PwC real estate head: How companies evaluate office-space needs if there's a recession - San Francisco Business Times

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The Business Journals caught up with Byron Carlock, real estate leader at PwC U.S., about current sentiment in commercial real estate, especially as the threat of a recession looms.

, real estate leader at PwC U.S., about the survey and general sentiment in commercial real estate, especially as the threat of a recession looms. The following excerpts have been edited for brevity and clarity.Broadly speaking, there seems to be a disconnect between Wall Street and Main Street. The capital markets have certainly tightened for real estate yet demand is still pretty strong, especially for housing. You see record rents being set in New York, as an example.

I think the watchword is relevance. You have to think about how it’s relevant to operational needs and place in the war for talent. It’s key on a couple of dimensions: cool spaces still attract people. Enlightened users are spending time making their space attractive for talent, hiring and retention, mentoring and gathering.

It’s an important issue as we react to climate change. The technology is rising to the occasion quickly ... the Inflation Reduction Act has some interesting energy incentives I think you’ll see more owners use as we make our buildings more ESG-compliant. That’s going to be a big line of demarcation of buildings that are relevant .

Are you seeing a lot of capital being raised to prepare for an onslaught of distress in commercial real estate, whether office or otherwise? Your survey found 30% of respondents in financial services plan to decrease their investment in real estate. Is it notable that financial companies are seemingly especially looking to cut back on real estate, given that they’ve been heavy users of office space historically?

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