Sally Ann Flood, partner and U.S. real estate leader at Deloitte, said the firm’s 2027 Commercial Real Estate Outlook presents a mood of uncertainty among executives, stemming from the cost and availability of capital and higher interest rates, alongside expectations of a 5%-10% increase in revenues.
Deloitte’s 2027 outlook is based on a survey of 950 C-level industry executives. The sentiment index declined to 57.8 out of 100, down from 64.9 last year, and 68.3 the year before.
“While it’s not as rosy a picture, I think it’s reality. Organizations are truly focused on their internal organizations and what they can do. The revenue growth was something that was at least demonstrating some resilience,” Flood said.
When asked about whether current market conditions represent a break from past trends, Flood responded that it’s more of a “gradual transition.” Executives are willing to invest, but are doing so with a more disciplined approach that concentrates capital in fewer sectors and assesses opportunities with a long-term perspective.
Flood pointed out that nearly 80% of executives plan to upgrade or reposition their assets. This reflects a growing emphasis on disciplined decision-making, especially when it comes to capital allocation and investment strategies.
"Just increased spending is not going to reward everybody, but having the discipline for where that strategy can really return for investors, that's going to be much more important," she said.
Flood also observed an increase in capital flows into the U.S., with expectations that 28% of organizations will return to invest in the real estate market, up from 16% in previous years. This uptick is believed to be partly driven by advancements in technology and AI.