It is important for commercial property managers to keep up to date with what is happening in the market. The demand for business premises is changing rapidly due to technological advances, the pursuit of sustainability and the recent health-related economic crisis.
In the current edition of the CCR magazineOur editor Michael Pallerino talks about how the pandemic has forced people to change the way they eat. He watches responsive companies ride and thrive (not drown) amid the waves.
Property managers must do this as well. You need to keep up with these trends and approach them creatively to stay competitive. We made it easy for you. Here are five commercial property management trends to watch out for.
Increasing conversion from retail to industry
There has been an increase in demand for e-commerce over the past year due to the pandemic. The resulting strain on stationary retail accelerated the wave of conversion of underperforming retail space into distribution facilities. According to a CBRE reportThe trend towards switching from retail to industrial did not start in the past year. By the summer of 2020, nearly 14 million square feet of retail space had been converted or converted into industrial facilities in the United States.
Shopping centers became warehouses and data centers.
However, not all sub-par retail space is ripe for the transition from retail to industrial. The main determinants are community needs and zoning challenges. If you want to remodel a parched retail space, consider the following:
- When the finances of such a transformation make sense versus another use.
- When there is a strong demand for industrial space in the region.
- When the local government is ready to review the zoning rules.
Changeover to shorter and more flexible rental conditions
The economic pressure and uncertainty caused by the pandemic also prompted companies to look for shorter rental terms and more agile office solutions.
according to to JLL (a global commercial real estate company) leases for office rentals are getting shorter and shorter. In the US, commercial tenants avoid traditional 10-year leases. Last year, the average rental period fell by 15% to seven years. They predict a further decline.
But tenants are not only looking for shorter rental terms. They’re also striving for more agile office solutions.
Before the pandemic, many companies hadn’t implemented agile office strategies. However, companies today want to be better able to respond to uncertainty. They are nearing the end of the leases trying to make the most of their current space. Arrangements like coworking memberships and creating outposts in suburbs are growing in popularity as companies make some of their employees work from home on a permanent basis.
Commercial property managers who recognize and consider their tenants’ need for agility are likely to be successful in the future.
Proactive contract terms
As the economic burdens continue to increase, particularly for retail and other commercial tenants such as restaurants, more and more companies are unable to meet their rental obligations.
According to the New York TimesAs of May 2020, 31% of tenants in the US were unable to pay their rent.
Of course, nobody wants to break a rental agreement. But circumstances, such as the shutdown order for all restaurants and eateries in some states, prompted entrepreneurs to do so.
In order to avoid further losses, tenants turn to legal principles such as force majeure in order to free themselves from contractual obligations. However, to invoke this principle, it must be stated in the contract and in the circumstances set out. Otherwise, tenants turn to the common law frustration doctrine, which is harder to argue and more complicated.
By including sophisticated force majeure clauses, property managers can take advantage of the growing demand for flexible leases.
The sustainability trend
Amid economic and health pressures, sustainability is a must for commercial property managers.
The new generation of millennials attach more importance to personal values such as work-life balance and ecological sustainability. These topics also resonate with end customers and investors.
Millennials aren’t just adopting one significant proportion of employees in the USA, but they are also supposed to take over as executive Director. Buildings that focus on employee wellbeing and environmental issues like energy efficiency and low carbon footprints are likely to receive more business from millennial companies.
Commercial property managers pushing green initiatives in their asset portfolios will thrive in such an environment.
The tech trend
The health crisis also sparked an increase in the use of technology by commercial property managers.
In just a few weeks, property managers had turned to technology to deal with the pandemic. Some of the measures included:
- Migrate your workforce to remote work.
- adoption Cloud-based property management software and productivity tools for the workforce.
- Moving client communication to online channels.
- Guide potential tenants through virtual property tours.
Property managers wanted to improve their agility. Technology is a central part of this drive and an essential part of day-to-day operations.
However, to stay nimble, property managers need to balance tactical and strategic moves. You should develop structured plans that anchor various technologies and data analytics. At the same time, they should invest in cybersecurity and data protection.
One last thought
The economic downturn triggered by the health crisis has presented commercial property managers with various challenges, particularly in the retail sector. However, some brands say They will increase stationary operations. These trends show that there are opportunities for property managers. Those who proactively involve tenants, communities, and government agencies to resolve specific issues will succeed. Embrace Technology solutions in real estate management improve their responsiveness and improve productivity.