Five big questions real estate is asking in 2022

From the speed at which workplaces are changing, to the prospect of further market disruption, 2022 is expected to be another year of transformation.

The major trends shaping global real estate are set to influence decisions throughout the year. But assessing which pandemic-driven changes are here to stay, and which are more temporary, remains a challenge.

Amid the raft of questions about what’s in store for 2022, here are five prominent ones that JLL experts believe will play a big role in how the industry moves forward.

1. Where will capital go next?

Last year saw investors focus on sectors appearing to offer resilience, like living, life sciences, data centers and logistics, the latter of which accounted for 23 percent of global real estate investment in 2021, an all-time high, according to JLL’s Global Real Estate Perspective.

In 2022, these sectors are expected to continue to draw demand, although capital will begin to reconsider the more traditional office and retail sectors that are seen as primed to bounce back after a difficult couple of years.

“Conviction has been building for lagging sectors in the current recovery and will increasingly benefit the office, retail and hotel sectors in 2022,” says Sean Coghlan, Global Director, Capital Markets Research, JLL. “High-quality, lower-risk assets have been benefitting most to-date.”

2. How can workplaces adapt to meet employees’ needs?

Changing employee needs, alongside the battle to both attract and retain talent, are going to be front and center in 2022 amid an increasingly hybrid work environment.

Workplace design has an increasingly important role to play, supporting greater cross collaboration wherever employees work, boosting energy levels but also encouraging communities to thrive.

The challenge for companies, says Marie Puybaraud, global head of research at JLL, will be in making technology and services “advance faster and further” to support hybrid work arrangements and provide employees with outstanding support in terms of health and wellbeing.

“Broader investment will be required – it is happening, but more will be needed, especially as many organizations spent so much time simply in survival mode and are now needing to step into a hybrid model,” Puybaraud says. “The next wave of improvements cannot come quickly enough.”

5. Will growth in the U.S. continue to lead the pack for investment as real estate markets rebound?

Improving macro-economic conditions have bolstered investor conviction in commercial real estate, with investment in the U.S. notably rebounding at an accelerated pace.

The rebound was strong in the UK, Germany and France as well in 2021. But in 2022, the recovery is expected to expand further in the EMEA and Asia Pacific regions. Intraregional investment activity has been bolstering competition and supporting pricing in both regions, but interregional investment is expected to rise.

Asian and Middle Eastern capitalin particular, is eager to increase cross-border investment across the U.S. and Europe.

“Disparate, rapidly changing travel requirements have limited a broader recovery in cross-border investment, especially during periods when new variants of the coronavirus have emerged,” says Coghlan. “However, the recovery of interregional investment activity began to accelerate in the latter few months of 2021.”