Generational wealth is being passed into the hands of Millennials and Gen Z. According to a recent Cushman & Wakefield report, the shift of money toward next-generation investors is also having an impact on commercial real estate connected to the finance industry. In their “Geography of Wealth” write-up, the authors discussed six trends underlying the real estate shift.
Wealth is growing. The report said that 1% of Americans hold $52 trillion in wealth, marking a 60% increase since 2019. The Cushman & Wakefield experts noted that the next-gen investors favor diverse, value-driven portfolios, while geographic preferences are “prompting CRE leaders to rethink portfolio strategies and location planning.”
Real estate is becoming strategic. The report stated that wealth management firms and banks are adapting their footprints in response to changing client expectations. Location strategies are shifting. Similarly, institutions are boosting in-person experiences to improve engagement through features such as “espresso bars, art installations, and concierge-style lounges.”
Advisors’ roles are changing. Financial advisors today are shifting their focus from transactions to working with clients in areas such as tax, estate, retirement, and legacy planning. Space design is evolving with this, offering “advisory suites and private salons replacing teller counters to foster deeper, more personalized engagement.”
Digital tools are changing financial services. Financial institutions are combining luxury retail strategies with up-to-date technology, converting branches into “aspirational spaces with concierge lounges, artful interiors and private advisory suites that reflect the lifestyles of high-net-worth clients.” As technology changes client interaction, institutions are taking steps to “reassess their physical footprints” to focus on experience.
Global cities are turning into wealth hubs. The report’s authors commented that global cities are “becoming epicenters of financial activity and luxury lifestyle.” As a result, financial institutions are shifting real estate strategies that reflect regional preferences.
Firms are facing challenges. Financial firms must meet regulatory requirements while providing local advisors and clients with the necessary support. Additionally, with costs rising, “consolidation, tighter space allocation, and greater revenue per square foot have become universal imperatives. The goal: manage costs without compromising the client experience.”
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