Global occupier trends to watch in 2024
Key trends that will impact global CRE strategies and market dynamics
To find out more about JLL's outlook for global real estate in 2024
Amid ongoing global economic and geopolitical challenges, 86% of Corporate Real Estate (CRE) leaders globally are focused on reducing operating costs. They will spend strategically in 2024, balancing competing and overlapping priorities, but where will they focus that spend?
Forward thinking firms will seize the opportunity to rethink their property portfolios and adapt to new workforce demands, ESG priorities and technology innovation.
AI, and technology more broadly, is the thread that binds our 2024 trends. Firms will look to invest in areas that support their wider people, place and portfolio objectives.
In this article, we explore five themes impacting CRE in 2024. By no means an exhaustive list, the impact of these themes will differ between companies, markets, regions and industries.
Talent, Performance & Human Experience (HX)
Employees are not satisfied with their office space, particularly when it comes to personal comfort, ability to focus and experience factors. Employers need to understand where the office is lacking and act fast. Technology and data will help design more impactful workplaces and policies that support wellbeing and performance.
1. Talent, Productivity and Human Experience
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51% of firms rank productivity as a key reason to attract staff back to the office but, for employees, poor office experience and noise are major barriers to returning.
JLL recommendation: Support the human experience in the office and boost performance by decoding employee and workplace data to create agile and personalized workplaces and policies.
Four years on from the start of the pandemic, employers continue to deploy both soft and hard tactics to get employees back to the office. One third of companies globally are implementing compulsory attendance but almost half (45%) of employees say their home environment better supports their overall productivity.
Staff report low satisfaction with personal comfort and overall experience in the office despite ranking this highly as a need. This is especially pronounced when it comes to the ability to do private and focused work.
These findings suggest that changes to the corporate workplace are needed.
Although hybrid workers value workplaces that support collaboration and socialization, 51% of the time in offices is spent on focused work. While the social side of the office is important, so are private workstations, acoustics and other factors that support desk-based work. Employers need to understand which factors boost performance and identify shortcomings in existing offices that require action. This will help to shape changes to physical space, technology and flexible work arrangements.
Employers also need to recognize the neurodiversity of their staff and create more personalized and flexible workplace. Technology, AI and data will help firms to understand the performance levers in their own organization, identify workstyles and personas and redesign space and company policies accordingly.
To find out more about how technology can transform real estate operations
Over 80% of companies are planning to increase their technology budgets.
JLL recommendation: To leverage AI, corporates must focus on value creation with their technology program, revisiting technology strategies to set robust KPIs, implementing resilient operation models and building lasting digital capabilities.
Rapid developments in generative AI and Large Language Models (LLMs) will supercharge CRE operations in 2024. These capabilities will expand data sources, drive standardization, deliver portfolio insights and support sustainability targets. By the end of 2023, over 500 proptech firms provided AI-powered solutions.
Technological advancements mean firms will receive more data about their buildings and people, allowing them to be more responsive and efficient. The availability of granular, real-time data will lead to more dynamic and tech-led management of real estate.
Although the ecosystem is maturing fast, priorities are changing. According to our Global Technology Survey, the post-pandemic focus on technologies that support hybrid working has shifted and corporates now want to drive value by making better portfolio decisions (See trend no.4) and decisions relating to broader business objectives.
Sustainability is now the top budget item for occupiers’ technology spend and, as CRE technology matures, occupiers need to focus more on impact. However, 80% of occupiers globally say they have not extracted enough value from their technologies. Leaders must revisit their strategies in 2024 to set robust KPIs and implement resilient models to ensure technology spend drives value. Cyber and data security has also emerged as the number one concern in technology adoption.
With AI and cyber security posing increasing challenges on companies’ technology capabilities, companies will need to take an ecosystem approach and engage external experts and partners to manage their technology stack. Organizations should also get the buy-in of their workforce and encourage upskilling and bottom-up innovation to unlock value and boost productivity.
Using AI to reduce energy use and cut emissions
A leading UK investment management firm has cut energy usage by 59%, reducing carbon emissions by up to 500 metric tons per year in its 11,600 sqm office building after implementing JLL’s AI-powered Hank technologies that’s an ROI of 708%.
