Thought leadership: A new lease on life for old retail spaces

In a recent announcement, LightBox principal analyst Dianne Crocker predicted that as many as 25% (a quarter) of America’s malls can be expected to close down within the next three to five years.

This is, obviously, a trend that commercial real estate (CRE) professionals – like us within NAI Global – have been aware of and tracking for many years, but the LightBox prediction goes on to offer some idea of what we can expect to see filling these spaces in future and what investors see as the opportunities created by this trend – both projections worth exploring.

The “death of retail” has been hanging over the industry’s head for the better part of a decade, but what is more likely – Crocker and NAI agree – is a move away from brick and mortar towards e-commerce, with a hybrid model in future. This trend was merely heightened by the Covid-19 pandemic.

The Amazon effect

This is in line with what trend analysts and futurists like Doug Stevens are forecasting. Stevens told RetailDive last year that by “2033 the majority of our daily consumption will be transacted online”.

“In the future, all but the most convenience-based retailers will begin to use their stores as media to acquire customers and their media platforms as stores to transact sales…” – Doug Stevens, author of “The Retail Revival: Re-Imagining Business for the New Age of Consumerism”.

This tracks: Our most recent Real Estate Outlook study, Q42020, found that over half of the survey respondents (57%) said the “Amazon effect” was expected to have an even larger impact on their CRE markets than the pandemic itself.

A buyer’s market

Crocker argues that the slowdown in deal volumes initiated by the pandemic has left a supply gap, and described the demand from investors as “pent up”.

“Institutional capital right now is focusing its repurposing investments on the safest benefits, the suburban metro areas that have seen meaningful growth in the past year…” – Dianne Crocker, LightBox principal analyst.

Multifunctional malls with a lifestyle component are not only the darling of consumers, but of investors too including private equity firms looking to score a bargain on a distressed CRE asset.

We are seeing this interest spiking too, and not just for straight sales. There is much interest in reusing these generously sized spaces in novel ways.

There are many such developments on the cards around the country. In Benton Harbor, Michigan, plans have been suggested to reconfigure the Orchards Mall with some 116 luxury two-bed apartments, with six-month leases to attract business travelers. Chapel Hill Mall in Akron, Ohio – which was foreclosed – expects to see new life as a business park.

There are also some less-traditional buyers in the market for malls these days. Gaming giant Epic Games recently bought up an almost 90-acre defunct mall in Charlotte, NC, that will be refitted into their new international headquarters.

Repurposing and extended life

The malls that outpace the trend will be those with a strong anchor tenant and those that offer the live-work-play balance. Crocker argues that malls that are grocery-anchored, or those “featuring medical services, pharmacies, gyms, and lifestyle amenities are more likely to survive in their current forms.” This is the kind of mall that will become a hub of urban life, she says.

An anchor tenant with a multichannel presence and a pandemic-proof loyalty is a gamechanger for mall and retail leasing.

Malls also have, we believe, a long life ahead of them as places to showcase goods and establish brand experiences. Raydiant makes digital experience tools for real life spaces. Writing for Forbes in 2020, Raydiant CEO Bobby Marhamat wrote that “in-store experience defines retail for people”.

“Touching products is part of that experience, but helpful staff, well-organized showrooms, unexpected activities, smart technologies and other components all combine to create exceptional experiences…” – Bobby Marhamat, Raydiant.

These factors combined are why smart money is betting on not ‘a death’, but ‘an evolution’ for our malls.

Thought leadership: How CRE fits into corporate strategy

The cliché of “Location, location, location” applies in commercial real estate (CRE) as much as residential, but what factors you bundle into that assessment are, naturally, vastly different and should be explicitly tied to corporate strategy. That’s the realm of corporate real estate management (CREM).

Corporate decisionmakers

A savvy corporate client on the hunt for premises will be asking whether a proposed site will support their corporate goals.

When considering a potential position for offices or logistics, for example, an assessor might ask about the transport links, the nearby shops and facilities. They may consider perception and whether the location is in keeping with brand identity.

They will need to understand the current and future demands the company will make of a location, and how the lease or sale terms will be perceived by a board or management team.

Access to (human) resources

There is another oft-overlooked location factor that NAI argues should form part of a CRE strategy: talent and access to the right people.

