It’s 2019 and experience is everything. The focus on experience has been steadily growing, and it’s become a full-blown obsession in nearly every major industry. CRE is no stranger to the concept of created experiences, and some sectors are totally dominating the game.
Let’s look at how these 4 rockstar CRE industries are utilizing created experiences to stay current and attract business.
Out of all of CRE’s sectors, the most avid participant in the wave of experience is retail. Due to the ever-changing market and the new age of consumerism, retail has been forced to undergo major reconfigurations. As we move into an increasingly digitized society, consumers are now able to easily order whatever they desire in one click or less.
As a result, the entire industry needed to step it up to meet the era’s expectations. In order to do so, consumer experience became the driving force fueling modern retail efforts. A REIT analyst talking to the Wall Street Journal states, “Mall tendency has changed. What hasn’t changed is the human desire to socialize”. Cultivating an experience within the shopping framework has become retailers #1 priority for 2019 and beyond.
Experience is also big in CRE’s multifamily realm. This is seen in amenities, special features, and other key components that accentuate the overall living experience for residents. Elements such as spas, gyms, pools, game and recreation rooms, and sports areas are all being expertly designed into multifamily plans.
Technology is playing a large role in creating these areas of experience. What you see are high tech features which make these areas interactive, responsive, and intuitive to the user. This establishes a unique and valuable experience - able to set brands apart from competitors.
As the world around us continues to provide exceptional experiences, it’s popping up as an important concern in some unexpected CRE sectors. As Millennials continue dominating the workforce, the office sector has changed its values to resonate with this confident and innovative generation.
Across the board, more and more companies are working to improve their brand culture. When 78% of the workforce strongly values a positive employee experience, it’s hard to ignore. By enhancing the professional experience, they seek to create a workplace where staff members feel happy, work productively, and feel valued. Companies are specially designing office spaces to create these experience areas and better accommodate the new era of work culture.
The influence of experience is slowly seeping into the industrial market. It’s common to see interactive opportunities popping up within industrial properties that coincide to the company’s focus.
This means on-site activities, such as tours or tastings, also extends into companion businesses - beer gardens within breweries or coffee shops inside of roasteries. This provides a whole new realm of business that is focused on providing an extraordinary and unique experience for clients.
Cultivating experiences is essential in our contemporary world. While humanity’s values and preferences change, industries need to adapt and find new ways to appeal to the public. What experience-based trends are you most interested in?
WeWork started the concept but it has only grown and expanded from there. The co-working or flex space model which began in NYC is fast becoming the new Uber of commercial office space. With large corporations abandoning the traditional work model for more flex space, it is changing how landlords attract and retain tenants.
Recently, landlords are discovering that they can use their building's flex space as an amenity to attract tenants. Flex space isn't just a coworking hub: it is bookable meeting space, conference rooms, event space, and multimedia rooms. Tenants are also demanding more from flex space operators. Here are 5 reasons why landlords should view flexible space as an amenity for their tenants.
#1: Great Way to Increase Foot Traffic
WeWork bought the Lord & Taylor site on 5th Avenue in NYC recently. The goal is to target retailers and combine the two in order to increase foot traffic to both. Other co-working firms are catching the wave and looking to broaden their tenant mix from simple office space to office plus. The ICSC (International Council of Shopping Centers) reports that co-working spaces will increase from 600 locations in 2010 to over 26K by 2020.
#2: Best Option for the Growing Independent Workforce
An NPR/Marist Poll reported at the beginning of this year that currently, 20% of the workforce is made up of contract workers. That number is expected to increase to 50% of the workforce over the next 10 years. Flexible space is the ideal solution for independent workers who may need workspace on a short term or temporary basis.
#3: Perfect Way to Use Up Unused Space
Most businesses aren’t looking to expand their office footprints, but flex space operators are, thereby keeping large office space in high demand. Flex space operators are targeting large shopping centers and corporate offices with a thousand or more employees to fill their empty office spaces with a diverse new mix of tenants. Large office parks and skyrises with plenty of vacant office space can mix in dozens of different businesses that can provide great amenities to the building’s tenants.
#4: Excellent Way to Provide Tenants More Flexibility
In the convenience economy, flexibility is the word. Office tenants have turned office spaces into a “pay-as-you-go” service. This flexibility allows entrepreneurs and startups to get their businesses off the ground without huge upfront investments and it allows landlords to keep the space occupied constantly.
Companies with their own office spaces are starting a new trend turning flex space into off-site meeting space. Breather, a similar model to WeWork except they provide very short term office spaces that rent on average for a day or two, provide flex space to companies to hold off-site conferences, meetings, and brainstorming sessions.
#5: Brilliant Way to Foster and Increase Collaboration
Along with the changes in workspace models is the change in work styles. Everything from office design to amenities is made to increase and foster collaboration among co-workers and among other tenants. According to one global study, over 60% of co-working tenants report an increase in focus and quality, while more than 90% reported that flexible workspace has aided business growth.
At first, co-working spaces made sense largely for startups and independents. Now everyone is using them. Turns out, it’s a cost saver even for established businesses.
Unlike a traditional office lease, tenants don’t have to go through months and months of negotiations and paperwork processing for co-working space. They aren’t even responsible for providing electric, internet, and a lot of office equipment to their employees – that’s the office owner’s responsibility.
With studies showing that workers are happier and more productive in co-working spaces – generally speaking – these types of offices are now in high demand. So how do you know if adding a co-working space to your office property is the wise thing to do? Here are a few things to consider:
Can You Be Competitive In Your Market?
The bulk of co-working spaces exist in large cities where the population density is high. These are the types of spaces in downtown Chicago or Manhattan for instance, that most small businesses couldn’t afford to lease, except through co-working.
You should conduct market research. Are there other co-working locations nearby that you will have to compete with? What are their rates and can you be competitive?
Will Your Office Design Match Your Target Tenant?
Some co-working spaces are like frat houses with creative teams literally bouncing things off the walls and playing brainstorming games. If you are targeting financial firms for example, you will need to consider a) the market for the type of tenants you seek, and b) an office environment that is conducive to the type of tenants that will be occupying the building.
Like office in general, the best plan is to provide a mixture of both in order to maximize the number of tenants you can attract.
Can You Offer Flexible Leasing Options?
There are tenants who will rent a space in your building one month at a time for years while others that will only be looking for a short term lease. One reason why those tenants choose co-working spaces is to avoid being locked into a long term lease.
Remember that if you do add co-working space to your office property, you have to be able to offer lease options that are more flexible than the ones that are typical to office. This will require some effort trying to keep the space occupied while attracting new tenants regularly to fill vacancies.
What Cool Amenities Could You Offer?
From apartment buildings to office parks, tenants want amenities that cater to their quality of life. That means office buildings with an on-site Starbucks, a dry cleaner, and a barber shop/hair salon, just to name a few.
When you decide to jump into the co-working space, amenities are a big part of it. What cool amenities can you offer your tenants? Space for collaborating and networking with fellow tenants is considered a huge amenity for any co-working space. You’ll want to make sure that you can provide shared space for all of your tenants within your office property.
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