by Belinda D. Schuster, CCIM, NWI Commercial Real Estate
According to a twenty two page report by Deloitte “Commercial Real Estate Outlook 2018”, the commercial real estate industry will require more forward looking developers in order to adjust to Internet of Things (IoT) buildings, smart cities and mobility. The report goes into detail what may be on the horizon for the commercial real estate and construction industry. The new Hudson Yards $25 billion dollar megaproject in New York City is a good example. It is designed to be a connected, sustainable and integrated neighborhood of residential and commercial buildings.
Commercial real estate financing may be heading into the digital platforms as the growing RE fintechs (start-up companies that compete with traditional banking and financial institutions) continues to offer alternative innovative solutions and enhanced user experiences at a lower cost than traditional bank financing. The global online lending industry is expected to continue to grow to $1 trillion over the next five years according to the Deloitte report. RE fintech services offer leasing, acquisition, deposition decisions managing the underwriting process and accessing detailed financial models for property financing.
Collaborative economy or sharing economy is an ongoing trend. Collaborative CRE space usage is gaining popularity in areas where one works lives and shops. Airbnb has 1.5 million global listings for renting accommodations for both business and leisure travelers. Many of its users would rather enjoy unique lodging experience than a hotel. LiquidSpace, Regus, Desks Near Me and WeWork are online companies that offer a wide variety of short-term rentals of office space. The rentals range from one-day rentals, hourly use, or meeting rooms. In the retail segment Storefront offers retail space for short durations, such as pop-up shops.
Companies will continue to evaluate the need for long-term leasing of large office spaces. On demand space availability may fit the growing flexi-work employees and the long-term office leases may become obsolete. Brokers that specialize in leasing may have to evaluate their direction and new roles as digital technology continues to impact this segment.
The commercial real estate industry can no longer ignore the digital age and its growing influence on the industry. Real estate companies will be hiring science majors, researchers, and computer science majors to keep up with digital technology. Recognize the changes that are occurring, collaborate with fintech startups; embrace R&CA (robotic & cognitive automation), focus on talent and culture or risk becoming irrelevant. Check out the full Deloitte “Commercial Real Estate Outlook 2018” here.
Belinda Schuster, CCIM Northwest Indiana Commercial Real Estate, Valparaiso, IN 46383 November 17, 2017, Belinda@nwicre.com