Changing of the Guard: What’s Important to a New Generation of CRE Workers?

The CRE industry has one of the widest reaches in the world, and it is going through a significant change. Find out what it might look like as the next generation steps into leadership roles at some of the leading firms.

The American workforce has experienced many hardships in recent years. Between personnel shortages, aging workers, and a volatile quit rate, recovery has been challenging for a majority of leading industries in the country—and there are many changes still to come.

Among some industries with the oldest median age are fabric mills, religious organizations, urban transportation, and forestry. Not far behind however, sits real estate with a median age of 50. In addition to growing median age, the real estate sector, in particular commercial real estate, tech adoption lags behind in this sector as well.

As more and more CRE professionals retire, making room for a much younger generation of leaders to replenish the ranks, CRE processes and investment strategies will undoubtedly shift with this changing of the guard in one of the country’s most prominent industries.

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The CRE Executives of Tomorrow
Gen X CRE Decision-Makers
Millennial CRE Decision-Makers
The Impact of the Next Generation of CRE Executives
The Future of Commercial Real Estate Investment

The CRE Executives of Tomorrow

According to the Bureau of Labor Statistics, the median age of an individual working in the real estate industry is 48 years. For property managers in particular, that age goes up to 50, an older median age than the logging industry, newspaper publishing, and even the industry of funerary services.

All this to say, it is likely many current CRE professionals and executives could be a part of the projected 90% of Baby Boomer retirees leaving the workforce by 2030.

This means the next generation of CRE professionals and leaders will most likely be Gen Xers and Millennials with Gen Zers filling early leadership roles as they gradually grow into their careers.

Generation X Decision-Makers

Gen X largely grew up in the 70s and 80s and as a result, these adults are categorized as self-sufficient, independent workers. As another American generation familiar with economic hardship, Gen Xers are less likely to be as devoted to their employer as their Baby Boomer parents and place a higher value on work-life balance, and when it comes to decision-making, factors of the cultural climate play a large role as well.

Thorough and resourceful.

As a smaller generation, Gen X has often been overlooked, but this fact makes them more choosy than previous generations and thorough when vetting the financial viability of a tenant or the stipulations of a lease agreement. They will not take information simply at face value based on the word of a trusted operating partner, instead, they frequently seek out answers themselves and turn to technology and insight from experts when making important business decisions.

Receptiveness to new tech.

As you can probably guess, Gen X has an innately higher willingness to use technology. What’s interesting is that they are just as likely as Millennials to use technology in spite of them only growing up with tech for a portion of their lives. This means that when Gen X finally rises through the ranks into executive positions in CRE that are frequently part of important budgeting conversations, they will be far more likely to adopt new technology tools into their teams’ strategy processes.

Attention to business value.

While Millennials may take a longer time to conduct research, Gen X decision-makers like to focus on the business value of their decision-making. This will all but certainly cause a culture shift from word-of-mouth CRE deal-making to relying on accurate, portfolio intelligence data to pursue viable funding and investment opportunities.

Millennial Decision-Makers

Never to be outdone, Millennials are also gradually making their way into leadership roles across corporate America. As a generation of employees reaching their mid to late thirties, with many still holding lower positions within CRE, research has shown that this generation is frequently consulted in decisions about tech adoption because they possess a very deep understanding of technology. What’s more, the Millennial style of decision making is a bit different from Gen X.

Tech-savvy pioneers.

Millennials, often referred to as “digital natives”, have a natural affinity for technology. Having grown up in the age of the internet and mobile devices, they are adept at leveraging technology to streamline processes and enhance efficiency. With a majority of Millennials in leadership roles in CRE, any and every administrative, operational, or reporting task that can be automated will be, leaving no room for CRE firms that continue to conduct a majority of day-to-day tasks manually.

Collaboration and feedback.

Collaboration is a cornerstone of Millennial decision-making. They place a strong emphasis on teamwork and value the input of their colleagues. Millennials are more inclined to seek feedback and engage in open dialogue when evaluating potential solutions.

