In an evolving economic landscape punctuated by frequent technological innovations and shifting client needs, Canada’s real estate industry faces new challenges and opportunities.
A recent survey by Deloitte Canada brings this transformation into sharp focus.
Deloitte surveyed executives from 100 commercial real estate firms in Canada, representing both REITs and non-REIT entities, and spanning various sectors like technology, media, telecom, banking, insurance, retail, and professional services.
Results of the survey were released in a report, “Future of real estate: Shift to phygital,” which provides a glimpse into the future of Canadian commercial real estate and the changing expectations of its tenants.
Among the pressing challenges are the concerns of a looming recession, high inflation, soaring interest rates, and plummeting valuations. Notably, over half the tenants stated they’d seek financial relief if faced with a recession, with 52% considering rental concessions and 48% demanding flexible leasing terms.
But there’s more than just economics at play. The pandemic has heralded a paradigm shift in space utility.
Modern tenants crave sustainable and intelligent spaces, the report posits. The data suggests a rising demand for digital amenities such as digital concierges, personalization options, and real-time visitor monitoring. This indicates a clear departure from the age-old real estate mantra of “location, location, location” to a more integrated, experience-centric approach.
Which leads us to the “phygital” phenomenon. Today’s leading real estate firms are transitioning from mere physical space providers to a fusion of physical and digital service providers.
These phygital services marry the tangible with the intangible, creating holistic experiences that cater to contemporary tenant demands such as energy management, predictive maintenance, and occupancy analytics, according to the report.
Interestingly, the survey illuminates a renewed interest in smart buildings, powered by advancements in technology. While only 8% of tenants currently have a majority of their portfolios in smart buildings, an impressive 46% anticipate that over half their portfolio will transition to smart structures within five years.
One comparison for these futuristic edifices is smartphones. Both are interconnected, sensor-enabled, and prioritize automation and integration. Much like how smartphones offer a plethora of apps tailored to individual preferences, tomorrow’s smart buildings might provide tenants an “app store” to customize amenities and services.
As boundaries blur between the physical and digital realms, the next era of real estate will focus on creating enriched, sustainable spaces. Stakeholders, including owners, operators, tenants, and facility managers, will all play roles in shaping these future-forward buildings.
Harnessing data, analytics, and fostering collaborative relationships will be paramount. Data will streamline operations and unveil novel revenue streams and refine the tenant experience, Deloitte expects.
The message is clear, according to Deloitte: the future is “phygital.” As the real estate sector steers towards this inevitable convergence, it promises richer experiences, sustainable solutions, and a more interconnected world.
Workplaces for Canadian tech talent appear poised to follow this trend.