Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte

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Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021
From Location, location, location to Location, insights and experience
Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
The COVID-19 pandemic has
accelerated a number of trends in the
world of real estate. What is the value
of real estate in an increasingly digital
world? And how can we prepare for
an even more data-based, digital –
and preferably sustainable – future?
Deloitte can help. Our real estate
professionals have deep industry
experience and knowledge to help
you achieve your business goals.
Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              Executive Summary

Executive Summary
Welcome to the 2021 edition of the Real Estate Predictions. Deloitte firms from around
the world have collaborated to analyze the latest developments that are impacting the
future of real estate. For an inspiring outlook on 2021 and beyond, please read our
predictions and find out more about the future of work, sustainability, digitalization,
and innovation in the real estate sector.

5G as an enabler for new and smarter               Innovation & construction in the shade         The impact of social good on real
ways of working                                    of global crisis                               estate
2020 has been a tumultuous year full               The COVID-19 crisis has shed light on          “ESG”, the generally used acronym for
of seismic shifts. It is easy to forget that       another well-known crisis that has the         “Environmental, Social and Governance”,
another impactful infrastructure change            potential of exponentially harming             has become an important business
is quietly taking place. The next wave of          humanity to a point of no return - global      consideration all around the world. For
digital disruption is on course and 5G will        warming. If we want to avoid the many          instance, real estate investors have an
be the ”glue” that will tie all of our devices,    consequences of global warming, we             increasing focus on sustainability. However,
buildings, and cities together, enabling new       should accelerate our efforts, starting        ESG in real estate can be so much more
and smarter ways of working.                       now. How can digitalization and innovation     impactful. How can it become an important
                                                   enable the industry to prepare for a           value driver?
Gaming the commercial real estate                  sustainable future?
talent conundrum                                                                                  Understanding Private Rented
COVID-19 has disrupted human                       The virtual office for Corporate               Sector property
connections, which are at the heart of the         Real Estate                                    One of the megatrends in real estate is
commercial real estate (CRE) business.             The widespread adoption of remote              the need for rented housing in the main
Last year, leaders in all industries were          working in 2020 has greatly shifted the role   capitals. COVID-19 has accelerated this
challenged to digitalize many aspects              of the workplace within organizations. All     trend. However, there is an insufficient
of work while shifting and engaging                indications point to a future where hybrid     and inadequate stock of rental housing,
employees in a virtualized environment.            working is here to stay. So how do real        so a specifically designed product must
Looking ahead, what does this tell us about        estate owners respond as the virtual office    be developed to match demand and offer
the future of work in real estate?                 becomes a key component of working in          new real estate opportunities. Enter Private
                                                   the ”new normal”?                              Rented Sector (PRS) property.
Gaining a competitive edge in real
estate with AI-driven geospatial                   Real Estate-as-a-Service: From                 Optimizing your use of office space and
analytics                                          “product and space” to “system and             real estate footprint
Data analysis can significantly improve            service”                                       COVID-19 has accelerated new ways of
decision-making in real estate. From               Real estate is undergoing a fundamental        working, which in turn will impact the use
valuation, sale/purchase of properties and         business model redesign enabled by             of office space. What are the implications
contracting to negotiations, risk analysis         digitalization and a growing market of         for the real estate industry and corporates?
and planning. In 2021, all eyes will be on AI-     smart buildings. What business model will      What opportunities will arise? How to
driven geospatial analytics. Why? Because          be successful in the future? What can the      prepare the property portfolio for a more
it is a quick, lean and affordable way to          real estate industry learn from tech? What     agile future of work? The urgency is clear:
provide address-specific rental predictions        is Real Estate-as-a-Service? And what is       the time to act is now.
and explainable transparency.                      the impact on strategy and organizational

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              Executive Summary

Protecting your identity in the                    Digitalization is here to stay               How to support strategic decision-
digital world                                      The real estate industry is currently        making in real estate
Protecting (proof of) our identity is              adapting to evolving market conditions,      Urban planning, asset management and
extremely important in our society.                a changing regulatory environment, and       investment decision-making require a
Particularly in the digital world, identity        a fast-growing technological landscape.      thorough understanding of the current
theft or misuse is a serious risk, and             This is described in detail in our 2019      and future supply-demand dynamics and
interactions and transactions in the digital       European Operations and Technology           underlying macro-economic factors. The
world have a serious impact for us in the          Survey for Real Estate Investment            integration of Artificial Intelligence (AI) with
real world. Self-sovereign identity is all         Managers. A survey that was completed by     real estate and financial planning expertise
about control over our digital identity.           a range of European real estate investment   can help support new ways of analyzing
                                                   and asset managers. What can we learn        historic data in an attempt to improve
Improvise. Adapt. Overcome. How to                 from their replies? How to achieve an        future decisions.
cope with the impact of climate change             effective digital transformation in our
Climate change has consequences for                industry?
nature, people, and therefore also real
estate. Mitigation and adaptation are
strategies to deal with the potential risks
of climate change. What is the impact of
climate change strategies on the future of
real estate, in terms of markets, planning,
construction, and renovation?

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              Table of contents

         Table of contents

                Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03
                5G as an enabler for new and smarter ways of working  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 06
                Gaming the commercial real estate talent conundrum .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 09
                Knowing what others don’t: gaining a competitive edge
                in real estate with AI-driven geospatial analytics .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
                Innovation & Construction in the Shade of Global Crisis .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17
                The virtual office for Corporate Real Estate  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20
                Real Estate-as-a-Service: From “product and space” to
                “system and service” .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 23
                The impact of social good on real estate .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 26
                Understanding Private Rented Sector property .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 30
                Optimizing your use of office space and real estate footprint  .  .  .  .  .  .  .  .  .  .  .  .  . 34
                Protecting your identity in the digital world .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 37

                Improvise. Adapt. Overcome. How to cope with the impact
                of climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
                Digitalization is here to stay  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
                How to support strategic decision-making in real estate . . . . . . . . . . . . . . .  49
                Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
                Contacts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              5G as an enabler for new and smarter ways of working

5G as an enabler for
new and smarter ways
of working
Implications for real
estate and construction
2020 has been a tumultuous year full of seismic shifts in everyday norms. In a year
marked with greater public scrutiny of embedded social structures and behaviors, it is
easy to forget that another impactful infrastructure change is quietly taking place. The
next wave of digital disruption is on course and the 5G rollout will be the enabler. 5G
will be the ”glue” that will tie all of our devices, buildings, and cities together, enabling
new and smarter ways of working for all of us.

