Real Estate Outsourcing: 2023 Trends

Real Estate Outsourcing

Corporate real estate (CRE) departments are increasingly turning to outsourcing as they face mounting pressure to provide high-quality services across a wider range of industry sectors and geographies. According to an industry survey, 86 percent of respondents are currently outsourcing parts of their CRE activities. Outsourcing growth remains uneven around the world, however, and companies are only beginning to outsource more strategic real estate activities.

Like previous years, outsourced services range from tactical, cost-sensitive activities to highly strategic tasks. About a quarter of the respondents within the study predict that they will fully outsource lease administration, transaction management and execution, project and construction management, as well as facilities and property management in the next three years.

Analysts expect the following focus areas to impact real estate outsourcing decisions in 2023:

1. Cost Management

In recent years, the global real estate industry has faced challenges in terms of profitability, particularly following the Pandemic. As a result, there has been a growing emphasis on developing robust cost management strategies. That said, real estate businesses with international operations are experiencing increased pressure to reduce costs associated with their global presence.

To address this, real estate experts have recommended partnering with local third-party specialists, developers, and investors as a means of mitigating costs and improving scalability. Outsourcing certain real estate functions to these local partners can bring benefits such as cost reduction and operational efficiency.

2. Outsourcing 4.0

Corporate real estate departments continue to evolve, becoming leaner, stronger and more efficient. From large internal teams that manage a group of external providers, CRE departments are getting smaller and working with one or two providers of comprehensive real estate services, including software, staffing and infrastructure. This new model (also called outsourcing 4.0) makes use of advanced technology like data analytics to standardize and simplify how property portfolios are managed. Analytics tools can mine portfolio information for insights that allows the firm to boost productivity, improve space utilization and reduce costs.

With this new outsourcing model, service providers perform both routine and strategic daily operations while the in-house real estate team handles more complex activities. In the coming years, real estate vendors will assume more control of costs, business interaction and process execution, which makes the organization’s property more effective. For vendors, the focus is to improve their technical capabilities and process expertise to become world-class partners to success.

3. Focus on Outcomes

In the current year, there is a notable shift in focus for CRE departments and businesses towards outcomes and values that propel business growth, such as increased productivity and competitiveness. Although service level agreements (SLAs) and key performance indicators (KPIs) remain important, the emphasis is now placed on tangible outcomes. More companies will also demand that service providers take a greater share of risks (as well as rewards), and this will be reflected in the outsourcing contract. As service providers assume greater responsibility for achieving desired outcomes, CRE managers are transitioning from day-to-day management to a more comprehensive approach of CRE performance management.

    4. Increased Collaboration With Other Departments

    Corporate real estate departments are no longer isolated entities in the organization. Because real estate strategy can impact employee productivity, experience, and retention, analysts expect CRE teams to increase collaboration with human resources, IT, the C-suite and support teams in the coming years. Service providers that offer real estate solutions integrating disparate systems into a single platform will be in demand.

    5. Skills Shortage

    The competition for skilled talent will only increase as the global real estate sector keeps on growing. Analysts predict that local real estate talent will be in high demand this year and in the near term. However, only a small number of workers have the right kind of knowledge and expertise that organizations need. To attract the right talent and fill skill gaps, real estate departments and businesses will improve employee incentives and align rewards with changing motivations. For example, different recruitment and retention strategies are needed for Millenials and more senior-level employees.

    Real estate managers will need experts in sustainability, social networking, big data, government relations, sovereign wealth funds (SWF) relations and other areas. Because of globalization, the need for soft skills like diplomacy and cultural understanding will also become as important as functional skills. Many companies will turn to local and offshore providers to access the skills they need in a cost-effective way. Some organizations have already started recruiting offshore teams in emerging markets to train and integrate them into the company before redeployment to their original locations.

    New regulatory requirements for asset and real estate managers in the U.S. and Europe are also putting pressure on organizations. While it is unlikely that regulations will be completely aligned among countries and regions, employee incentive models will increasingly take into account non-financial performance. Employees committed to innovative thinking and exceptional customer service will be the most rewarded.

      Technology and Real Estate Outsourcing

      Technology has played a significant role in transforming real estate outsourcing practices. Here are several ways in which technology has been used for real estate outsourcing:

      Property Management Software

      Technology-driven property management software has streamlined and automated various aspects of real estate outsourcing. These software solutions help manage property listings, lease agreements, tenant communications, maintenance requests, financial transactions, and reporting, among other functions. They improve efficiency, transparency, and collaboration between outsourcing partners and the real estate company.

      Virtual Tours and 3D Visualization

      Virtual tour technology allows potential buyers or tenants to view properties remotely without physically visiting them. This technology utilizes 360-degree images, videos, and interactive features to provide a realistic virtual experience. It enables outsourcing partners to showcase properties to clients located in different geographies, saving time and resources.

      Data Analytics and Market Research

      Advanced data analytics tools help real estate outsourcing companies analyze market trends, conduct property valuations, and assess investment opportunities. By leveraging big data and machine learning algorithms, outsourcing providers can generate valuable insights and make data-driven decisions for their clients.

      Communication and Collaboration Platforms

      Technology facilitates seamless communication and collaboration between real estate outsourcing partners and their clients. Platforms such as project management tools, video conferencing software, and cloud-based document sharing systems enable effective collaboration, real-time updates, and transparent communication, regardless of geographical location.

      Automation and Artificial Intelligence (AI)

      Automation and AI technologies have automated routine tasks in real estate outsourcing, such as data entry, document processing, and property maintenance scheduling. AI-powered chatbots and virtual assistants can also handle customer inquiries and provide basic support, enhancing customer service efficiency.

      Blockchain Technology

      Blockchain technology has the potential to transform real estate transactions and property management. It offers secure and transparent record-keeping, eliminates the need for intermediaries, and enables faster and more efficient property transfers and contract management.

      These are just a few examples of how technology has been used in real estate outsourcing. The ongoing advancements in technology continue to reshape and optimize various aspects of the real estate industry, enhancing efficiency, transparency, and productivity.

      To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

      About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

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      We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

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