In this series, Tasos Stavrou, director of Global Business Development for Leading Real Estate Companies of the World®, discusses trends in Commercial Real Estate with members of the network’s Commercial Real Estate Think Tank. Leading Real Estate Companies of the World® (LeadingRE) is a global network of 550 top independent real estate firms, with over 200 of those firms specializing in the commercial arena.

Here, Mr. Stavrou is in conversation with Eric Forshee, Principle Owner of Probus Companies / Long Realty in Scottsdale, Arizona, USA.

The office sector is struggling with empty desks, while the industrial property market remains strong. Do you expect this to continue? 

Companies are struggling to get employees back in the office. We are seeing more sublease spaces come to market and businesses are coming to terms with lower office requirements and embracing ways to allow employees to continue working from home. This behavior is reinforced by exceptionally low employment giving employees the power to quit and easily find new employment. With the pending recession in the United States, we have already seen huge layoffs and raising unemployment. The ability to force employees back to the office will shift and we will see demand for office space come back into balance by the end of 2023. 

What strategies are landlords and businesses using to attract workers back to the office? 

Flexible work weeks that allow employees to work from home two or three days a week is a steppingstone to requiring them in the office all the time. Low unemployment continues to empower employees to demand more time out of the office, however providing a flexible work week seems to be effective at keeping most of employees satisfied.

Are ESG practices gaining more importance in the Commercial Real Estate sector? Which are the biggest sustainable trends to look out for in 2023?

Most sustainable trends are practiced in limited developments and usually require a higher investment with the hopes of better occupancy and financial returns. For trends to be adopted by all developers requires either governmental legislation or financial and economic incentives. When sustainable products make economic sense, they will always be embraced. 

How will the CRE industry respond to the global financial uncertainty, high inflation and a looming recession? 

There are billions of dollars controlled by real estate funds that are not concerned with the pending recession. Opportunities will arise from investors who do not have the resources to survive a downturn, and commercial investors understand that you buy in down markets and sell in up markets.  We will see a lot of commercial real estate sales in 2023 and forward.

Pipeline challenges will continue to be one of the biggest factors because of the recession and the war in Ukraine as well as political unrest and uncertainty in China.  

The demand for flexible and shared office space will continue to grow now that people have experienced a couple of years of working from home.  Commercial office buildings that can adapt and find ways to make office space more flexible will do well this year.

Learn more about Probus Companies / Long Realty: probusaz.com

Learn more about LeadingRE here: leadingre.com