New report also shows tax incentives and ease of space repurposing are high priorities
MILWAUKEE, August 23, 2022 /PRNewswire/ — Wipfli LLP (Wipfli), a top 20 accounting and advisory firm, today released a new report based on a survey of 198 real estate company executives to find out how they adapt for long-term success and react to changing market conditions. Respondents to Wipfli’s real estate industry outlook prioritized differentiators such as ESG and technology, as well as business strategies such as tax incentives and the ability to easily reallocate spaces. Among the main results:
- 88% of respondents are optimistic about current real estate market conditions
- 77% said ESG has had an impact on their investor pool or real estate projects
- 66% have not changed their investment strategies in the past 12 months
- 51% of real estate leaders say their company is experiencing a talent shortage
- 38% are making progress on digital transformation with very clear objectives
“Technology debt incurred by the real estate industry has come due,” said Brad Werner, leader of Wipfli’s construction and real estate practice. “Our survey confirms that real estate organizations understand that investments in their technology and digital capabilities are critical to staying relevant and resilient, especially as investor and tenant demands shift due to external factors, such as the ESG movement. “
ESG is now a table stake for the real estate sector. Only 23% of survey respondents said ESG had no impact on their investor pool or projects. The remaining 77% revealed that ESG had a variety of different impacts. For some, this has reduced their pool of investors and made it more difficult to recruit new investors. Others said it actually increased their plans. And still others said their focus on ESG helped them attract and retain employees. ESG should be an essential part of decisions about new acquisitions, lease renewals and investor relations.
Compared to other industries, real estate is lagging in the adoption of new technologies, but it has become an increasing priority for real estate leaders. While some businesses feel they don’t need the sophistication and connectivity offered by technologies more complex than spreadsheets and accounting software, others recognize the importance of their digital transformation to their success and their future longevity. The majority of survey respondents are on their digital transformation journey, with 38% having very clear goals to achieve and 32% facing challenges in executing their plan. Only 15% do not think digital transformation is necessary at all.
Further proof that the industry is turning its back on technology: 85% of real estate leaders recognize the importance of digital transformation. Reasons why: better products are developed, costs are reduced, platforms are standardized and, above all, data analysis is becoming more sophisticated. Today, technology is less about creating efficiency and convenience and more about creating value. Technology products are already helping organizations make decisions faster, close deals faster, and improve the structure of those deals. And that’s just one aspect of the benefits. Like ESG, technology is an essential investment to continue to grow and be competitive.
To close deals, real estate companies are also looking for a bonus that helps them make the numbers work. Tax incentives are plentiful and real estate companies are reluctant to enter into transactions without them. And with all the disruption created by the COVID-19 pandemic, it’s no surprise that repurposing existing space has been the second most important business strategy to leverage.
Dive deeper into Wipfli’s real estate industry outlook results.
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Andrew JenningsThe Plunkett Group