The Changing Face of Real Estate

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Yes, the Internet has turned our world upside down and we love it. It is these types of epic changes that provide tremendous opportunities for those of us that are willing to roll with the punches while looking for advantages to benefit our businesses.

Commercial real estate is feeling the heat in a big way. With time passing, owners of shopping centers and other retail properties are having a harder time filling vacancies. Store closings are a common sight everywhere. Shoppers are getting more accustomed to the convenience of internet shopping, where variety abounds, parking is a non-issue and prices are competitive. The problem is not going to go away and retail property owners have to face the music.

The office space user market is also quickly shrinking, as more office work is being done online, at home or on the fly. Service providers of all types continue to move online, where the need for human interaction is kept to a minimum. Large sales and support departments, occupying large office space have literally disappeared. The job done by fifty employees ten or fifteen years ago is now being done by a few people with the aid of self-serve websites. Furthermore, some larger office users are starting to provide shared offices for their employees, based on a reservation system. All indication is that the demand for office space is on a steep decline.

Not all is doom and gloom! The future for industrial and residential real estate looks very promising. Industrial/warehouse space will be in high demand as product inventories held in traditional stores move to warehouses and are sold over the internet. The cost savings for retailers are tremendous, as high rents, expensive store displays and sales personel saleries are kept to a minimum.

The increase in the time spent working out of the house is bound to influence the size and location of homes. Spending many work hours at home will motivate homeowners to look for nice and comfortable home office environments. Don't be surprised if future homebuyers' start considering the home office as one of their top priorities in their search for a home!

So what does all this mean? The medium term to long term trends points to the following:

1. Conversion of some shopping centers and stores to other uses, such as entertainment centers, storage space, showrooms, etc.
2. Conversion of surplus office building to condos and coops.
3. Expansion of industrial parks and the construction of warehouse properties.
4. New home builders will start designing homes with office components and old homes may be extended or modified to incorporate home offices.
5. Spending less time away from home will mean fewer cars on the road. This can result in an increase in people moving closer to city centers and an expanding public transit system.

Many of us worry about change because we don't want our boat rocked. I say, fully embrace change and use it to get ahead of your competitors.