This collaborative approach allows them to harness diverse perspectives and make well-informed decisions that align with the goals of their organizations. It will also create a greater need among operating partners, portfolio stakeholders, owners, and executives to streamline all communications and eliminate data silos with portfolio-wide data standardization.

Balancing innovation with ROI

While Millennials are eager to embrace cutting-edge technologies, they also exhibit a pragmatic side. They recognize the importance of ROI and are diligent in assessing the long-term value of any business decision. This balanced approach encourages Millennial decision-makers to refer to portfolio data more than previous CRE generations to make decisions, sustaining this inclination to innovate with the important goal of achieving the best portfolio performance.

The Impact of a Younger Workforce on CRE Tech Adoption

Because such a large portion of the CRE industry will retire in the next seven years, and the predecessors will be far more eager to adopt technology, thanks to tech advancements that took place throughout their lives, the role of PropTech in CRE will undoubtedly change to one of greater significance and relevance. But just where those innovations truly lie, time will only tell. As leaders in the CRE digitization revolution, we have a pretty good idea of which areas hold the most potential for technology growth.

Facilitate faster deal execution.

Much like AI, entrepreneurs and startups are embracing technology, including PropTech. Over time, as less effective solutions fade away, the surviving PropTech companies will be those able to drive a comprehensive transformation of CRE processes, such as faster deal execution and management.

One area of CRE where next generation PropTech solutions will have the greatest impact is deal execution and the ability to close transactions at a much faster rate than was previously possible when deals were executed 100% by hand. With PropTech solutions, like Prophia, capable of digitizing key lease concepts, capturing tenant rights, and standardizing disparate data, deal execution will be a much faster and more accurate process in the coming years.

Concierge tenant management.

With more sophisticated tech solutions suffusing the CRE industry, the next generation of tech-adept brokers and property managers will be able to provide their existing tenants with individualized management. Whether that’s handling operational requests immediately, or going into renewal conversations with greater transparency. PropTech will help the next generation of CRE professionals better serve existing and new tenants.

More bespoke intelligence.

A future, tech-savvy CRE workforce will also mean more custom reporting on behalf of important portfolio stakeholders. This is already an achievable innovation with many AI-powered tools, like Prophia, that have custom intelligence options built into their data-processing servers. Advanced PropTech will also allow CRE professionals to easily share their intelligence with important portfolio stakeholders and ownership groups, to eliminate the need to disparate spreadsheets and buried emails.

Investor buy-in.

With the ability to streamline business-generating processes and manage more clients with the use of technology, the next generation of CRE workers will also be interacting with potential investors who have a similar familiarity with technology as they do. This will help reinvigorate investor attitudes and facilitate a different investment landscape for the future executives and professionals of CRE. 

The Future of Commercial Real Estate Investment

Forbes put it very succinctly in a recent piece about investment opportunities in CRE, “Stay current or else.” That is to say, successfully integrate technology or succumb to inertia. Technology is a key ingredient in the CRE investment strategies of the future. Teams who successfully leverage tech all but guarantee faster deal execution and risk mitigation compared to firms who continue to rely on manual processes to sustain relationships with investors.

What’s more, the future landscape of CRE investment will place greater emphasis on community-oriented action, investing in properties that help ease environmental stressors like homelessness, poverty, and support for other institutions that help uplift local economies.

As the next generation of CRE workers step into leadership roles, it’s all but certain that sustainability efforts will play a massive role in future building design and development. Additionally, sustainable building management will also act as a strategy for attracting high quality tenants and instill confidence in investors over the years.

CRE is a trillion-dollar industry and it has a profound impact on both the economy and the jobs market. The workforce is massive and many in executive positions are aging out of those roles, creating an opening for the next generation who is much more technology savvy and collaborative in their decision-making.

Is your team ready to successfully facilitate deals or pivot strategies to attract the next generation of investors? Prophia can help you take your first steps toward digitization and support your team’s future endeavors as the CRE landscape changes once again.