This is the nature of cities or areas that become hubs for specific industries and sectors: they have a rich pool of workers with the right mix of skills to draw from. If you’re looking for the top geologists in the world, you probably want to focus on an area associated with mining. Want people who are passionate and knowledgeable about the ocean? Try Hawaii. Silicon Valley, and increasingly Texas, are meccas for the technically minded.

There’s remote work and transferable skills to consider, of course, but generally speaking a talent pool linked to an area is self-sustaining, in the way that Silicon Valley and Stanford will always be linked in their mutual development paths.

What type of staff you envision filling your hallways and boardrooms will also inform other location considerations: like access to good schools, parks, or public transport.

Property as an asset

Last but definitely not least, the right property is an asset and an investment with future dividends. This is why a smart broker, or their corporate client isn’t just looking at what is now, but what could be, what’s on the horizon, and any prevailing trends that need to be considered.

A client with explicit return on investment (ROI) expectations or a particular appetite for risk – as just two examples – should place that information on the table from the get-go, as premises can be (and often are) serving the dual purposes of functional and financial.

Remember: business strategy should drive a real estate decision, not the other way round.

Click-to-collect and e-commerce: a windfall for CRE

Pivoting from in-store sales to tech-enabled sales was one of the saving graces of retail in 2020 when stores emptied out, and shelter-at-home orders dragged one. The data now shows that companies and markets better positioned to shift to e-commerce fared better than those that didn’t. 

The upside to shifting sales online, though, was that it contributed to a longer holiday shopping season, and drove record-breaking extension in e-commerce market penetration, with some reporting as much as 70% e-commerce sales growth last year. 

When a door closes…

On the commercial real estate (CRE) side of the retail coin, it has also driven demand for warehousing, fulfillment, and shipping spaces – a shift that creates an opportunity for a savvy agent or broker. 

…A warehouse opens

The World Property Journal, for example, reports that 99.2 million square footage of industrial space was taken up in the last quarter of 2020, making it the strongest quarter on record. Some 203.7 million square feet were absorbed during the course of the year, which is 27% up on 2019’s net growth.  

This overview perspective echoes the reports coming from regional data, such as in Wisconsin, as well as abroad in the UK and Europe, and Australia. According to Bizjournals.com, in Southeast Wisconsin, the industrial property market in 2020 took up square footage equal to that of all the new builds coming to construction completion in the area. 

In the UK, FM Magazine reports, that available space is outpaced by demand, and this is tricky at a time when companies will have to manage their supply chain very carefully due to Covid-19 and ‘Brexit’. 

Standing out

This kind of growth is a beacon of light in the otherwise dismal statistics of 2020, where economies around the world took huge strain – but it also draws attention to itself, which means more competition too. 

“Just because you have industrial or warehousing space on your books, don’t assume it’s a done deal,” cautions Jay Olshonsky, President and CEO of NAI Global. “Some companies are also cautious and risk-averse at the moment, so you’ll have discerning clients looking for only places that fit their needs and not every warehouse building will do that.”

At this point, analysts generally expect this trend to continue into the second quarter of 2021, although the growth line may flatten out somewhat as we begin to see a stronger return to in-person shopping in Q3 2021.

3 Ways to Embrace Green Building

In contemporary developments, environmental building has gone from being a ‘nice touch’ to a nearly mandatory consideration. Today’s consumer culture is passionate about choosing brands and companies that make eco-conscious choices, which have put the pressure on professionals to take tangible (and marketable) steps towards going green.

Resultantly, this has fueled a major trend in the world of commercial real estate. As their clientele demand all things green, our tenants and investors are hitting the commercial markets with green building in mind.

With success on the line, CRE pros need to start incorporating the green building module into their strategies. Fortunately, there are tons of different ways this can be accomplished – many of which won’t break the bank.


Let’s take a deeper look at green building and review some tips that will help CRE embrace this lasting trend.

Green Building Defined

Green buildings place strong importance on sustainability, waste reduction, and lessening a property’s carbon footprint. Successful green buildings are given the official stamp of approval by the Leadership in Energy and Environmental Design (LEED). There are more than 200,000 LEED-certified buildings globally and the trend is only growing.

