My holiday wish list for commercial real estate – Press Enterprise
With Thanksgiving lately, Hanukkah in full swing, and Christmas in less than 30 days … it’s time for some Christmas cheer!
Countless children around the world – including our five grandchildren – are putting together their lists. So I thought it would be fun to draw my five hopes for the 2022 commercial real estate market – aka my gift list for the coming year.
So without further ado, here it goes.
A more balanced market. Industrial real estate – buildings where people make, store, and ship things – have fallen by the wayside for the past six years. Currently, fewer than 1 in 100 buildings have no residents!
We find an acute imbalance when there is a demand that exceeds supply, the lack of new buildings, changes in consumer shopping habits and an excessive appetite for things. As a result, the prices of listings have skyrocketed and many people are wondering if rents are sustainable.
So I would like a little more common sense.
Vanishing office insecurity. II have said many times that transactions take place when activity increases or decreases. But uncertainty is a killer for a company that relies on movement.
There have been some big Amazon office deals in the market – like the purchase of the former Orange County Register Printing Office in Santa Ana and the Bank of America campus in Brea. For both, however, a change of use is pending. The former suites of executives, middle management and office workers will be eliminated and replaced by countless blue delivery vans.
The pandemic changed the office paradigm. Companies countered with “hybrid” approaches that required smaller floor space, virtual workstations and less collaborative layouts.
I would like some long-term leases for large office buildings here.
Solution to the port problem. Talk about a perfect storm that’s like an anaconda eating a Thanksgiving meal or six: the accumulation of ecommerce containers slowly moving through the supply chain.
Many people are much better informed than me about the causes. All points in the supply chain are simply squashed – which leads to massive delays, bottlenecks and escalating price tags. Certainly some reduction in regulation would help. A little more storage space could help too. Are you asking America to stop shopping for a while?
I would like a stable flow of goods until July 4th.
Interest rates still low. Rising interest rates could be the best thing for us – like tearing off a bandage. But wow! How incredibly painful for an economy that depends on cheap money.
Our 10-year Treasuries rate – the benchmark for commercial real estate lending – has been hovering in the low 1% range for a number of years. Great for borrowers but terrible for savers. As our population ages and more of us have steady incomes, an increase in returns would be welcome. Don’t forget, however, that $ 1.2 trillion in stimulus goodies is to be paid back. Rising interest rates would make amortization more expensive.
All in all, I would like more of it.
A more diverse industry. Commercial real estate brokerage has been dominated by men in the past. However, two fall conferences that we attended showed a change.
I was thrilled to see over 40% women and minorities at the Commercial Real Estate Influencers Summit and the Society of Industrial and Office Realtors Global Event.
It is my wish that the face of commercial real estate reflects our world.
Allen C. Buchanan, SIOR, is a Principal at Lee & Associates Commercial Real Estate Services, Orange. He can be reached at [email protected] or 714.564.7104.