to upgrade legacy real estate stock to support ESG commitments and avoid assets becoming stranded due to high carbon emissions.  
  • Obligations for investors and occupiers to deliver on the wave of global ESG regulations and corporate Net Zero Carbon commitments remain at the forefront and will drive an unprecedented flight to quality across EMEA to buildings with strong ESG credentials.
  • Converting sustainability targets into deliverable action plans is a key focus, with a wide range of new materials, technologies and solutions emerging to help advance environmental performance. ESG is driving architectural change and even closer cooperation between architects, engineers, developers, investors, advisors and procurement specialists.
2. Increased buyside opportunities for real estate investors and corporate occupiers looking to take advantage of higher yields, strong corporate balance sheets and market opportunities following the erosion of real estate asset values during 2023.  
  • The weak 2023 investment market and an erosion of asset values will bring significant buyside opportunities for investors and occupiers taking advantage of higher yields and lower values during 2024.
  • Colliers expects owners and investors to take advantage of the asset value corrections experienced in 2023, combined with a wave of refinancing anticipated in 2024.
  • Significant opportunities exist for corporates with strong balance sheets to acquire real estate assets they see as core to their long-term business strategy and requirements.
  • Any reduction in interest rates in H2 2024 will also provide a new lease of life to the EMEA and global investment market as the cost of debt reduces.
3. More corporates building and fostering enterprise resilience through a flexible real estate portfolio and workplace strategy. 
  • For organisations operating in more volatile business sectors, the pivot from long-term leasing commitments amongst major corporations is set to continue. Those leases will move from fixed long-term commitments to short-term flex options in a continued push for financial and operational agility as locational strategies and office footprints are refined.
  • According to Colliers’ research (Colliers and CoreNet Global Summit 2022), two-thirds (66.6 per cent) of corporate occupiers in EMEA anticipate that up to 20 per cent of their commercial real estate portfolio will move from traditional leases to flex leases by 2027 and one in three (34 per cent) anticipate a material decrease in the amount of space per person that they will need.
4. A continued reimagining of the workplace (physical and virtual) as a key lever for talent attraction and retention, which enable hybrid working strategies that reflect continued organisational and societal change. 
  • The role of the physical office will continue to evolve. Post pandemic, the office is now seen more as a hub for inclusive employee engagement and collaboration, with workspace designs increasingly reflecting this cultural shift. Balancing this increased need for workstyle flexibility with organisational needs for cost control and productivity will continue to take careful thought and planning.
5. The transformative use of data and artificial intelligence to tailor insights on real estate occupancy and use, CRE investment strategy and drive efficiencies across the built environment. 
  • Gathering and analysing data from smarter buildings and turning it into actionable insights and intelligence will allow organisations to get ahead of the decision-making curve; prioritising capital investments, optimising workplace sizes and locations, as well as informing how these should be designed and experienced.

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