The need for speed, latency, reliability,             More to come                                        Implications for real estate and
and capacity                                          The first 5G networks were launched in              construction
For the last several years, 4G – which was            2019 and were largely deployed from                 Numerous industries have made
itself revolutionary at its introduction              existing 4G base stations. Since then,              significant digital transformation strides
around 2010 – has served our society well.            various major network organizations                 with 4G capability. What are the benefits
However, our demand for accurate and fast             have also launched 5G mobile network                of 5G? How can real estate leverage this
data is growing exponentially, and inherent           capability in a limited number of cities            new technology to accelerate digital
limitations relating to speed, latency,               and towns. There is much more to come               transformation within an industry that
reliability, and capacity are becoming                – 5G could solidify the business case for           is well behind others? Let’s explore the
more and more apparent. 5G mobile                     transformational technologies such as the           answers to these key questions further.
internet is a major leap forward from 4G.             Internet of Things (IoT), Artificial Intelligence
If its full potential is realized, it will not only   (AI), Augmented & Virtual Reality (AR & VR)         Greater network speeds
address 4G’s limitations, but will transform          and Digital Twins all of which could have           Standard 4G provides a maximum
the way we live, work, travel and play.               a significant impact in digitalizing various        potential real world speed of around
                                                      sectors – the sky is ”virtually” the limit.         80Mbps whereas 5G could reach peak
5G operates over much higher radio                                                                        speeds of 10-20Gbps1. In combination
frequencies than 4G, which requires the               Unsurprisingly, the rollout has been                with increased bandwidth, improved
substantial upgrade, and addition of, cell            impacted by trade and tech disputes                 network speeds could greatly enhance
towers. Higher frequencies require the                regarding certain 5G equipment and by               construction processes. For instance,
closer proximity of cells, meaning that               the outbreak of COVID-19 for reasons                the remote use of VR could support
”small cell sites” will need to be added to           including a reduced consumer demand                 communicating ideas to project teams in
buildings, light poles and other structures           (due to the increased Wi-Fi usage working           an agile setting. Also, 5G could increase the
across the country. Network providers are             from home), allegations linking 5G rollout          use of off-site manufacturing, unlocking
building this high speed infrastructure at            with the COVID-19 spread, and lack of               AI to optimize quality control and risk
pace though, to date, the initial commercial          understanding concerning the benefits               escalation processes, and increase the use
application for the 5G rollout has centered           of 5G.                                              of 3D printing to create standard building
upon mobile broadband.                                                                                    components. It could improve information

1          House of Commons Library, 5G Briefing Paper 2019, September 6, 2019, page 4.

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              5G as an enabler for new and smarter ways of working

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              5G as an enabler for new and smarter ways of working

storage, progress tracking and automated               development appraisals to enhance value          5G as an enabler for workplace
project controls. And track and trace supply           and marketability.                               transformation
chain logistics could support ”just in time”                                                            As pre-existing working patterns continue
delivery and minimize corruption.                      High capacity                                    to shift, 5G could further consolidate the
                                                       More bandwidth and data capacity would           workplace transformation. Fully integrated
The most significant benefit for the                   reduce competition for connection and            5G offices could create enhanced revenue
construction industry will most likely be              would allow the support of up to one million     opportunities for landlords through
5G’s ability to take Building Information              devices per square kilometer. 5G combined        different types of leasing models. Business
Modelling (BIM) to the next level, which               with big data applications and cloud storage     models of flexible office operators, booking
will enhance the potential for fully                   capabilities could increase data on space        desks and meeting rooms with specific
confederated 6D Models and enable                      utilization, power and energy consumption.       digital capability, may become more
the creation of a cloud-based ”digital                 A much-needed retail revolution could start      common as 5G networks expand.
twin”. This will support more efficient                with VR and AR to create experiential retail
delivery, integration and better decision              environments and be further developed by         Key observations
making throughout the building lifecycle               in-store analytics to personalize shoppers’      2020 may have slowed down the 5G
from concept design through to                         experiences. Big data applications could         technology revolution, but it has also
decommissioning. Further, the creation                 also support the continued effort to enforce     further highlighted the need for improved
of these models will allow clients to ”look            social distancing as more offices and retail     connectivity, greater network speeds,
and feel” their projects earlier in the                outlets open.                                    reduced latency and wider bandwidth
delivery process.                                                                                       capacity to support digital transformation.
                                                       In time, collecting and interpretation of        Although there are challenges in
Low latency                                            data produced by real estate assets will         implementing 5G and no doubt greater
5G is expected to reduce latency2 in the               become a defensive strategy for most real        speeds will soon exceed it, the economic
order of 1 millisecond3. In other words, 5G            estate stakeholders. It will help them to        and social benefits will outweigh the costs.
response times will feel instantaneous4.               maintain an edge over their competitors.         The real estate sector has the ”bandwidth”
The implementation of IoT in real estate               Also, more regulatory requirements are           to reap some of the greatest benefits from
is progressing at a rapid pace, with                   imposed by governments to encourage              its implementation.
more and more new buildings being                      the use of 5G technology, as it will increase
specified with sensors inside and out. 5G              productivity and efficiency and improve          Authors
will enable instantaneous connectivity                 sustainability performance.                      Scott Dudley
to real time building usage data and                                                                    Director | Financial Advisory | UK
infrastructure, providing scope for accurate           Challenges                             
tenant occupancy data and optimized                    It is important to factor into any business
maintenance regimes on assets. In the                  case the challenges involved with optimizing     Peter Adeleye
future, landlords may take advantage of                5G and the various technologies it enables.      Consultant | Financial Advisory | UK
private 5G splicing (i.e. pay for what you             These include but are not limited to:  
use, down to the device) to increase yields
by offering bespoke services to their                  • shorter frequency waves requiring small        Contact
tenants. The potential for building assets               cell site technology with antennas as          Andrew Carey
with wire-free connections instead of Wi-Fi              close as 500 feet apart                        Partner | Financial Advisory | UK
could radically reduce the implementation                                                     
complexity of core building management                 • higher risk of obstacles (including building
systems (including fire, security, lighting,             materials) blocking or disrupting high
HVAC and energy/utilities).                              frequency 5G signals

