Five trends that shaped real estate in 2021

From the very start, it was clear that 2021 would not be like other years in recent memory.

But exactly how the year unfolded wasn’t completely as imagined, either. Hybrid work moved firmly into the mainstream at a pace quicker than some anticipated (or even hoped). Sustainability became a dominant discussion point in boardrooms with more companies starting to formulate net zero action plans. The real estate industry was forced to reckon with real, urgent needs to adopt new technologies.

Some of the ensuing changes were a long-time coming, such as the increased push towards a more sustainable, tech-infused world. Other shifts, like evolving working habits, had been bubbling farther below the surface, accelerated by the ongoing pandemic.

So what were the trends that left their mark on real estate in 2021?

1. Hybrid working takes off

As lockdowns gave way to hybrid working programs, people trickled back into the workplace.

For some, flexible home and office arrangements remain an experiment. For others, it has now become a feature of the working week.

“This year has seen companies begin to fully grasp the fact that hybrid is something that will not go away,” says Marie Puybaraud, global head of research at JLL. While it’s now accepted by companies as a long-term strategy, “it’s really off the back of employees seeking greater flexibility and not wishing to return to old habits”.

JLL’s Workforce Preferences Barometer, which surveyed 3,000 office employees, found that a majority identify a work-life balance and the ability to work from either the home or office as more important than pay.

2. Sustainability risks got real

With the built environment accounting up to 40 percent of the world’s carbon emissions, the pressure is on companies and investors to take action.

In recent years the focus had been on “green premiums” for buildings with certifications, which can boost asset values by more than 12 percent, according to JLL.

But the conversation was reframed in 2021, with the real estate industry and governments increasingly focusing on the risks of a so-called “brown discount”.

There are more examples of brown discounts emerging, says Guy Grainger, Global Head of Sustainability Services & ESG at JLL.

"We're just starting to see it," Grainger told Fortune on the sidelines of the COP26 climate conference in Glasgow. “I think over the next few years, we’ll see more examples of ‘brown discount,’ and it’s significantly larger than a ‘green premium’ for those buildings that have been made sustainable.”

3. Real estate moves deeper into the digital age

Analyzing sustainability performance is just one area where commercial real estate is turning more to technology.

The industry, which in some ways has been slow to integrate technology in recent decades, has been showing signs of quickly catching up.

For instance, consider space and occupancy management systems such as Dealpath, which deliver real-time insights into real estate portfolios. There are also technologies like Skyline AI that use unique data sets, artificial intelligence and machine learning algorithms to process data quickly and offer deeper insights for real estate opportunities.

While harnessing data can remain a challenge for some companies, there’s a growing realization that change is required to avoid falling behind.

“Leveraging data to make better decisions has been something the real estate industry has always done, but it’s now getting to grips with the technology that is helping unlock new opportunities,” says Richard Bloxam, CEO of global capital markets at JLL. “Investors are reaching more-informed decisions than before.”