Wednesday, 3 June 2015
The Changing Face of Real Estate
Yes, the Internet has turned our world upside down and we love it. It is these types of epic changes that provide tremendous opportunities for those of us that are willing to roll with the punches while looking for advantages to benefit our businesses.
The office space user market is also quickly shrinking, as more office work is being done online, at home or on the fly. Service providers of all types continue to move online, where the need for human interaction is kept to a minimum. Large sales and support departments, occupying large office space have literally disappeared. The job done by fifty employees ten or fifteen years ago is now being done by a few people with the aid of self-serve websites. Furthermore, some larger office users are starting to provide shared offices for their employees, based on a reservation system. All indication is that the demand for office space is on a steep decline.
Not all is doom and gloom! The future for industrial and residential real estate looks very promising. Industrial/warehouse space will be in high demand as product inventories held in traditional stores move to warehouses and are sold over the internet. The cost savings for retailers are tremendous, as high rents, expensive store displays and sales personel saleries are kept to a minimum.
So what does all this mean? The medium term to long term trends points to the following:
1. Conversion of some shopping centers and stores to other uses, such as entertainment centers, storage space, showrooms, etc.
2. Conversion of surplus office building to condos and coops.
3. Expansion of industrial parks and the construction of warehouse properties.
4. New home builders will start designing homes with office components and old homes may be extended or modified to incorporate home offices.
5. Spending less time away from home will mean fewer cars on the road. This can result in an increase in people moving closer to city centers and an expanding public transit system.
Many of us worry about change because we don't want our boat rocked. I say, fully embrace change and use it to get ahead of your competitors.