The Shrinking World of Commercial Real Estate
It has been a while so time to get my blog on again. There are always lots of things going on in the world but one thing that has become much more than a trend is the fact that people need less commercial real estate in properties of almost all asset types. Let’s take a look at each and explain what is going on. When we look at multifamily we see micro apartments exploding into dense urban areas and selling out quickly. Their success had already been established in other countries and the U.S. is no different in their appetite for smaller living units. In the suburbs people are selling larger single family homes in favor of smaller rental apartments. For office and medical space we have seen the impacts of virtual offices and telemedicine reshape (downward) the space requirements for many companies. This is only going to continue over time. Retail real estate is no different, with the most visible impact being the ever shrinking restaurant property size. Most restaurant owners have finally realized that they cannot make money with a very large location due to the high rent, food and labor costs involved. So they have retooled concepts to fit into smaller footprints, leaving the larger units vacant. And they tend to stay vacant because it is very expensive to cut them down in size and no one wants to lose the infrastructure which is very expensive to install and permit. And it is hard to ignore vacant anchor store locations, which are harder to fill than ever since the pool of tenants looking for that size space is also shrinking rapidly. Finally there is only one asset class bucking the shrinking trend and that is industrial. In an effort to compete with Amazon any company in the product or service business has to provide one or two day shipping to be competitive. Which means they either have to add that infrastructure to their operation or outsource it. Either way more space is required and that is not going to change regardless of the economy.
If anyone needs some assistance finding some commercial real estate, selling it, leasing their property or renewing their commercial lease please contact me for assistance at 561-756-1665. We specialize in providing outstanding service to our commercial real estate clients in Palm Beach, Broward, and Miami-Dade Counties as well as the entire state of Florida. Typically our fee is paid by the landlord so there is no cost to your business for our services. As always thanks for reading and have a great day.
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