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Having stress-tested 80 scenarios that could impact society and the economy in the years to come, commercial real estate players must act now to ensure their relevance into the future, according to emerging research.
Rather than “attempting to predict the future”, a new research program for JLL aptly titled, JLL Future Vision, is focused on a scenario-based approach that will provide the ability to plan for multiple futures.
It has identified four imperatives that must be acted upon now: climate, people, technology, and resilience.
According to the real estate firm, it’s an “ambitious research initiative incorporating the perspectives of experts from a wide range of disciplines, from demography to anthropology and urban planning”.
Ben Breslau, the chief research officer at JLL, expressed that “while no one knows what the future holds, we believe that exploring possible future scenarios enables the entire real estate value chain to prepare as much as possible for the unpredictable – and all the associated opportunities and risks, whatever they may be”.
A statement from JLL noted that the program’s insights “are intended to help firms embrace the unknown”, while providing a roadmap for navigating ongoing change and disruption.
“Importantly, these actions can, and should, be taken today – from the ways we design, build and operate real estate, to how people and businesses interact with the built environment,” it read.
- Climate
According to the researchers, heatwaves, flooding and droughts will continue to put cities and buildings at risk “regularly and everywhere – not just in the most susceptible regions”.
With minimising environmental impact certain to become the default requirement for all buildings, JLL has warned: “Buildings will need to be designed, constructed and configured to withstand greater damage and disruption.”
- People
“The way people live and work has seen dramatic upheaval in recent years,” acknowledged JLL.
“It’s not over, and it will continue to influence the real estate industry,” the firm forewarned.
With employees having more choices, and AI impacting the kind of work people do, new technologies should “support increased recreation time, a game changer for cities, especially as life expectancy rises”.
JLL also expressed how companies and governments will need to put better emphasis on social impact, which will ultimately “play a much bigger role in real estate strategies”.
Not only that, but housing affordability is forecast to become even more acute in major cities, with the research indicating industry “will have a key role to play in solving it”.
- Technology
According to JLL, real estate can expect to experience the impacts of technology from two fronts: as a space provider and as user of technology.
Advanced automation will be used in the construction of buildings and spaces, while robotics and intelligent materials will combine with 3D printing and modular construction capabilities.
Digital twins will also become widespread, monitoring “every aspect of a building’s lifecycle, from design to demolition”.
The built environment is set to become part of an interconnected ecosystem, but it does not mean that everything will become digital.
“Real-life experiences will become more important to people, with physical spaces taking on new meaning as they blend with technology, ranging from subtle step changes to fully immersive realities,” the report flagged.
- Resilience
As climate change, technology, and demographic shifts impact and influence the strategy of real estate investors and occupiers, JLL warned that while some of these do follow predictable trends, “recent events have alerted us to the need to be constantly prepared for the unexpected”.
With many organisations already embedding VUCA (volatility, uncertainty, complexity and ambiguity) into their risk conversations, JLL raised that an ever more complex operating environment will see even more societal and financial pressures put on companies “to achieve more efficient and sustainable models”.
Arguing “the real estate industry will have no choice but to address these challenges in every action they take”, JLL said real estate actors will bear the burden of developing or redeveloping buildings that consume less resources.
Not only that, “they will need to build more resilient strategies, which will include enhanced risk management through scenario planning and stress-testing, as well as agile business models and diversification”.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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