Faster response times between devices will             • many devices that will need to be 5G
also allow for the more widespread use of                enabled, e.g. better battery technology
autonomous vehicles and the associated
transport infrastructure. With more people             • GDPR legislation and privacy laws that
working from home, 5G connections                        may limit 5G optimization.
may soon replace the need for Wi-Fi.
Valuation of 5G technology infrastructure
will have to be considered within future

2         Latency is the time taken for devices to respond to each other over the wireless network.
3         4G is around 30 milliseconds
4         Ofcom, What is 5G, March 9, 2018; [accessed November 28, 2020]

Real Estate Predictions 2021 - From Location, location, location to Location, insights and experience - Deloitte
Real Estate Predictions 2021 |
                              Gaming the commercial real estate talent conundrum

Gaming the
commercial real estate
talent conundrum
Talent strategy in a post-
pandemic world
The COVID-19 pandemic has disrupted human connections, which are at the heart of
the commercial real estate (CRE) business. Leaders in all industries were challenged
to digitalize many aspects of work while shifting and engaging employees in that now-
virtualized environment. Companies had to provide the infrastructure that would
enable employees to work effectively from home, while prioritizing health and safety.
Looking ahead, what does this tell us about the future of work? How can we prepare
for the challenges of talent strategy in real estate?

One implication is that the ability to               development, and cloud computing (see           agree that their company has accelerated
succeed in the post-pandemic world will be           Figure 1). Additionally, our analysis of job    efforts to use technology and tools
hampered in the near term by employee                openings for 500+ roles showed that             in redefining business processes, job
concerns about returning to work. This               traditional skills were highlighted as “must    roles, and skill requirements (Figure 2).
was acknowledged by more than 50%                    haves” across all construction and general      Regionally, a higher proportion of European
of respondents to the Deloitte Center                management job openings. Only risk              respondents (47%) are likely to do this,
for Financial Services’ Global Outlook               management, and marketing and CRM-              as compared to those in APAC (44%)
Survey 2020.                                         related job postings required advanced          and North America (32%). And only 36%
                                                     tech skills in more than 10% of job postings.   of the respondents acknowledge that
Traditional skills or advanced                                                                       their organization is refreshing its talent/
technology skills?                                   The focus on traditional skills was pervasive   recruitment strategy to shift to future
The pandemic also highlighted challenges             across different CRE subsectors as well. For    technology and skills needs.
in a highly manual business model                    instance, REITs looked for traditional sales
dominated by traditional job roles and               and marketing skills in more than 60% of job    CRE companies should consider the
skills in critical business areas including          openings. More than 50% of brokers’ job         following actions to envision the future
accounting, building maintenance, and                listings sought finance and accounting (F&A)    work and skill matrix and to facilitate the
customer service. Pre-pandemic, some                 skills. However, advanced data analytics        recruitment of right-skilled talent:
CRE companies were continuing to lag                 skills were sought by REITs and brokers in
other industries in their adoption of certain        only 1% and 3% of job listings, respectively.   01. Redefining roles and skills
technologies and recruitment of tech-savvy                                                           02. Modernizing recruiting approach
talent. To support this, our analysis of             Refreshing talent strategy is a growing         03. Creating alternate talent marketplaces
skills demand in the United States during            imperative                                      04. Strengthening talent analytics
the 2014-2019 period revealed a higher               It is a growing imperative for CRE
and sustained demand for traditional                 companies to digitalize business processes
skills. In contrast, there was muted growth          and refresh their talent strategy so as to
in demand for advanced technology                    not lag further behind. Of note, 41% of
skills such as data analytics, software              survey respondents agree or strongly

Real Estate Predictions 2021 |
                              Gaming the commercial real estate talent conundrum

Real Estate Predictions 2021 |
                              Gaming the commercial real estate talent conundrum

Figure 1: CRE companies continue to demand traditional skills
Proportion of job openings demanding traditional and advanced tech skills



                                                                                                 30%                         30%
                                                  26%                                                                                                27%
                                                                      24%                                                    25%
25%                                                                                              24%
                                                                    25%                                                                              22%
                     21%                          24%
20%                                                                                                                        19%
                                                  17%                 17%

                   10%                                                                                                 Growing ‘skills demand gap’

 5%                  4%                                                                          4%                                                4%
                                                  3%                   3%                                                      3%
                     1%                     1%                      1%                           1%                       1%                          1%
            0.3%                                                                                                                                             0.4%
                   2014                       2015                    2016                      2017                       2018                      2019

Traditional skill areas                                          Finance & accounting               Sales and marketing                   Property management
Advanced tech skill areas                                        Data analytics and AI              Software development                  Cloud computing

Source: LinkUp jobs data of US real estate companies; Deloitte Center for Financial Services analysis.

Figure 2: CRE companies’ urgency to redefine talent
My company has accelerated redefining business processes, job roles, and skill requirements to include use of technology and tools

Europe       2%    5%              17%                              30%                                          29%                                  18%

APAC                       20%                          18%                      18%                                   35%                                   9%

America         7%                        26%                                       34%                                             24%                      9%

Note: Responses might not add up to 100                   Strongly disagree        Disagree                   Neither agree nor disagree             Agree
due to rounding-off.
Source: Deloitte Center for Financial Services’                                    Somewhat disagree          Somewhat agree                         Strongly agree
Global Outlook Survey 2020.

