Displaying items by tag: real estate portfolio
We’re almost two years into the COVID-19 pandemic, and industries are still feeling the reeling effects. The commercial real estate (CRE) industry is no exception. The course has changed for many industries with a transformed landscape leading to 2021 commercial real estate trends that will carry on well into 2022.
As experts in the commercial real estate industry, Lavoro Consulting has kept a watchful eye on trends that affect our clients’ CRE plans, from engineering firms to property managers. As such, we've compiled a list of the most important trends we anticipate effecting commercial real estate beyond the next year.
6 Top 2022 Commercial Real Estate Trends & Predictions
1. Office Space and Remote Workers
The in-office workforce is shrinking and adapting to a new norm. The pandemic isn't over and companies are still making post-pandemic decisions about their employees' workspaces. With remote and flexible work still an upward trend, many businesses with office space find themselves contemplating a lease renewal for a space that is now too large for their transformed workforce.
That’s why many office tenants are planning on negotiating with their landlords for smaller units upon their lease renewals. With approximately 30% of Americans working remotely, many more companies are going to have to rethink the nature of their employee workspaces and downsize their physical business locations.
As mentioned above, office attendance has been declining for the past decade, paving the way for remote work. However, the COVID-19 pandemic has blown this trend out of the water. In fact, the National Association of Realtors (NAR) found the total loss in office occupancy to be 133 million square feet since 2020 Q2. Office attendance is now at a steep decline with employers and employees alike supporting working remotely in a location of the employees' choice.
This offers flexibility to workers and cost savings for employers on things like rent, furniture, and office supplies. With a large portion of the workforce transitioning to remote or hybrid work and employers downsizing their rental space requirements, we're seeing significant office vacancies from now into the foreseeable future.
3. Industrial Space & Warehousing
Industrial spaces and manufacturing warehouses are the property types that saw the biggest growth in 2021. This was due to the fact that these types of spaces were able to adapt quickly to the changing needs of businesses during this recent crisis. While some of these spaces may not see as much growth in the future, they will continue to serve as a valuable asset for CRE owners who can capitalize on them.
4. Mixed-Use Properties
A trend that is growing, and will continue to grow down the line, is the value of mixed-use properties. With convenience high on the list of many communities and urban developments, properties with two or more uses are seeing massive growth in the commercial real estate sector. All-in-one vertical properties mixing residences, co-working spaces, and lifestyle enhancement are in demand by millennials and baby boomers alike. A mixed-use development tends to be more sustainable as well, which is a top emerging focus for commercial real estate investors.
5. More Investment Competition
Investors and private buyers alike are taking advantage of lower interest rates. With a scarcity of residential properties, especially in urban developments, high net-worth investors are buying up commercial properties. With such a high demand and dwindling supply, the competition for CRE opportunities is high. The window is closing to take advantage of current interest rates and remaining investment properties.
6. Restaurant and Retail Spaces Will Suffer
Restaurants and retail in urban and rural areas have already taken a massive hit over the past two years, due to the pandemic. Areas that typically saw a lot of office workers and commercial buildings, like downtown areas and office complexes, are going to continue to see a lot of retail and restaurant closures and downsizing. With fewer employees being housed in large office spaces and more people working remotely, there are fewer people visiting shops and restaurants in urban metro areas. This will continue to contribute to more building vacancies in metropolitan areas compared to the suburbs where you’re starting to see restaurants starting to recover.
What Do These 2022 Commercial Real Estate Trends Mean For You?
Although the landscape has shifted across the commercial real estate sector, there is and will continue to be a growing demand for commercial investments. However, your investment choices and the way you manage your portfolios will look a lot different than before the global pandemic. In light of these events, investors should take note of these trends and ensure they account for them when making investment decisions.
At Lavoro Consulting, we can not only help you understand the current market conditions, but we can use them to your benefit. If you're thinking about investing in real estate, we'd be happy to help! Contact us for a free initial consultation.
And if you’re looking to restructure your current office space and lease to suit your evolving business needs, then you may want to talk to our experienced tenant rep and office fit-out specialists.
If you're making real estate decisions for your company without leveraging strategic real estate consulting services, you may be losing your company thousands upon thousands of dollars. The choices and approaches you make with your corporate real estate strategy can have lasting impacts on your bottom line and your company culture. If you make the wrong CRE decisions, they can have lasting financial repercussions for your company.
A strategic real estate consultant can help mitigate these risks and guide you with a multi-faceted strategy through the complex and ever-evolving landscape of corporate real estate.
What is strategic real estate consulting?
Strategic real estate consulting is a corporate real estate service provided to small and mid-size companies. Those companies will often have limited portfolios and infrequent, one-off projects, which means dedicated real estate staff is often out of budget. So these CRE tasks typically fall on the plates of departments that don’t have the bandwidth to deal with it every few years. That’s where strategic real estate services come in!
