The commercial real estate industry, and the world at large, will undergo disruptive change in the next twenty years. The disruption will result from the three trends:
· Growing use of self-piloted automobiles
· Rising sea levels, flooding, and global warming
· Millennial CEO’s
Growing Use of Self-Piloted Automobiles
Commuting times will be shorter once most cars on the road are self-piloted by a computer. As human error decreases, traffic will decline as well. An office property that had formerly been 30 minutes from downtown Chicago or 45 minutes from the CEO’s home in the North Shore may now be 10 minutes from downtown and 15 minutes the North Shore. Because self-piloted cars allow the CEO greater access to the location, the CEO should be willing to pay a higher rent at the property. Thus, self-piloted cars should shift rents and property values in most submarkets.
Rising sea levels, flooding, and global warming
As sea levels rise over the next century, secondary coastal markets will be lost in the resultant floods. Governments will spend whatever necessary to save major cities along the coast, but billions of dollars’ worth of commercial real estate in smaller cities and towns will be lost. This phenomenon will happen slowly, over decades, probably with the first significant losses occurring in 2030.
I imagine that global warming could be one of the causes of the next economic recession. However, I predict that there will be some global warming ‘winners’ in commercial real estate. Markets located in the interior of the country may be preferred by investors, landlords and tenants seeking refuge from the rising sea levels. Interior markets should win the dollars that leave the flooded coasts.
As a tenant representation commercial real estate broker, I spend much of my time developing relationships with local business owners and c-suite executives. Today, most executes prefer to speak through email, on the phone, or face to face. I’ve developed some great tools to help me find contact information (see Handy Tricks for Finding Contact Information) and meeting senior executives face to face (see Grow Your Business by Starting a Networking Group).
I have two younger brothers, one 9 years younger than me and one 15 years younger than me. By watching them, I have learned how the next generation of clients will be different from this one. My brothers communicate constantly with their peers, but they do so by texting and only texting. One of my brothers doesn’t have an email address; the other has one that he barely uses. They do not like to speak on the phone and they hate to leave voicemail messages. Once the next generation comes of age, brokers will have to completely adapt their sales systems to meet the communication preferences of Millennials.
By: Troy Golden
Senior Director, SCGroup Real Estate
Email Troy: firstname.lastname@example.org
Visit Troy's blog: http://oakbrookofficereport.org/
Connect with Troy on LinkedIn: www.greateroakbrookbusinessleaders.com
Visit the SCGroup Real Estate website at www.scgroupre.com