Real Estate Predictions 2021 |
                              Gaming the commercial real estate talent conundrum

Redefining roles and skills                            For job postings, CRE organizations should               improve their use of digital tools and
To illustrate future work and job roles, we            use shorter descriptions and enable a                    absorb the business impact of digitalization.
have envisioned how modernizing work                   more mobile-friendly application process,
could transform three positions: leasing               which would help candidates apply easily.                Strengthening talent analytics
manager, valuation advisor, and accounting             For shortlisted candidates, organizations                CRE leaders are more likely to make sound
specialist. (See figure 3). Analysis of three          could use automated interview scheduling                 talent decisions if they are backed by data
main job components – the automation of                solutions that are synced with interviewers’             and analytics. Workforce analytics programs
certain tasks, emphasis on analyses and                calendars, allowing candidates to find an                can also help CRE organizations attract and
insight generation, and tenant engagement              interview slot in real time2.                            retain the right talent. For example, data
– reveals how CRE roles would likely need                                                                       analytics can be used to improve resumé
to evolve to meet future needs. Workers                Creating alternate talent marketplaces                   sourcing and screening to get candidates
in these roles will probably spend more                To get access to these new skill sets                    with the right fit, while avoiding any selection
time using technology while devoting their             and increase workforce agility, CRE                      bias. Data mining and pattern recognition
expertise to conducting analyses and                   organizations should consider recruiting                 can help talent leaders to shortlist
strengthening tenant engagement. For                   through a variety of channels and not                    appropriate candidates, after matching their
instance, leasing managers could have                  rely on the traditional approach alone.                  skills, experience, and background with job
more time to focus on enhancing tenant or              For example, the alternate workforce,                    requirements4. As shortlisted candidates
client engagement if they used predictive              consisting of e.g. contractors, freelancers,             go through the interview process, more
analytics to help develop different lease              and gig workers, is expanding rapidly                    structured and unstructured data would
optimization strategies. And other tasks,              and could offer CRE organizations wider                  be generated based on their responses
such as invoicing, would be automated,                 access to talent with advanced tech skills.              and behaviors. CRE organizations can then
freeing up even more time.                             For instance, the estimated number of                    combine this data and select candidates
                                                       self-employed workers in the United                      by predicting their success in a role
As responsibilities shift, the skills and              States in 2020 is 42 million3. Therefore, CRE            through machine learning models, which
qualifications needed for each role are                companies should consider developing                     leverage past data on hiring and success
expected to evolve as well. At a minimum,              a talent marketplace to include alternate                of candidates5. Essentially, digital HR
each role would require technology or                  workforce, and offer rotation programs,                  systems can help firms collect and manage
analytics coursework such as a bachelor’s              stretch or voluntary assignments to                      data better which, in turn, would enable
degree or certification in big data or real            existing employees.                                      predictive analytics to help leaders make
estate analytics. Employees will also                                                                           more informed talent decisions.
need to excel at soft skills such as critical          For an internal talent marketplace,
thinking, problem solving, communication,              companies would need to look at job                      Gaming the talent gap
presentation, and relationship building.               processes and identify intersection                      The need to quickly change and adapt has
                                                       opportunities where employees in one                     never been so high for the CRE industry.
Modernizing recruiting approach                        department could work in another. They                   Right-skilled talent can play an important
CRE organizations could use different                  may have to upskill or reskill existing                  role in determining whether a company
technologies during the recruitment process            employees, which could include revamping                 stays ahead of the competition or plays
to attract the right-skilled talent. Talent            of existing training curricula, redefining               catch-up as the business environment
leaders can create digital content and use             expectations and skills, and developing                  evolves over time. CRE leaders should
an array of social media channels and job              effective measurement criteria.                          consider redesigning talent – rethinking
platforms to promote open positions.                                                                            and adapting the way their employees
For instance, Intuit uses virtual reality              CRE organizations could consider                         work, embedding technology into their
technology to provide candidates with a                developing internal knowledge-sharing                    decision-making, and redefining skills,
real-time experience of what it would be like          and mentoring programs. Experienced                      talent processes, and practices to help
to work at its campus, and to gain a deeper            professionals could then teach younger                   them prepare for the future of work.
understanding of the organization’s culture            employees core sector and soft skills that
and ethos and its use of technology in day-            are related to leadership and relationship-              Author
to-day activities1. This is likely intended to not     building. At the same time, younger                      Surabhi Kejriwal
only enhance a candidate’s understanding of            employees can provide informal learning                  Real Estate Research Leader | US
the company, but also its brand.                       sessions with older employees to help          

1         Mohammed Faraz Khan and Richa Kejriwal, “Digital Workspaces – A Talent Management Strategy,” Zinnov, May 31, 2019.
2         Ruma Batheja, “Recruitment technology tools that every recruiter must know,” People Matters, May 23, 2019.
3         Erica Volini, Jeff Schwartz, and Brad Denny, “2020 Human Capital Trends Ethics and the future of work: From “could we” to “how should we”,” Deloitte
          Insights, May 15, 2020.
4          “Talent acquisition analytics Driving smarter sourcing and hiring decisions with data,” Deloitte, 2018.
5          Ibid.

