Our CEO, Sheila Matuscak, enjoyed her interview with Andy Jake Jacob from DotCom Magazine. During their conversation they discussed the evolving commercial real estate industry, entrepreneurism, and how “we can all do hard things”.
Learn more about how CoeoSpace is re-imagining how space is found and shared.
Industrial commercial real estate (CRE) space fundamentals remain strong despite increasing construction costs. The demand for modernized industrial space is showing that despite these cost increases, the e-commerce fueled demand is keeping industrial warehouse space rents rising. Dallas-Fort Worth, the Inland Empire, Chicago, Atlanta, and Houston led the pack in industrial space under construction during Q1, 2021. The Urban Land Institute projects industrial rent growth to increase by 4% in 2021. In 2022, ULI projects 3.7% growth followed by 3.1% growth in 2023. Moody’s Analytics also predicts that industrial commercial real estate will have the highest rent increases of all asset classes this year.
While the common perception is the pandemic hurt all commercial real estate, that is simply not the case. Well located industrial space is clearly a winning asset class for industrial owners and investors. If you simply watch some of the top players doing acquisition and new development, the optimism for the future of industrial space is clear.
The Leaders in Industrial Commercial Real Estate Space
Several companies are taking the lead when it comes to industrial real estate acquisitions and furthering new developments within the space.
One such company well known in this asset class is CenterPoint Properties. CenterPoint acquires, manages, and develops premium industrial real estate. The commercial real estate it acquires is located near major transportation hubs, mainly focused on trucking infrastructure, large rails, and ports. It also helps government agencies create elaborate development projects, taking advantage of its security clearances that allow for projects to start faster. Their creative use of proprietary technology, innovative financing techniques, public and private partnerships as well as other innovative methods allows CenterPoint to provide their customers with a competitive edge to ensure their success. Since the first quarter of 2020, they have made over $1.3 billion in investments.
Another leading entity in the acquisition and new development of industrial real estate buildings is Dermody Properties. They have established themselves as veterans in the industry focused exclusively on developing, acquiring, and managing logistics, e-commerce, and industrial real estate for the past 60 years. Most recently Dermody closed its third commingled fund. Dermody Properties Industrial Fund III, L.P. (DPIF III) is a $1.1 billion fund comprised of previous investors along with new investors ranging from insurance companies to public and corporate pension funds. With momentum from its latest raise, Dermody Properties looks to continue to be a leader in this industry by acquiring, developing, and operating Class A, logistics-focused properties throughout critical hubs in the United States, per Les Shaver from Globe Street.com.
With properties in the Americas, Asia, and Europe, Prologis is also one of the top logistics real estate providers. Leading with its industrial real estate development experience, the Fortune 1000 company has acquired billion-dollar all-stock commercial real estate. It has also worked with companies such as Allianz for huge real estate investments. One service they provide is to suit industrial real estate properties to customers’ specifications and use renewable energy to promote a greener industrial environment.
Conor Commercial Real Estate focuses on community-driven real estate development. Their commitment to honesty and integrity is what has allowed them to build their reputation as a transparent developer in various asset classes, from industrial space to office space to multi-family and health care.
And of course, real estate icon Sam Zell’s announcement earlier this month that his REIT, Equity Commonwealth, is buying Monmouth Real Estate Investment Corp, a company that holds high-quality, net-leased industrial buildings, for $3.4 MM is quite a statement that Sam Zell who is known as the “grave dancer” and a visionary, clearly sees bright skies on the horizon for this asset class. Industrial real estate is no longer a simple search for “warehouse space for lease” or “warehouse space for sale”!
Technology Is Transforming the Industrial Real Estate Space
Innovation is revolutionizing the CRE industry and how real estate development is managed with companies such as those included above are creatively using proprietary technology and brownfield remediation models to stay a step ahead.
A few trends have become noticeable in CRE in 2021. Digital twins have emerged thanks to the mass data collected by the commercial real estate industry. Using data about the CRE building that’s being acquired as well as the Internet of Things (IoT) regarding building operations improves the efficiency as well as experiences of occupants.
Data and analytics are increasingly being relied on, especially with behavioral patterns and demand changing frequently. Industrial real estate companies use analytical data to inspect the risks and opportunities any demand and behavior changes present.
Artificial intelligence (AI) and robotics are being increasingly used. Leveraging technology is infamously slow in CRE and regularly tests the patience of those involved with CRE projects. Robotic process automation has sped up this process for companies. Companies use automation to reduce costs and boost the efficiency of day-to-day operations. Machine learning has also become a go-to digital transformation tool for industrial real estate companies to analyze building layouts during property management. AI can also help commercial real estate brokers with lead generation to help lease these properties quickly.
