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.”
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