Real Estate Predictions 2021 |
                              Gaming the commercial real estate talent conundrum

Figure 3: Evolution of CRE roles

                                                                     Automation of                       Emphasis on analyses                         Strengthening
  Key components of the role
                                                                      certain tasks                      and insight generation                  tenant/client engagement

  Leasing Manager                                                                                    • Conduct predictive analytics and
                                                                                                       identify opportunities for lease
                                 Current tasks

                                                           • Prepare and maintain physical lease       optimization
                                                             contracts and invoices                                                            • Be the single point of contact for

                                                                                                     • Draw insights from sensor data to
                                                           • Manually enter and extract lease                                                    tenants and enhance engagement
                                                                                                       improve building management
                                                             data and manage on disparate                                                        and service
                                                             systems                                 • Work with sales team to promote
                                                                                                       properties and with legal team to vet
                                                                                                       lease documents

                                                           • Create and maintain digital lease
                                 Future tasks

                                                             contracts                               • Interpret and share lease
                                                                                                       information and analysis on

                                                           • Manage integrated digital lease data      spreadsheets                            • Follow-up on rent payments with
                                                             using cloud-based software                                                          tenants
                                                                                                     • Share lease and market information
                                                           • Manage automated invoicing and            with internal departments
                                                             lease data abstraction
                                    Current tasks (2020)

  CRE Valuation                                            • Conduct physical property
  Advisor                                                    inspection and manually document        • Gather data on traditional variables
                                                             the details                               from internal or third-party            • Provide valuation report to clients, as
                                                           • Prepare valuation reports on paper        databases                                 per the agreed timeline
                                                             or spreadsheets                         • Perform competitive analysis            • Manage regular communication with
                                                           • Fill back-up data like demographics,      of rents, market value of similar         clients and resolve queries
                                                             comparable properties etc. into           properties etc.

                                                           • Conduct virtual inspection using
                                                             geospatial platforms and use mobile
                                 Future tasks

                                                             apps for physical visits to centrally                                             • Advise clients on asset strategy
                                                                                                     • Utilize Al-assisted valuation models      based on valuation forecasts

                                                             store the data                            that combine and analyze sensor
                                                           • Automate generation of valuation          and other alternative forms of          • Perform risk modelling and advise
                                                             reports and autofill background data      property and market data                  clients on wider risks associated with
                                                                                                                                                 a property
                                                           • Provide more reliable and real-time

                                                           • Collect and sort actual bills and
  Accounting                                                 checks
                                 Current tasks

  Specialists                                              • Enter daily ledger entries into the
                                                                                                                                               • Provide relevant accounting

                                                             system                                  • Manually compare and analyze work
                                                                                                                                                 information to internal clients and
                                                           • Reconcile accounts and bank               orders, invoices, and payments
                                                           • Create recurring and ad-hoc reports
                                                             on standard timelines
                                 Future tasks

                                                           • Enter digitized source documents of
                                                             bills and checks                                                                  • Partner with internal clients and
                                                                                                     • Leverage AI and data analytics to

                                                                                                                                                 stakeholders on accounting
                                                           • Automate ledger entries,                  identify irregular expenses and raise
                                                                                                                                                 treatment and help forecasts
                                                             reconciliation, reporting, and            flags for review
                                                                                                                                                 income, expenses, and budgets
                                                             compliance checks

                                                           • Enhanced efficiency and productivity
                                                                                                     • Deeper and forward looking insights     • Learning and exposure for
                                                           • Simplification of tasks                                                             employees
                                                                                                     • Risk mitigation
   Key benefits across roles                               • Improved data accuracy                                                            • Increased synergy within teams
                                                                                                     • More nuanced, informed, and faster
                                                           • Additional time to perform higher         decision-making                         • Stronger relationship with clients
                                                             order tasks

Source: Deloitte Center for Financial Services analysis.

Real Estate Predictions 2021 |
                              Knowing what others don’t: gaining a competitive edge in real estate with AI-driven geospatial analytics

Knowing what
others don’t: gaining
a competitive edge
in real estate with
AI-driven geospatial
Micro-analysis on address level
Data analysis can significantly improve decision-making in real estate. From valuation,
sale/purchase of properties and contracting to negotiations, risk analysis and planning.
In 2021, all eyes will be on AI-driven geospatial analytics. Why? Because it is a quick,
lean and affordable way to provide address-specific rental predictions and explainable

Micro-analysis on address level                         Major challenges                                         However, once all of these barriers have
The availability and interpretation of the              However, when it comes to data                           been cleared, the insights, which can be
right information is crucial in any sector,             management in the real estate sector, there              derived, will usually pay off well.
including real estate. After all, data analysis         are still a number of major challenges.
can significantly improve decision-making,              Often the required data are simply                       Reaping the benefits
from valuation, sale/purchase of properties             not available, not granular enough, or                   Real estate companies that are able to
and contracting to negotiations, risk                   outdated. If they are available, they might              gain a lead in mastering their own and
analysis and planning. Obviously, there is              not yet be harmonized across geographic                  acquired data by means of advanced
an abundance of data about the world’s                  areas. So even before the start of a simple              data analytics, will reap the greatest
biggest cities. This makes macro-analysis               analysis, a lot of effort is required. This also         benefits. Enhancing your own datasets
for these places straightforward and                    pertains to other manual data corrections,               with additional geographic features will
relatively easy for skilled data scientists.            such as missing values or incorrect master               justify the application of powerful analytics
However, the smaller the place, the harder              data. While for master data the case is                  techniques such as deep learning. This in
it gets to create a good understanding of               clear-cut (a value is either correct or not),            turn will lead to much better insights into
locations – even on the aggregated view                 other data issues might require expert                   previously not well-understood market
provided by zip code areas. For single                  judgement. In other words, there is a risk               developments, sub-markets, locations and
addresses (micro level) this is even more               of ending up with expensive but worthless                interdependencies.
difficult. The same is true for data-rich               or even misleading analysis results, due to,
hotspots, if the required skills are lacking.           for instance, personal bias by the expert                Digitalization: digital location twins
For instance, the rental value of two                   “correcting” the data issues. The alternative            can bridge the knowledge gap
properties that are only a couple of meters             is buying data on social demographics,                   A combination of various approaches
apart, can already differ significantly due             rents, purchase prices and geographic                    to ”digital twins” can be of great value in
to the presence of e.g. railway lines, noisy            points-of-interest (POIs), but good data                 real estate. Whereas the sensor-based
streets or polluted waters.                             always comes at a (potentially steep) price.             approach (i.e. Internet of Things, or IoT)

