Gone are the four basic sectors of commercial real estate: retail, office, industrial and multi-family. They are still very much a part of many portfolios, but the investor and broker will need to consider several new categories.
Real estate investors and brokers alike must consistently remain nimble for the ever-changing demographics, laws and business needs to remain relevant.
Technology is one reason we see changes, but consumer habits play a large role. New laws also bring the changes we may not have anticipated.
Online sales are huge and have a significant impact on the retail landscape. At the end of 2016, Amazon.com had a market value of almost $356 billion. This is more than Walmart, Target, Best Buy, Macy’s, Kohl’s, Nordstrom, JCPenney, and Sears combined!
This year, nine retailers announced they are closing almost a combined 1,000 brick-and-mortar stores.
Let’s take a look at eight of the emerging trends in commercial real estate today:
Placemaking
We are moving to where we value a sense of place with the lines of life, work and play blurring. Placemaking strengthens the connection between people and the places they share.
What creates a great place? Four main guidelines are instrumental and include sociability, uses and activities; access and linkages; and comfort and image.
Mixed-use
With the blurring of our life, work and play lives, we tend toward moving back to the downtown city core for a sense of place. The mixed-use building is generating considerable interest to help facilitate this.
Hubs and collaboration
We keep hearing collaboration is our future. Co-working spaces sometimes called hubs create an environment that facilitates collaboration.
Think of it as an executive center plus innovation lab, business incubator and community center. Through a membership, you can be a part of a growing community of members and collaborators who will help inspire you.
Energy-efficient, sustainable and healthy offices
Tenants and their employees want more features and amenities in their office buildings because it has been found to increase happiness and productivity.
Pop-up retail
Often used for seasonal items as well as small mom-and- pop shops, the trend is being noticed by major retailers both online and brick-and-mortar.
This concept is being used for “experimental” storefronts—ways for companies like Amazon or eBay to test a concept, introduce a new product line or quickly connect with online shoppers.
Marijuana storefronts and growing facilities
California is starting to experience the “420 effects” behind Colorado, Oregon, Washington, Alaska, Nevada and Washington, D.C.
The new law is being introduced in phases, but we already see retail storefronts and warehouses being leased by proprietors at higher-than-average rents.
Fulfillment centers
With the growth of online retailers, demands for a central and strategic location are the key to keeping costs and shipping times low.
Data centers
The importance of data centers lies in the availability of the Internet backbone and reliable power. With that comes security and safety concerns in the obscurity of these buildings to not draw any attention to what is contained inside to the safety of not being exposed to hurricanes, tornadoes or earthquakes.