More Sustainable Technology Is Being Relied Upon
Another noticeable trend in industrial real estate development is the emphasis on introducing sustainable technology that makes properties safer and better optimized. More CRE entities are looking at improving energy efficiency, solar power, environmentally friendly roofing, and other technologies that boost value for investors and owners.
A tenant’s decision regarding a commercial real estate lease going forward could depend more on how many of these technologies are installed. They are cost-saving and are seen as major assets that will make buildings considerably more attractive to occupants.
Industrial real estate continues to evolve, and technology has made industrial space and warehouse space more sophisticated. To learn more about how the CRE industry continues to grow and to find space in your market, join us today!
CoeoSpace provides its “take” on Cohesion’s blog titled “Want to improve your building’s indoor air quality? We’ve got the solution.” CoeoSpace then further explores what will bring office tenants back to their office space.
Learn more here about how to bring employees back to enjoy the workplace!
Is commercial office space for lease “dead”? What will allow employees to feel safe?
At CoeoSpace, we are seeing tenants making indoor air quality or “IAQ” a key consideration in determining which commercial office space to rent. Because air quality will impact when employees will feel safe enough to return to their workplace, this is critical. Cohesion, a leading-edge company, headquartered in the Windy City of Chicago, that provides a smart building platform for commercial real estate, discusses in How to Improve Air Quality the importance of indoor air quality (IAQ) for office workers.
We agree 100% that a building’s air quality is an important topic. Because, it concerns every worker. Solutions range from the old-fashioned method of opening the windows to new technologies for air flow and circulation. Returning employees are also interested in other wellness and sanitation features. Specifically employees are now focused on:
The cleaning schedules for the lobby, elevators, shared tenant spaces.
The property’s social distancing policies.
Touchless doors, elevator cars.
Population control in high traffic and high visitor areas such as the lobby or fitness center and regular reporting so trends can be understood.
These new policies and technologies focused on the health and wellness of a building and a space have become paramount. However, we anticipate that future occupants still hold a high priority for:
Indoor parking and convenient or free parking.
Café’s and shared tenant areas.
And perhaps even basketball courts, bowling alleys and recording studios.
A Fantastic Example of Office Space for Lease in Chicago
One fresh delivery in Chicago’s West Loop CoeoSpace – Find Space. Share Space. Promote Space is 1201 West Lake Street. Because of all it offers, CoeoSpace’s Co-Factor gives this building a Platinum rating. In addition to premium amenities and quality, the property is in an amazing location. This office building offers exceptional options on every level from ground floor retail space to many office space choices. From a beautifully done, move-in ready office suite for 70 -80 people to spaces to design and build your own space for up to 24,000 square feet can be found here. So, it’s a great find for someone looking for state of the art space, top air quality, best in class management, and many amenities.
Hybrid Office Space?
CoeoSpace is hearing that the “hybrid” workplace will be the new world order. Because, employees are seeking “choice” or the freedom to work where they feel they can be the most productive. However, the details of how this will work is still unclear to most business leaders. So, workplace design will and should now be focused on health and wellness elements. This will allow their employees to feel safe and supported.
Over 80% of office workers want to get back to their office space.
Most humans that CoeoSpace has spoken with do not believe that complete remote working is an effective long-term strategy. Because “people need people” to collaborate and be creative and isolation hurts companies growth potential. So, the five day a week commute into the office seems to be a thing of the past for most companies.
The CoeoSpace prediction on back to the office.
We predict that in addition to office buildings becoming wellness oriented, that tenant workspace and design will evolve to support a company’s culture, brand, and employee engagement goals. Office space will now be created to meet employees “where they are and where they want to be.” So, we envision tenant spaces of the future will incorporate amenities such as a meditation room, socially distanced collaboration rooms, employee lounges and even sanitation stations for IT equipment. And, perhaps even a “mudroom”! As mudrooms are commonly cherished in many homes as the place to leave the dirty items until they are cleaned.
No one really knows what the office will look like post-pandemic. So, now is the opportunity to reimagine how space and buildings can evolve to maximize productivity. Also, how the office can improve an employee’s quality of life and ability to choose how and where they work. I believe the possibilities are boundless.
And that’s our take at CoeoSpace. Thank you Cohesion for opening the space for this important and timely discussion.