6 Trends Driving Sustainability in Commercial Real Estate

What can we expect in the next several years with regards to sustainability and commercial real estate? What cultural, economic, and technological forces should we look to understand and shape our investment strategies in the New Year?

Earlier this month, staff and executives at Principal Real Estate Investors began examining these questions as part of our annual planning activities. Portfolio managers, asset managers, appraisers, engineers, and operations managers gathered to hear a presentation on what we are seeing in the market, to share thoughts and observations, and to assess the implications for our work as investment managers. We plan to leverage this effort to help shape our strategies and guide future enhancements to our Pillars of Responsible Property Investing initiative.

We identified six trends that we believe will drive our industry over the next several years, and which we anticipate incorporating into our future policies, practices, and management strategies:

  • Materiality – moving beyond reporting, seeking meaning in our data, and understanding evolving fiduciary considerations and perspectives.
  • Resilience – managing enterprise, climate, investment, and property risk in an increasingly volatile environment.
  • Performance – increasing pressure from regulators, markets, investors, and clients to improve the financial and environmental performance of properties.
  • Intelligence – harnessing data, analytics, and new technology in real estate.
  • Experience – navigating new tenant expectations about the “occupant experience,” and leveraging emerging tools for engagement.
  • Research – examining and incorporating the growing body of research on environmental, social, and governance considerations in our management of real estate.

In our view, these concepts represent large, global changes displaying many signs of acceleration. Despite the recent election results and uncertainty about federal policies and initiatives, we see each of these trends playing a major factor in real estate investment management, both in the short and long term.

In future posts, I will discuss each of these trends in more detail and provide high-level context for commercial real estate. We will dig into the concepts at length—presenting recent developments and market observations that influence our thinking at Principal Real Estate Investors—and illuminate new insights, opportunities, and risks in real estate investing. Stay tuned for my next post, “Materiality–Moving from Reporting to Meaning.”

Follow Principal Global Investors on LinkedIn


Unless otherwise noted, the information in this document has been derived from sources believed to be accurate as of December 2016. Information derived from sources other than Principal Global Investors or its affiliates is believed to be reliable; however, we do not independently verify or guarantee its accuracy or validity. Past performance is not necessarily indicative or a guarantee of future performance and should not be relied upon to make an investment decision.

The information in this document contains general information only on investment matters. It does not take account of any investor’s investment objectives, particular needs or financial situation and should not be construed as specific investment advice, an opinion or recommendation or be relied on in any way as a guarantee, promise, forecast or prediction of future events regarding a particular investment or the markets in general. All expressions of opinion and predictions in this document are subject to change without notice. Any reference to a specific investment or security does not constitute a recommendation to buy, sell, or hold such investment or security, nor an indication that Principal Global Investors or its affiliates has recommended a specific security for any client account.

Principal Financial Group, Inc., Its affiliates, and its officers, directors, employees, agents, disclaim any express or implied warranty of reliability or accuracy (including by reason of negligence) arising out of any for error or omission in this document or in the information or data provided in this document.

Third party content, such as comments to this blog, is not reviewed by Principal Global Investors before it is displayed, although we may remove, alter, edit or adapt any such comments. Principal Global Investors does not endorse, authorize, or sponsor any third party content. Links contained in some blog posts may take you to third-party sites and Principal Global Investors makes no guarantees to the accuracy of the information provided.