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6 booming CRE specialties that probably didn’t exist when you were a kid

Jan 30, 2017

two men and buildings -112412-edited.jpegThe commercial real estate industry has always been subject to the volatility of the industries it strives to serve, so when shifts in technology, demographics and world affairs call for progress and evolution, brokers and other CRE professionals need to be prepared to act.

Some of the key shifts impacting today’s CRE professionals include:

  • Baby boomers are living longer, meaning services and housing for this group will need to become more available.
  • Millennials are shaking up living patterns by placing less value on owning a home and more value on living in cities.
  • The future of mobility may make many mainstays of urban design, such as parking lots and gas stations, obsolete.

On top of these changes, brokers themselves are increasingly finding the very practices on which they have always relied being challenged — namely, their focus on relationship building over using data and content to demonstrate credibility. Today’s broker can no longer get away with “not being a numbers guy.” Instead, successful brokers will transform themselves into relationship building data nerds.

With a slew of changes soon to be challenging how today’s commercial real estate professionals do business, it’s no wonder the specialties brokers choose to attach themselves to are changing, too.

As a result, many of the specialties available to brokers now may not have even existed 15-20 years ago. Back then, your list of possible specialities may have looked something like this:

  1. Office buildings
  2. Warehouse
  3. Retail facilities
  4. Multifamily housing

Now, the list of options looks much different. Most senior brokers probably never would have predicted the current demand for marijuana-related retail and warehouse space in states like Colorado, California and Washington.

Here, we’ll take a look at the some of the surprising specialties today’s brokers have to choose from.

1. “Experiential” retail

As more and more shoppers choose to make purchases online rather than in stores, thousands of traditional retailers, such as Macy’s, are shutting down brick-and-mortar stores. Acknowledging that consumer trends are changing, but that shoppers aren’t ready to abandon the traditional shopping experience altogether, prominent online retailers like Amazon are starting to open showrooms that allow consumers to experience products with the option to purchase them online. Brokers will be challenged with anticipating both the habits of consumers and the retailers that serve them.

2. Marijuana

With the substance now legal in California, Oregon, Washington, Alaska, Colorado, Washington D.C. and Nevada, commercial brokers specializing in providing 420-friendly retail and warehouse space stand to benefit a great deal. In Colorado, costs for warehouse space increased 60% after the legalization of marijuana.

3. Coworking

With over 7,000 coworking spaces worldwide and new centers popping up all over the place — from tech hubs like San Francisco to unassuming locales such as Asheville, North Carolina — coworking has become a booming commercial real estate specialty. The challenge in finding spaces suitable for coworking operators will be in targeting areas where these businesses can be successful enough to balance out the high operating costs of running a coworking space. Coworking members tend to be transient by nature, making it difficult for operators to maintain the membership rates necessary to be profitable. Location is everything.

4. Fulfillment centers in remote locations

With the boom of online retailing showing no sign of slowing down, demand for fulfillment centers in strategic locations is likely to remain high. In order to cut down on delivery time and inefficiencies, retailers like Amazon are willing to pay a premium for well located fulfillment space. The challenge for brokers specializing in this service will be availability. Demand for space well exceeds supply at this time, making this an especially interesting niche to watch in the coming months.

5. Energy efficient/sustainable buildings

Despite, or perhaps because of, lack of support for environmental initiatives from President Trump, demand for eco-friendly spaces is likely to remain high. Data shows that employees tend to be happier, healthier and more productive in offices that prioritize energy efficiency and other environmentally friendly initiatives, so many business owners are making this a priority. As a result, building owners are predicted to spend $960 billion on sustainability projects for existing buildings between now and 2023. Still, the challenge for brokers specializing in this field will be availability as developers scramble to catch up with demand.

6. Data centers 

Fueled by the popularity of cloud technology, demand for data center space is exploding. Data centers are spaces designed to power and protect the technology used by businesses. Although typically run by government agencies and large corporations, many businesses are taking matters into their own hands and building custom data centers as a way of increasing control over their technology. The challenge for brokers serving this industry will be to keep up with the rapidly changing needs of businesses seeking out data center space.

Download the rest of The Commercial Real Estate Best Practices Toolkit
Nell Gable

Written by Nell Gable

Nell Gable is a freelance writer who specializes in creating compelling content for CRE companies and startups.

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