Two Tales of One City

by Alec Pacella for Properties Magazine January 2022

The dust has finally settled on 2021 and, for better or worse, it looked a lot like 2020. It’s that “better or worse” part that will be the focus of my annual wrap-up column.

I’ve used this theme a few times in past columns, sometimes I termed it “best of times, worst of times’ while other times I called it “glass half full, glass half empty.’ As has been said several times in the recent past, COVID has accelerated trends that were already present and the concept of ‘better or worse’ is no exception. To see what fared better and what fared worse, read on.

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Watch this space: Industrial boom continues into late 2021, and beyond

We’ve all seen how the Covid-19 pandemic gave the industrial sector the shove it needed to go from well-poised to interstellar. Now research from the Commercial Real Estate Development Association (NAOIP) suggests there is no slowing down for commercial real estate’s (CRE) newest darling sector.

The NAIOP’s Industrial Space Demand Forecast for Q3 2021 shows that “sustained growth in e-commerce [and] demand for industrial real estate continues to outpace supply”. This, they say, puts the sector in a state of net absorption that will continue throughout the year and into 2022.

Digging into the numbers

The authors of the report are Hany Guirguis, PhD, Manhattan College and Michael J. Seiler, DBA, College of William & Mary. They write that “the demand for industrial real estate still outpaces supply” even with “nearly 100 million new square feet delivered nationally since the beginning of the year, 450 million square feet currently under construction and another 450 million planned”.

Their data then boils down to net absorption of some 162.6 million SF in the second half of the year, and they state that they’ve “returned to their pre-pandemic confidence levels”.

Triangulating more data
The demand has of course been driven primarily by the boom in e-commerce. GlobeSt.com reports that e-commerce sales hit “a quarterly record of $222 billion in the second quarter of this year”, accounting for 13.3% of all retail sales. But there are contributing factors, such as growth in cold storage, materials and construction, manufacturing and medical industries.

With the combination of factors, CRE data analysts such as YardiMatrix are predicting the growth to stay buoyant through 2026. Yardi’s predictions include delivery of 348 million SF next year, 360 million SF in 2023, and up to 370 million SF in 2026.

New growth
There are other blooming products and industry categories that will only increase this demand. The cannabis processing industry is hungry for space in deregulated regions and in countries with widespread legalization like Canada and Latin America. Finally, there are superlative predictions for the industrial square-footage needs of the commercial space industry too.

No wonder, NAIOP CEO Thomas J. Bisacquino calls industrial “a bright spot in the CRE industry”.

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.

These Perks are Getting Employees Back into the Office

Over the past few months, office owners and team leaders have been doing everything they can to make their workspaces safe and healthy. Office buildings have undergone massive alterations to prepare for the full-scale return to the workspace… but when will that happen?

Changes to the Office Space

Today’s offices are contactless, tech-powered, and socially distant. Commercial property owners and residing tenants have teamed up to build an office space that does not put occupants at risk.

This required immense investment on the part of CRE and individual companies, but the result is an office that can accommodate workers safely. In these times, health and wellness are priceless.

Even though COVID-combatting protocols are being adopted across the sector, most workers are still yet to return to work. WFH remains as the primary professional landscape since COVID-combatting efforts did not convince workers to come back to the office.

If All Else Fails, Incentivize It

There’s something about amenities that wins people over.

Office tenants have taken this route to convince their teams to return to their workspaces. This new incentive-driven company culture trend is giving workers a reason to come back. But, beyond the attraction, office perks are also solving some of the key issues that today’s workforce has been dealing with since the pandemic.

For example, offices and schools closed at the same time earlier this year. Even though offices are slowly reopening, not all schools have welcomed students back again. As a result, workers with children cannot return to the office without paying for babysitters – which isn’t always feasible in these challenging financial times. Allowing team members to bring their children to the office with them is enough to solve one barrier keeping people away from the commercial workplace.

This is one example of how offices are adding perks to draw people back to work – but there’s more. Let’s look at 3 other benefits that are gaining momentum within the office scene as companies try to win back their teams:

Free Lunch

Free, pre-packed lunches are also becoming a norm for in-office employees. Companies are providing free meals for their workers who have come back to the office. Not only does this financially benefit team members, but it also mitigates the risks of having to enter and exit the office building to get lunch from external restaurants.

Learning Pods for Children

With workers bringing their children to the office, many companies are creating positive educational environments for the little ones. Companies are setting up learning pods for children – and they’re even hiring professional tutors to teach them.

Discounts on Parking

Parking at home is free, so offices needed to compete if they wanted to win workers back. Free or discounted parking is becoming another industry standard within the office sector as companies want to make the transition back to the office as smooth as possible.

Companies are heavily investing in their commercial operations to get their workers to return. Will these efforts introduce new amenities that expand the current workspace model?