To learn more about decarbonization strategies
For every three sqm of demand, just one sqm of low carbon space is in the pipeline between now and the end of this decade.
JLL recommendation: Corporates should use technology and data to implement decarbonization and resilience strategies now. Do not wait until 2025.
The growing impact of climate change and regulatory pressures will force corporates to act in 2024. In eight markets across the US, 77% of lease renewals from the top 100 occupiers will be tied to a carbon commitment.
However, a supply shortage of low carbon space is likely to impact sustainability-driven leasing decisions.
In terms of their real estate, tenants should think beyond green building certifications, which are typically design and construction based, and focus on measuring a building’s operational environmental performance such as energy intensity and GhG emissions.
With only 23% of executives currently contingency planning for climate-related disruptions over the next 12 to 18 months (Source: PWC Pulse Survey, 2023), leaders should identify sites that are most vulnerable to mounting climate risk and act in 2024. Short-term resiliency measures must then migrate into longer term decarbonization plans, tailored to each location. In cities such as New York, Paris and Sydney, for example, climate progressive regulations will drive the pace of retrofitting.
As corporates shape their sustainability strategies, technology, AI and data capture will be key to achieving sustainability goals and shaping an overarching CRE strategy.
4. Portfolio optimization
Build an agile and resilient portfolio
Employers want their staff back in offices but 58% of office workers think their home environment better supports focused work.
JLL recommendation: Corporates should prioritize investments in technologies that facilitate data-driven decision making about workplaces and portfolios.
Employees are, on average globally, coming into the office 3.1 days per week but this varies by geography, industry and other factors. With occupancy rates fluctuating throughout the week, organizations are rethinking how they configure their workplaces. The approach CRE decision makers take to optimizing portfolios in 2024 will need to be more nuanced than ever.
Data is key to decision making but only one third of companies globally have the occupancy and workplace sensors which can support such decisions. Investing in technologies that capture the kind of data needed to make informed decisions about the size of the footprint, location(s) and the type of spaces required must be a priority.
Despite the above nuances, several high-level portfolio trends will continue to transcend geographies and industries in 2024 as firms balance cost cutting with strategic priorities:
1. Flight to quality: Corporates globally are moving to higher quality, centrally located buildings that offer the features amenities and ESG credentials that map to their business priorities.
2. Talent: In the United States, 1.4 job vacancies exist for every unemployed person and competitive labor market conditions persist globally (Source: Bureau of Labor Statistics). Firms will reduce or expand in locations depending, in part, on their headcount objectives.
3. Sustainability: Sustainable real estate is becoming a non-negotiable for occupiers and the implications of this will intensify in 2024.
4. The intersection of real estate and urban planning: Government initiatives, zoning changes, public transit development and surrounding amenities will continue to impact CRE decisions.
5. Maximizing ROI
JLL Recommendation: Use the lessons of the pandemic to invest differently in your people, places, processes and technologies. Do this in an integrated way to drive wide-reaching operational efficiencies as part of a Target Operating Model.
As corporates finalize 2024 budget priorities, some will focus on individual trends such as sustainability or technology while others will address our Top Trends holistically. Both approaches can deliver ROI but there will be a multiplier effect for those that invest in a rounded program. Maximizing ROI requires savvy budget allocation across a range of initiatives that benefit people, places, processes and technologies.
For example, employers cite maximizing productivity as a top three reason for getting staff back into the office (along with collaboration and cultivating company culture) yet strategic investment is needed to deliver an environment that supports productivity.
Reducing operating costs is a top priority for 86% of corporates yet achieving greater operational efficiency requires improved CRE management and operational processes. The most forward thinking firms will drive cost efficiencies by predicting patterns of demand in their real estate. Investing in sophisticated and integrated workplace technologies will allow for better decision making.
Assigning a monetary value to intangible variables such as human experience is difficult and definitively measuring ROI is fraught with complexities. Ultimately, the ROI for any given firm will depend on their ability to prioritize and balance a range of initiatives that support their unique business needs and enhance their ability to implement an optimal target operating model.