Retail sales continue to skyrocket online; technology allows office employees to go mobile, and life moves quickly towards a technological environment.
The ongoing discussion regarding the “death of shopping malls”, the “transition of office space”, and even the “lack of need for real estate professionals” often centers on the millennial generation.
Change always accompanies time, and while it may appear there imminent doom looms on the horizon; this transition is nothing new to society.
Time periods similar to the Industrial Revolution and the Digital Revolution both brought changes, not destruction. Each sector of real estate will be affected, but in such a way that they retain a large amount of square footage as a whole.
INDUSTRIAL – the growing dynamic of ecommerce, and ordering anything and everything online requires extensive storage. Large warehouses and manufacturing facilities are necessary and will continue to thrive.
OFFICE – many employees are working from home, and with video calling, cloud storage, and countless applications to streamline workflow, the “desk with your name on it” is becoming less necessary. However, what we are seeing in this sector is not death but a reformation. Offices are forming into open floor plans with a strong focus on collaboration and creative environments. This is different, but still requires square footage.
RETAIL – There is a large perception that retail stores are on the decline relative to their size and square footage. This may not be relative to space, but the stores themselves. Millennials are extremely aesthetic and seek creative, engaging places. This is going to require an effort from retailers to create an engaging store experience that is fueled by tech and aesthetics. Ecommerce is rising, but the larger percentage of customers prefers to “window-shop” online, and buy in stores.
OVERALL– concepts may become smaller, more efficient, and open. But the square footage will not dissipate, but rather transition to warehouses instead of full retail. The new generation also seeks more options on food & drink and this will absorb more square footage.
There is no doubt that the face of commercial real estate is changing, and with this change brings new opportunities, and a chance to grow. I am of the opinion while brick and mortar will be impacted and become more efficient, the tangible locations of offices and retail businesses will never be lost. The fact is, people want to deal with people. Although our world moves towards technological interactions, the reality of face-to-face relationships is vital to being