Over the past four years, the office and industrial real estate markets have undergone seismic shifts.
Since the onset of the pandemic, the office sector has struggled to keep up with evolving workplace demands and expectations. The abrupt shift to remote and hybrid work has led the sector to experience record-high national vacancy at 19.8%. Despite an uncertain outlook, not all is doom and gloom. Office tenants now favor newer, centrally located trophy and Class-A assets that offer modern amenities. Tenants are in a “flight to quality,” with the overall vacancy in these types of buildings decreasing by 5% in the past five years. Meanwhile, industrial real estate has witnessed record demand since 2020, with rent values growing and new construction happening across the country.
It isn’t possible to be certain of the exact trajectory of these markets. Commercial real estate is often volatile due to its ever-changing nature. Economic uncertainty throughout the past year and a half has shaken up assets across all sectors, and technology, including high-tech software solutions and artificial intelligence, continues to evolve rapidly. That is why remaining at the forefront of trends, aligning with those who are similarly forward-thinking and adapting to change are the best ways to stay agile in the market.
The Society of Industrial and Office Realtors, or SIOR, a leading global commercial real estate association, understands this and equips its members with the leading tools, knowledge and resources necessary to thrive in a rapidly evolving real estate landscape.
“If there is a silver lining in any changing market, it’s that people and companies begin looking at things in new and highly creative ways,” SIOR CEO Robert Thornburgh said. “While economic factors are undoubtedly influencing all sectors, change is also driving opportunity. Any significant transformation happening in commercial real estate creates avenues of growth for those paying close attention.”
The continued effects of political and economic uncertainty on industrial and office properties remain noteworthy as each sector adjusts, Thornburgh said. As interest rates rose in the past year to combat record inflation, property prices and market fundamentals have been negatively impacted, slowing down construction starts. The office market is experiencing similar economic setbacks but was also greatly impacted by work-from-home policies implemented during the pandemic.
The real estate industry is also confronted with a variety of technological advancements, including artificial intelligence and smart building technologies aimed at reducing costs and enhancing operational efficiency, that are reshaping the way properties are acquired, sold and overseen.
In a survey conducted by SIOR to explore the influence of technology on commercial real estate, 84% of respondents said they believe commercial real estate technology, particularly proptech, is essential for success. Nearly 100% reported that drones will be among the most valuable technology for the future of the industry, and 82% said big data will be among the most valuable.
“Companies that choose to take advantage of these technologies will play a pivotal role in the industry’s future,” Thornburgh said. “CRE has traditionally been slow to integrate new technology, but this is changing. Those that accelerate smart, relevant adoption will ultimately be better informed and conduct more precise decision-making.”
These trends illustrate why staying prepared for uncertainty will give companies an advantage, he said. To thrive in today’s dynamic environment, change becomes a prerequisite for success.
“Building a culture that isn’t afraid to explore new ideas and related thinking is paramount for success,” Thornburgh said. “SIOR has helped its brokers succeed during numerous cycles over the years. Thankfully, we are constantly pushing the envelope to drive innovation and business development, and we are proactively evolving to ensure both our organization and its members are prepared to meet tomorrow’s demands.”
The past two years have been “revolutionary” for SIOR, Thornburgh said. Adopting a new five-year strategic plan, the organization has set its sights on a more global, nimble and forward-thinking association.
“A revitalized brand, thoughtfully implemented new initiatives, platforms for exchanging best practices and ideas, and the exploration of technology-based advancements will all bring a heightened energy and culture to the organization,” he said. “It will ensure our members are well prepared to meet any challenges that lie ahead. These new changes are already driving greater interest in SIOR today.”
In 2023, SIOR saw the most new members join the organization since its inception in 1941. It saw a 21% increase in female members, a nearly 25% increase in members under 35 and a 13% increase in international members. The society has more than 3,900 members across 49 countries. These numbers are particularly notable as the organization raised its qualifications in a variety of ways, making it more difficult to earn the designation.
With more members joining SIOR each year, attracting the next generation of office and industrial leaders is critically important, Thornburgh said.
“It is of paramount importance for SIOR to be composed of the industry’s finest,” he said. “In all categories of membership, the primary drivers for us are integrity, competence and skill. We’re working to elevate expectations in the office and industrial space with the best brokers in the game.”
Looking forward, key initiatives for the organization include increasing value to its dedicated members and industry partners, prioritizing its member associate program, an area that focuses on those starting out in their careers, becoming an international resource for members across the globe, and setting a new precedent for excellence in the industrial and office sectors.
“The driving question for us? How can we continue to accomplish extraordinary outcomes for those that are a part of the global SIOR community and this industry we care so much about?” Thornburgh said.
Source: “How SIOR Is Embracing Change To Move The Office And Industrial Sectors Forward“