3 Ways Brokers Can Protect Their Data

It’s nearly 2021 and nothing is more valuable than data. In today’s world of business, data is gold.

For commercial real estate, data has been playing an imperative role in shaping successful strategies. From small boutique brokerages to global firms, being data-driven is a must to keep pace with the industry’s contemporary movements.

When it comes to data, the most important thing is knowing how to properly leverage the information. Having data is necessary, but the value of data depends on how it’s used. As businesses strive to better flex their data capacities, a new concern is arising: data security,

Today, nearly every brokerage is safeguarding a hub of sensitive data. Information from every deal, asset, and client is digitally stored and used for analysis. This data needs to be kept safe – here’s why, and how your brokerage can protect its priceless data.

Why It’s Important to Keep Data Safe

The proper application of data allows businesses to make predictive analysis, helping them to better understand the next best moves to make.

This capacity is what makes data so valuable to contemporary business models. If you know what’s happened, you can know what to expect. Brokers who use data are able to better serve their clients, make confident moves, and handle their portfolios with a degree of foresight.

Data is valuable – there’s no question about that. But, keeping your data safe is a big responsibility. With industries turning to digital infrastructures at a rapid pace, cybersecurity concerns are skyrocketing. Brokers need to be sure that their data is not going to be stolen, leaked, or compromised in any way.

In today’s CRE climate, protecting data is protecting a broker’s most valuable asset.

3 Solutions for Safe Data

Commercial portfolios generate a massive amount of data. These 3 strategies will help professionals keep their data safe. This is what brokers can do to make sure that they’re taking the right steps:

Keep a Data Inventory

Staying organized the first step towards a robust data protection strategy. If you don’t know what your brokerage has, you won’t be able to keep it safe. Making a data inventory is a great way to keep track of your data, where it’s stored, and where it’s sent to.

Don’t Be Hit with Internal Fraud

Not all threats to data come from the outside. It’s equally as important for brokerages to guard against internal fraud.

For digital data, maintain encrypted access and security restrictions. Security clearance to access sensitive data should be a baseline practice for brokers. Paper-based data needs to be protected, too. Keeping sensitive documents stored safely is a wise protective move.

Have a Data Breach Emergency Plan

Always be prepared for a worst-case scenario. Forming a data breach emergency plan is required to develop a solid reaction plan. This includes proper training for all team members, planning the next steps, and preparing to move forward. Be ready to pivot, investigate, and solve the problem.

Data reigns supreme – be sure yours is safe with these best-practices.

For commercial real estate, data has been playing an imperative role in shaping successful strategies. From small boutique brokerages to global firms, being data-driven is a must to keep pace with the industry’s contemporary movements.

When it comes to data, the most important thing is knowing how to properly leverage the information. Having data is necessary, but the value of data depends on how it’s used. As businesses strive to better flex their data capacities, a new concern is arising: data security,

Today, nearly every brokerage is safeguarding a hub of sensitive data. Information from every deal, asset, and client is digitally stored and used for analysis. This data needs to be kept safe – here’s why, and how your brokerage can protect its priceless data.

Why It’s Important to Keep Data Safe

The proper application of data allows businesses to make predictive analysis, helping them to better understand the next best moves to make.

This capacity is what makes data so valuable to contemporary business models. If you know what’s happened, you can know what to expect. Brokers who use data are able to better serve their clients, make confident moves, and handle their portfolios with a degree of foresight.

Data is valuable – there’s no question about that. But, keeping your data safe is a big responsibility. With industries turning to digital infrastructures at a rapid pace, cybersecurity concerns are skyrocketing. Brokers need to be sure that their data is not going to be stolen, leaked, or compromised in any way.

In today’s CRE climate, protecting data is protecting a broker’s most valuable asset.

3 Solutions for Safe Data

Commercial portfolios generate a massive amount of data. These 3 strategies will help professionals keep their data safe. This is what brokers can do to make sure that they’re taking the right steps:

Keep a Data Inventory

Staying organized the first step towards a robust data protection strategy. If you don’t know what your brokerage has, you won’t be able to keep it safe. Making a data inventory is a great way to keep track of your data, where it’s stored, and where it’s sent to.

Don’t Be Hit with Internal Fraud

Not all threats to data come from the outside. It’s equally as important for brokerages to guard against internal fraud.

For digital data, maintain encrypted access and security restrictions. Security clearance to access sensitive data should be a baseline practice for brokers. Paper-based data needs to be protected, too. Keeping sensitive documents stored safely is a wise protective move.

Have a Data Breach Emergency Plan

Always be prepared for a worst-case scenario. Forming a data breach emergency plan is required to develop a solid reaction plan. This includes proper training for all team members, planning the next steps, and preparing to move forward. Be ready to pivot, investigate, and solve the problem.

Data reigns supreme – be sure yours is safe with these best-practices.