The best real estate consultants, like our team at Lavoro Consulting, have extensive experience in interior design, space management, and corporate real estate services. CRE consultants function as an extension of your staff to provide consistency, efficiency, and dedicated attention to your real estate, facilities, and leases.
Let's take a look at 5 ways strategic real estate consulting ensures every property you lease, buy, or sell meets the long-term financial and operational goals of your business.
Better Outcomes With Stakeholder Collaboration
When people participate in decision-making or planning that is going to affect their work, they’re going to feel a higher degree of ownership and commitment to that work. Involving stakeholders in your corporate real estate plan almost always generates better outcomes.
For instance, at Lavoro, we work with every stakeholder on a project to involve them in the strategic planning process so that your organization is unified in your desired outcome. We’ll bring all parties to the table and lead discussions about any changing or future needs for your business. This helps ensure that every party is on the same page with a shared vision. And it ultimately helps create a more cohesive environment within your organization.
Portfolio Strategy and Management for Multiple Office Locations
Managing offices across diverse geographical areas can be challenging, even for experienced professionals. The ability to create cost and operational synergies across your company’s portfolio often requires strategic real estate consulting services and CRE expertise that you may not be able to house internally. That’s where CRE consultants come in.
At Lavoro, our goal is to put your properties in the best financial position. We offer strategic, pragmatic solutions so you can feel confident in every real estate transaction you make. Our experts understand the unique challenges faced by businesses that operate in multiple locations. As such, we know how to leverage your real estate transactions and portfolio strategy to streamline operations while maintaining high levels of customer and employee satisfaction.
Mitigate Risks for Potential Commercial Real Estate Investments
As part of our strategic real estate services, we’ll conduct a number of scenario analyses so that you can accurately measure risk when evaluating a potential commercial real estate investment. We’ll consider all kinds of scenarios from worst-case to best-case, so you can make data-driven decisions for your business.
Our CRE analysis includes:
- A review of market conditions
- An assessment of current operations and costs associated with operating multiple locations
- Identification of opportunities to improve efficiencies through consolidation or relocation
- Analysis of capital requirements necessary to fund improvements
- Evaluation of alternative financing options such as debt vs. equity
- And an assessment of risks related to location selection, tenant mix, competition, and more.
Accurately Identify, Plan, and Manage Space Needs
Commercial leases are almost always long-term leases. This can make it difficult to align your organizational needs with your lease. Before your CRE consultants even start the search for your next commercial space and help with the lease administration, they’ll help you accurately identify your company’s space needs.
This means you’ll be asked questions like:
- What type of space do you need?
- How much square footage does your organization take up now?
- Where would you ideally want to locate?
- Do you have enough room for growth?
- Are you looking at an expansion opportunity? If so, which spaces should you target first?
These types of questions will help your CRE specialists identify, plan, and manage your company’s space needs.
Optimize and Repurpose Current Office Space with a Restack
When a company’s lease is almost up, leadership must answer a tricky question: “Should we re-sign and stay or should we move to a new space?”
If you like where you currently are, but your office needs a facelift, then an office restack is always a great way to revitalize your space. At Lavoro, we can assist with all aspects of your office restack so your team experiences minimal disruption and a smooth transition, all while getting the most out of every square foot of your space.
We’ve helped companies reposition their existing space by consolidating several small offices into one larger space, creating more efficient workflows, improving employee morale, and reducing overall overhead expenses. Our experience working with clients on this type of project has given us insight into how to maximize efficiency and minimize downtime.
There's no doubt that investing in commercial real estate requires careful planning and execution. You may want access to experienced corporate real estate professionals when considering buying a property outright or leasing from another party. Our CREs can provide guidance throughout the process to ensure better success.
At Lavoro, we believe that successful investments require thoughtful consideration of both short-and long-term goals. By combining deep industry knowledge with extensive hands-on experience, we'll help you navigate each step of the journey toward achieving those goals without bleeding money.
Learn More About Our Strategic Real Estate Services
If your business or organization needs assistance creating a successful strategic real estate plan, reach out to us today at Lavoro Consulting. We are here to function as an extension of your team and ensure your real estate decisions positively impact your bottom line and contribute to the overall success of your business.
We have extensive experience in both public and private-sector work in the corporate, retail, hospitality, and transportation sectors. We’ve worked with clients nationally and globally to provide workplace and portfolio services that make your spaces work for you.
Schedule a consultation today to learn more.
If your business operates out of multiple offices, you have a choice to make: hire a commercial real estate portfolio manager or manage the properties yourself? If you have a relatively limited portfolio and infrequent, one-off CRE projects, it may be tempting to try to cut costs and manage the portfolio yourself. But before you make a decision, it’s important to understand just how much value a CRE portfolio manager can bring.