Real Estate Predictions 2021 |
                              Knowing what others don’t: gaining a competitive edge in real estate with AI-driven geospatial analytics

Real Estate Predictions 2021 |
                              Knowing what others don’t: gaining a competitive edge in real estate with AI-driven geospatial analytics

The AI learns geospatial patterns from data rich samples, allowing it to identify locations with a similar fingerprint and making
predictions for those data poor ‘digital twins’.

offers insight into the inner workings of                 Explainable AI is trustworthy AI                          users in order to make a real impact in the
a building, the concept of the learned                    Of course, replacing any blind spots with                 market. This will unleash its full potential
”digital twin” focuses on the environment                 predictions from a black box AI is never a                for the first time. For those who have
of a building. Here, the goal is to use                   good idea. With so much at stake, investors               invested early, time- and cost-intensive
information from data-rich areas to gain                  will always ask why they should have faith                data gathering, and cleansing efforts will
an understanding of relevant drivers                      in a machine prediction, especially if it is              eventually become a thing of the past.
and forces behind interesting market                      purchased externally as a service. Once
developments. This knowledge can then be                  again, technology comes to the rescue with                Authors
applied to somewhat similar but data-poor                 a conceptual approach called “Explainable                 Tobias Piegeler
areas. Based on the right data and on a                   AI”. In short, Explainable AI means that AI               Director | Real Estate Consulting | DE
machine learning algorithm, the computer                  is applied in such a way that the results of    
will build a model. Afterwards, when                      the solution are easy to understand, as
provided with some basic information                      opposed to the predictions from a black                   Sascha Bauer
such as an address, the construction year                 box, as mentioned above, where the results                Senior Manager | Insight Driven
and the condition of an object, the model                 cannot even be explained by its designers.                Insurance | DE
will render valuable answers. Precise                     Explainability is not just a regulatory         
predictions of current and future rental                  obligation but can also provide trust and
values or recommendations for the highest                 valuable business insights to businesses                  Contacts
yielding refurbishment options are just                   and end users. For instance, it will provide              Stefan Ondrusch
some of the potential use cases. To ensure                clarity on why one property is worth 15%                  Senior Manager | Real Estate
efficient and effective processes, these                  more than a similar one nearby.                           Consulting | DE
prediction models will be integrated via API                                                              
(often in the form of ‘AI as a Service’) into             2021: the year of maturity
the workflows of real estate management                   The year 2021 will initiate an era in which               Joerg von Ditfurth
software, feed planning or risk models.                   enhanced AI-driven location analytics for                 Partner | Real Estate Consulting | DE
They will enrich reports and provide                      real estate will reach maturity and become      
meaningful visualizations to human                        suitable for the masses. It will become
decision makers.                                          mature enough to be adopted by enough

Real Estate Predictions 2021 |
                              Innovation & Construction in the Shade of Global Crisis

Innovation &
Construction in the
Shade of Global Crisis
Two technology trends
that will move the real estate
construction industry forward
The COVID-19 crisis has shed light on another well-known crisis that has the potential
of exponentially harming humanity to a point of no return - global warming. If we want
to avoid the many consequences of global warming, we should accelerate our efforts,
starting now. How can digitalization and innovation enable the industry to prepare for
a sustainable future?

Global warming and                                     operates, and momentum to implement            operate under extreme and frequently
construction waste                                     new approaches to manage long-time             changing conditions. It is still a labor-
The real estate construction industry                  practices. Disruptive technologies have        intensive industry, where implementing
is one of the biggest contributors to                  the potential to provide the efficiency,       automation is deemed essential. The
global warming. It is responsible for 40%              productivity, waste control, and more          industry’s low productivity, specifically
of all global carbon emissions1. With a                that the industry has been seeking for         low labor productivity, is one of its biggest
percentage that high (compared to other                decades. In this article we will focus         showstoppers, effectively putting a brake
industries), the Paris Agreement’s2 push               on two technology trends – Robotics            on further internally driven innovation
to limit total emissions to 1.5 °C / 34.7 °F is        & Automation, and Management Tools             and digitalization, and so it has become
particularly essential for this sector. Also,          for the Construction Site – and how            increasingly difficult to meet the growing
according to a report from Transparency                the implementation of these trends will        demand in the market.
Market Research, the volume of worldwide               move construction forward into a more
construction waste is predicted to double              sustainable future.
to 2.2B tons by 2025.
                                                       Robotics and Automation
Crisis: a catalyst for change                          The 1960s saw the launch of the first
The good news is that in a reality where               Industrial Robot – ”Unimate”3. It was the
construction is riddled with inefficiencies,           first step towards progress, transformation,
such as wasted energy, high costs, lower               and foresight that brought us to where
profit, and material waste, there is room for          we are today. Still, despite advancements
significant improvement. Moreover, crises              like Unimate, automation in the real estate
can be profound catalysts for change.                  construction industry is often challenging.
They can create opportunities to gain a                Construction sites are full of surprises
new understanding of how the industry                  and uncertainty, and workers continue to


Real Estate Predictions 2021 |
                              Innovation & Construction in the Shade of Global Crisis

Real Estate Predictions 2021 |
                              Innovation & Construction in the Shade of Global Crisis

