Biggest Planned CRE Tech Increases Are In Sustainability

A recently released global survey by JLL of 1,006 senior real estate decision-makers during May and June 2023, including 600 CRE leaders at major occupiers and over 400 leaders at real estate investors, landlords and developers, pulled together numbers on how landlords and tenants are looking at property tech.

About 91% of the occupiers are “willing to pay a premium for tech-enabled space.” However, what that means isn’t necessarily clear. There are many aspects of a tech-enabled space, such as reducing power use and water, improving air quality, managing property access, scheduling facilities use, and managing security.

But out of all of the possibilities, the top choice for the largest share of planned increases in technology spend is sustainability management. That covers a number of tech products and systems that companies say they’re planning to adopt: energy and emissions management, smart energy infrastructure, and sustainability reporting tools.

This comes back to trends GlobeSt.com has reported in the past. Sustainability gets significant attention because it ties into a variety of corporate needs, both on the part of tenants and owners. Regulators will put increasing pressure on reducing carbon footprints, and while that might specifically affect landlords, the costs would get passed along to tenants.

Then the SEC has said that it plans to increase reporting on environmental issues. Both sides have to explain what they are doing to someone, and investors globally are concerned about how environmental issues will affect future cash flows and the current values of companies. Carbon footprint of facilities will always play a significant role.

There is also the additional attraction of reducing energy and water use, which cuts expenses and improves profits.

Companies also should have the budget to invest in needed tech as 85% of them plan to increase their tech budgets even with a tough economic environment.

Both CRE investors and corporate tenants plan to use two main strategies to speed tech adoption: 89% say they will “combine upskilling existing workforce, hiring new talent, outsourcing and M&A to enhance their technology capacity,” and 78% will “turn to external partners to help improve technology outcomes.”

But there is a big issue facing all the companies. Talk is fine and cheap. Getting something done, even with budget, is hard. JLL noted that 78% of the respondents lacked an actionable strategy in place, while fewer than 40% reported their current tech programs as being very successful.