Technology is shaking up the commercial real estate industry in profound ways. Tech innovations are increasingly transforming the way people work, get information and how they shop. These changes and their impact on commercial real estate should not be taken lightly, and those working within the industry will likely need to adjust certain business practices to remain competitive.
Adapting to Online Shopping Convenience
The ease and convenience of buying items with the click of a button and having them delivered anywhere in the world is having a huge impact on commercial retail spaces. Approximately 80 percent of Americans shop using e-commerce transactions and mobile purchases, and 15 percent report shopping online weekly. The rapid increase of online sales has disrupted the need for brick and mortar retail outlets, while increasing the need for more fulfillment center spaces. Many retailers are embracing the trend by pushing online sales and reaping the savings that were once spent on physical locations and to pay the salaries of staff members. Others are adapting and making physical stores focus more on experiential purchases and/or marketing.
Office Spaces in Flux due to Collaborative Technology
Technological innovations such as Podio, Skype, Go to Meeting and other virtual collaboration applications have made it easier than ever to work remotely. Will remote workers ever kill the concept of an office, though? Probably not, or at least not in the near future. Companies are finding that having employees in the office breeds more collaboration and productivity. However, high-speed Internet, the availability of open applications, greater employee satisfaction and decreased employer costs have resulted in a surge in the tally of remote workers. With the growing popularity of shared work spaces and co-working spaces, offices may look a bit more like multi-family in a sense as time goes by.
Greater Demand for Overseas Sourcing
Technology has improved communications and purchasing power for both retailers and consumers. However, this has opened the doors up for even small businesses to operate and conduct business overseas and take advantage of the competitive prices concerning manufacturing, sourcing and labor. One of the biggest impacts resulting from these practices is upon labor itself.
As overseas sourcing is becoming more common, more virtual assistants are also be hired in lieu of traditional employees. Essentially, the need for fewer physical employees and storage space for goods means that many offices and industrial spaces typically used for manufacturing will experience a certain degree of displacement and repurposing.
The Demand for Multifamily Properties is Surging
Along with drastic changes in technology, humans are transitioning their habits and patterns as well. There are more people changing jobs and moving to new cities at a faster pace than in previous years, with the Millennial generation leading the pack concerning transient employees. It’s easier than ever before to find a new job and a new home to rent thanks to technological advances. Opportunities abound nationwide, and the younger generation seems onboard for making changes on the fly.
Furthermore, this type of lifestyle seems to have caused a decline in homeownership which is at an all time low in over 50 years. The most recent data indicates that only 64 percent of the population own homes, with the remaining families opting for rental properties. While some individuals may choose to rent due to affordability, many take this route so they can have the option of moving at any time without the burden of having to sell a home.
At the end of the day, however, the more things change, the more they stay the same. Real estate is no stranger to technological advancements and, while things may look different on the surface, the underlying principles behind a good investment remain relatively unchanged.