A few examples                                         More examples                                       Authors
Therefore, technologies that can replace               For instance, software has been developed           Doron Gibor
these traditionally physical tasks are on              that creates a “digital twin” of the                Partner| Audit Services| IL
the rise. A number of companies develop                construction site using hardhat-mounted   
intelligent, mobile, multi-purpose, and                360-degree cameras. These allow project
autonomous robots for use in construction              managers at construction sites to get an            Amit Harel
sites. Some focus on wall rendering (e.g.              overview of the state of a project and              Partner |Financial Advisory | IL
stucco, exterior insulation and finish                 whether it remains on schedule. Another   
systems, concrete, primer, and adhesives),             helpful innovation is an automated cloud
others automate the construction site                  platform that was designed and built                Contact
layout process with a mobile robot.                    for infrastructure construction projects.           Maya Trajtenberg
Drones are another pivotal trend, e.g. for             It enables real estate construction                 Consultant | Financial Advisory | IL
the collection of high-resolution data to              companies to monitor project progress,    
generate field intelligence, or to improve             ensure quality, and control budgets based
land surveying services (especially in                 on actionable project execution metrics
infrastructure). AI and Machine Learning               extracted from field data.
will automate many construction tasks in
unprecedented ways. For instance, there                Moving forward
are startups that use AI and an IoT platform           Though these technologies are impressive,
on cranes to transform any site into a                 they will end up being wasted if they are
smart, data-collecting field, automating               not accepted and ultimately utilized by
decision-making tasks on-site.                         the people in charge. They will not simply
                                                       catch on. Innovation has led real estate to
Management Tools for the                               new heights before, and we must be open,
Construction Site                                      receptive, and critical (when necessary)
A large amount of construction waste                   to technology that could further improve
is due to poor management. 38% of                      the industry. COVID-19 will probably end
construction management professionals                  like other pandemics before. However,
consider poor processes and procedures                 global warming is quite another story.
to be a vital cause of technology failures4.           When it will hit, it will hit hard, and with long
45% report that they spend more time                   lasting consequences. Innovation and the
than expected on non-optimal activities5.              implementation of new technologies could
Adopting many of the emerging digital                  be our ”vaccine” to help us prepare for the
technologies on-site could enhance the                 next crisis to come, and enable the real
rise of smart project management. These                estate construction industry to thrive.
technologies, combined with real-time
data, could enable ground field managers
to make better informed decisions around
scheduling labor and materials for a
particular project.


Real Estate Predictions 2021 |
                              The virtual office for Corporate Real Estate

The virtual office for
Corporate Real Estate
Where right sized
workforce meets
best fit workplace
The widespread adoption of remote working in 2020 has greatly shifted the role of the
workplace within organizations. All indications point to a future where hybrid working
is here to stay, as employees reap the benefits of greater choice in their working week
and employers re-examine their real estate requirements. So how do real estate
owners respond as the virtual office becomes a key component of working in the
”new normal”?

Remote working is nothing new                           shorter commuting times and the chance         building spaces equipped with a multitude
Although the transition into remote                     to spend more time connected to their          of sensors are providing organizations with
working during 2020 has been tough for                  local area and its people and businesses.      increasingly large volumes of real-time data
individuals, teams and organizations, it’s              Organizations will look to a distributed       on their workspaces. The more data-rich
nothing new. Since at least the peak oil                real estate model, diversifying their office   our spaces become, the greater value
crises of the 1970s organizations have                  space mix across both a central CBD hub        we can extract from them, driving up the
been grappling with the idea of both                    and co-working spaces or smaller offices in    cost per square meter of premium smart
geographically distributed and remote                   suburban and regional areas. This will allow   offices. Organizations will need strategies
working. Advancements in personal                       staff to leave their homes to experience       to effectively utilize this data to extract
computing and the internet have meant                   a greater separation between home              maximum value, resulting in a shift from
there have been few technological                       and work life and connect socially with        a ‘set and forget’ approach to workplace
barriers to this phenomenon. COVID-19                   colleagues, while avoiding long commutes.      design of the past to make spaces hyper-
has ultimately been the trigger for a                   This makes a lot of sense as people also       flexible and responsive to real-time needs.
widespread shift to take place, as an                   become increasingly aware of climate           Concurrently, cyber will play an increasingly
enforced critical mass of remote working                change and make conscious decisions to         important role in organizational data
to prioritize worker safety has forced us to            reduce their carbon footprint. Office spaces   security across the virtual office, enabling
overcome the perceived cultural barriers                must be smart and flexible enough to           an efficient, hybrid workforce to work
towards it. Now that remote working has                 facilitate these changes, as data becomes a    securely.
become largely normalized, the traditional              critical component of workplace innovation.
notion of a workplace could be changed                                                                 Best practice: Australia’s Virtual Office
forever.                                                Data is crucial                                Our own thinking in this space comes as a
                                                        Data has a crucial role to play in the         result of the success of Deloitte Australia’s
Reimagining the role of the office                      emerging workplace, driving the success        Virtual Office. A small, dedicated team was
Mass adoption of remote working offers                  of spaces, just as it does for the digital     created during mid-2019 with a human-
organizations the chance to reimagine                   world. Workers will need to be equipped        centered approach to first understand
the role of the office in a new real estate             to seamlessly transfer between physical        and then deliver solutions for the remote
operating model. 2020 has witnessed                     and virtual settings to work effectively       working needs of the firm’s staff. Providing
the rise of the local community: a trend                with colleagues regardless of whether or       greater optionality to the staff was a key
which looks set to stay, as people enjoy                not they’re physically co-located. Smart       driver for the team’s work, providing key

Real Estate Predictions 2021 |
                              The virtual office for Corporate Real Estate

Real Estate Predictions 2021 |
                              The virtual office for Corporate Real Estate

resources, training and information to uplift
our staff’s remote working experience,
regardless of where they choose to work
from, including the new Melbourne and
Pyrmont office spaces.

The time to embrace change is now
As the dust settles on a tumultuous year,
the one factor that’s emerging loud and
clear is the groundswell of support for
hybrid working to continue into a post-
pandemic future. With remote working
experience under the belts of nearly every
organization globally, the time to embrace
change is now. Real Estate operators can
get ahead of the curve, adapting traditional
approaches by reimagining the role of
the office and their operating models by
keeping employee choice, community
and data front of mind. Hybrid working is
here to stay, and those that embrace the
resulting changes will reap the rewards.