It’s safe to say that nearly every commercial sector is taking steps to become more environmentally-friendly. Retail, multifamily, office, hospitality, and even industrial are all being pushed towards a greener outlook. This development is having a big impact on the physical spaces they inhabit.

The commercial industry is shifting its focus towards an eco-conscious building module. Data analysts anticipate that commercial property owners around the world will be spending $960 billion in eco-conscious investments by 2023.

However, that’s not to say that all green upgrades will rack up a big price tag. Here are a few great tips to help you achieve a building that’s good for both the planet and your bank accounts.

Keep Your Eyes on These 3 Trends

Apply these 3 environmentally-friendly tips to your commercial portfolio to seamlessly transition your buildings into a greener future. 

Include Green-Thinking In Daily Habits

Sometimes, it’s the little things that matter most.

It doesn’t always take a huge effort to cultivate a greener building. Instead, property owners can add a few easy-to-do daily habits to your regular maintenance routine. Get serious about recycling efforts, install a bike rack for tenants, and educate building users about cutting back on wasted water.

Green Leasing

Have you heard of the green leasing trend? If not, you’re missing out on an eco-friendly practice that’s not only helpful but also nearly cost-free. When writing the lease document, draft up energy-efficient reports, create recommended-use directions to reduce waste, and add in green requirements.

Energy-Efficient Everything

Whether it’s appliances, tools, or lighting; green buildings employ eco-efficient products as much as possible. A great way to get started at a low cost is by replacing the building’s older lights with LED lighting. LED lighting lets off more light and less heat, meaning less energy is being wasted.

Wasting less means spending less. Watch utility bills reduce after applying energy-saving tools throughout the commercial property.

Stay tuned for more CRE tips and news.

What’s Happening in the 5G World in 2021

The 5G revolution is unfolding before our very eyes – but if you don’t look closely, you’ll miss it.

5G, or fifth-generation of cellular technology, has been promising lightning fast speeds and incredible bandwidths since its initial announcement in 2019.

However, it was still a far-off reality at the time. 5G’s intensity requires a substantial technological infrastructure to actually deliver on those wow-factor promises. At the time, the network lacked the foundation for 5G to become the national standard of connectivity.

Since then, leaders in tech and communications have been working ardently to build the network to host 5G – and they’re not doing it alone.

Commercial real estate plays a significant role in preparing for the full-bodied launch of 5G. Being at the forefront of the commercial scene, CRE’s network of buildings will be primary homes to 5G tools and apps. This is creating a substantial link between this new technology and commercial real estate.

CRE pros need to keep their eyes on 5G’s progress. Here’s what we need to be watching in the 5G space for the new year:

Tracking 2020’s Progress

2020 was expected to be the year that 5G took off. This prediction only came true to a certain degree. In 2020, 5G has been slowly rolling out. The transition from 4G to 5G is proving to be a slower process than initially expected.

4G LTE remains the bulk processor for mobile network connections. Meanwhile, 5G’s infrastructure is gradually being built. Today, the primary goal of cellular companies is focused on development. Setting up, perfecting the tools, and working on facilitating a seamless transition remains top of mind for 5G in 2020.

The jump to 5G is immense. When 5G becomes the standard, running at its full potential, the world will see the tech boost we’ve all been waiting for.

What’s To Come in 2021

Announcements have already been made that 5G will be coming into tangible effect in the new year. Apple has already claimed that 60% of its new phones will be running on 5G in 2021. AT&T is also planning to scale its 5G network in the new year.

When this happens, the world’s latent tech capacity will finally be able to come into play. Right now, we have many technologies, such as smart cities and IoT buildings, that aren’t yet at their fullest potentials. 5G will provide the necessary power and speed to give the world a demonstration of the heights of modern tech.

In 2021, 5G will continue to be more active in the mainstream. By the time we’re approaching 2022, it’s possible that we’ll be on the precipice of a full 5G activation.

Impacts on the Commercial Space

In the coming years, expect PropTech to erupt across all sectors. Commercial real estate will be at the forefront of 5G’s transition – and professionals in this industry need to be ready to carry the weight. As we prepare to welcome 2021, now is a good time to strengthen the tech infrastructures of commercial portfolios.