Covercy recently surveyed a number of commercial real estate (CRE) professionals to gain their insights into what they see coming for the industry in the year ahead. Thank you to all who participated — below are the results of the CRE trends 2023 survey. Have any thoughts or insights to contribute? Get in touch with us here — we’d love to hear from you.
The CRE Trends 2023 Survey Results
About the Survey Participants
Respondents described their firms according to the asset classes with which they’re involved and provided some details about how their firms operate, such as their asset counts and banking utilization. More than 80% were involved in multifamily properties, and more than 30% were involved with commercial properties. Others included industrial (11%), mixed-use properties (17%), and other property types (11%). Of these participants:
- Assets — 50% had 10 or fewer assets, 11% had between 10 and 25, 11% had between 25 and 50, 11% had between 50 and 100, and 16% had more than 100
- Bank Accounts — 72% had between 1 and 50 accounts for their assets, 17% had between 50 and 100 accounts, 6% had between 150 and 200 accounts, and 6% had more than 200 accounts
- Credit & Debit Cards — 89% of respondents had between 1 and 50 credit and debit cards for their accounts, 6% had between 100 and 150, and 5% and more than 200
- Technology — half of respondents noted needing more technology to achieve their goals, while 16% did not, 16% were unsure, and the remaining 16% reported being all set with their current technologies
Trends Regarding Current Assets
- Asset Classes — More than half of respondents (56%) indicated they have broadened their approach to different asset classes, while 22% said they have not and 22% were neutral.
- Rates — The majority of respondents (89%) indicated that rising rates have changed how they consider new opportunities, while 10% disagreed or were neutral.
- Inflation — Nearly half of respondents (44%) were neutral on whether inflation had significantly impacted their assets, while 22% indicated it had not and 33% indicated an impact.
- Performance — Nearly half of respondents (45%) reported their assets performing better over the past year, while 33% were neutral and 23% indicated reduced performance.
Trends Regarding Investors
- Cautiousness — Unsurprisingly, the majority of respondents (95%) indicated that their investors have become more cautious.
- Prospecting — More than a third of respondents (39%) were neutral as to finding new investors to partner with, while 22% reported having no difficulty and 39% indicated having greater difficulty finding new investors.
- Investor Pool — One third of respondents (33%) were neutral about whether the overall investor pool had changed, 28% disagreed that it had changed, and 39% reported that they believed it had changed.
- Expectations — Half of respondents (50%) indicated that their investors’ expectations of them have increased, while 33% were neutral and 17% disagreed.
Trends Regarding Funding
- Loans — More than half of respondents (55%) were neutral about whether their use of loans had increased, 39% disagreed, and 6% agreed.
- Equity Funding — More than half of respondents (56%) indicated that their use of equity funding for deals had increased, while 44% were neutral.
- Preservation — Regarding whether they were focused on preserving their funding, more than half of respondents (50%) were neutral or disagreed and 44% agreed.
- Self-Funding — Prioritizing self-funding was reported as being important to 44% of respondents while 22% disagreed and 28% were neutral.
Trends Regarding Banking
We asked our 2023 CRE trends survey participants what issues they expected to see in the area of banking in the year ahead. Stand-out responses included rising interest rates and increased competition between banks (such as with reduced fees) along with the demand for a centralized solution for integrating with existing technology platforms and consolidating accounts across all assets.
Trends Regarding Technology
- Sophistication — Nearly half of respondents (45%) indicated that their investors are expecting greater sophistication from them, while another 44% were neutral and 11% disagreed.
- Automation — More than half of respondents (53%) indicated experiencing a greater need to automate investor relations activity, while 35% were neutral and 12% disagreed.
- Transactions — A large number of respondents (72%) reported having a greater need for more automation or insight into transactions, while 28% were neutral.
- Centralization — Two-thirds of respondents (66%) reported having a greater need to centralize their technology and tools, while the remaining third were neutral.
- Reporting — Two-thirds of respondents (66%) indicated a greater need to automate reporting or use more advanced reporting, while the remaining third were neutral.
Trends for the Year Ahead
- Acceleration — The majority of respondents (66%) reported not believing that the overall commercial real estate market will accelerate while 6% were neutral and 28% believed it would.
- Investor Population — A divisive question, 50% of respondents don’t believe that more investors will enter the CRE industry while 44% do; 6% were neutral.
- Opportunities — Conversely, a majority of investors (72%) believe that there will be more opportunities available in the industry in the year ahead. Dissenting opinions stood at 22%, with 6% unsure.
Thank You from Covercy
Again, we sincerely appreciate all who participated in this year’s survey. Be on the lookout for additional opportunities to share your insights as a commercial real estate professional.
So, what should you do with the information from our 2023 CRE trends survey? As the data revealed, there will be greater emphasis on technology in order to achieve other goals. The need to centralize systems, provide better service to investors, and ultimately be ready to take action when opportunities arise will be critical.
As a complete commercial real estate investment management platform, Covercy offers everything GPs and their investors need to seamlessly navigate new deals, manage assets on an ongoing basis, and report on performance. Learn more about our platform and its capabilities here.
If you’ve been looking for a new technology platform to centralize and streamline your workflow, get in touch with us here for a private demo.