Robbie Robertson
Partner | Customer Strategy &
Experience Design | AU

Rowan Muller
Consultant | Customer Strategy &
Experience Design | AU

Alex Collinson
Partner | Assurance & Advisory | AU

Real Estate Predictions 2021 |
                              Real Estate-as-a-Service: From “product and space” to “system and service”

Real Estate-as-a-Service:
From “product and
space” to “system
and service”
A new business model for
commercial real estate
Real estate is undergoing a fundamental business model redesign enabled by
digitalization and a growing market of smart buildings. A redesign that is important in
a (post) pandemic era when so many businesses are evaluating what their property
brings to the company by providing on-demand, customizable and scalable access to
space, amenities and services. What business model will be successful in the future?
What can the real estate industry learn from tech? What is Real Estate-as-a-Service?
And what is the impact on strategy and organizational performance?

In a world of bits and bytes, the value of             The evolved Real Estate value                        as opposed to monetizing the product.
Real Estate for businesses is increasingly             proposition                                          REaaS generates revenue based on the
determined by a different yardstick. Square            In the era of the ”new normal”, work                 outcome of improved experience and
footage is being replaced by data, and                 doesn’t strictly depend on office space.             productivity. These improvements are
services that enable work are taking the               The function of corporate real estate has            provided to the occupants working in the
place of the traditional space to work.                therefore evolved from somewhere to                  connected building, where each digital
Where the adage for property value once                work, to a workplace that enables users              service to support outcomes is charged for
declared: location, location, location, the            to perform better than they would do                 on demand.
reality of today’s real estate is location,            anywhere else. It is a place of high impact
insights, experience. To unpack this further,          and superior experience, offering a curated          Lessons from the tech industry
property owners need to consider how the               and scalable ”homefield advantage”                   To understand the evolved business
space is being used, not whether it is being           to businesses, and transforming real                 model, the real estate industry can learn
occupied. Real Estate-as-a-Service (REaaS)             estate from a ”space to work” into a                 new ways to generate revenue from the
creates the conditions for property owners             ”business tool”.                                     tech industry. Internet-based and physical
to ask themselves what the real value of                                                                    ”sites” have similar requirements: people
their property is. REaaS, an innovation                Updating the business model:                         amassed in a single location in need of
that is being enabled through smart and                becoming a service provider                          a personal outcome with predictable
connected buildings, augments bottom line              Enter “Real Estate-as-a-Service”, or                 frequency. ”Locality” is leveraged to
benefits from savings to new revenue and               ReaaS. The term “As-a-Service” became                support experience, productizing the
shifts the value focus from offering space             mainstream through high-speed                        user rather than the infrastructure. Value
to offering digital and physical services              connectivity whereby technology                      emphasizes rendering services to support
to users.                                              companies leveraged their infrastructure             what people do and how they do it, instead
                                                       and software, offering an alternative model          of just where they do it. Real estate is
                                                       for use by targeting consumer behavior,              therefore transformed from ”fixed product”

Real Estate Predictions 2021 |
                              Real Estate-as-a-Service: From “product and space” to “system and service”

Real Estate Predictions 2021 |
                              Real Estate-as-a-Service: From “product and space” to “system and service”

(space and infrastructure) to ”connected               to take direct control of provisioning the           Author
system” (information and services).                    infrastructure that is typically fulfilled by        Marco Macagnano, Ph.D.
                                                       a tenant as a part of their initial fit-out.         Senior Manager | Smart Real Estate
Smart building: connecting users and                   This creates a technological backbone                Leader | ZA
occupants to services                                  that not only renders basic connectivity   
The location where people work is de-                  and functionality (e.g. lighting and Wi-Fi),
prioritized, whereas the smart building                but also helps tenants to improve their
connects users and occupants to services,              organizational performance – by means
so that work becomes more advanced and                 of data about how the space is being used
connected to benefit the business. User                and by whom.
output is monetized through services that
leverage the physical infrastructure as an             Digital Masterplan and
enabler. This fundamentally changes the                Platform Strategy
business model of property owners who                  To exploit the potential offered by REaaS,
are now in the position to become service              a Digital Masterplan and Platform Strategy
providers as custodians of physical and                is required. This masterplan can act as the
digital infrastructure.                                architectural design for smart buildings,
                                                       avoiding the pitfalls of capitalizing separate
Understanding digital services                         point-solutions that provide limited
in real estate                                         benefits outside of core functionality.
The smart building creates conditions to
aggregate and contain all building data.               A masterplan will:
These are used for targeted analytics
to inform decision-making. The data is                 • align the connected building to the
contained within a digital platform and                  enterprise architecture of the tenant or
can therefore be leveraged to provide                    occupant
customizable features and services.
A service is defined as the provision                  • define and design what data is required,
of information that is contextual or                     how it is generated and analyzed
personalized to any customer or user. A
digital service is one that is commoditized            • support the revenue model, and
and provided electronically across multiple
platforms such as internet or mobile                   • determine the infrastructure required
devices. Digital services include e.g. insights          to support the digital agenda and the
through analytics, features and facilities               features that support the digitally
rights management, location-based                        augmented Real Estate.
services, and a digital marketplace for
third parties. They can be monetized in                REaaS combines and cross-leverages
various ways, offering additional revenue              capabilities across systems to enable
to property owners and tenants – e.g. by               platform-based features and analytics that
means of subscriptions, consumption-                   were not possible before. This platform
based models, data monetization, API                   unlocks the potential to sell these features
monetization, digital marketplace, and                 and services to end-users. This will enable
marketing & advertising.                               businesses to quantifiably improve their
                                                       experience, productivity, and space usage,
Improving organizational performance                   and it will help property owners transform
In order to deliver a digital service, the             from their “product and space” offering to a
provider must be in control of the flow of             new value-adding and future-proof role as
data to the end device that benefits the               a service provider.
user (e.g. a mobile device, lighting, or audio
visual equipment). In real estate terms,
this will incentivize the property owner

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