5 Big Changes Coming To Real Estate
From a true lack of land to the extinction of the check-in desk in hotels, here are five coming trends that will change the face of commercial real estate we learned during our 2016 Development & Construction Forum.
1. COST IS BECOMING SECONDARY
When it comes to tenants, location is paramount. And not just location, but coolness and details that have dollar signs attached to them. “The real estate cost themselves are small. The rest of the country has figured this out before Atlanta has,” says Hines Interests' Mark Ferris.
In fact, some companies will evaluate a set of trophy properties in multiple submarkets, versus just focusing on the submarket. And that's because for Corporate America, office space has become about recruitment and retention—being part of the local area, says Seven Oaks Co's Randy Holmes (here).
2. GOODBYE HOTEL REGISTRATION DESKS?
Maybe not completely, but North American Properties' John Kelley (here) sees the presence of huge hotel registration desks as an endangered species. Smartphones are quickly filling the void.
“You're not going to be using a key card. It's all going to be done by your phones. That's changing the way we look at hotels,” says Regent Partners' Adam Allman.
3. OFFICE NOT A COMMODITY
Whether it's the desire for mixed-use or to be in specific locations, the fact construction costs still have prevented the average developer from launching too many new office buildings to glut the market, or simply that there's now in Atlanta a real lack of viable sites, the reasons from our panelists were plentiful that Class-A office space in Atlanta is becoming more of a premium in this century.
“It feels like you're getting to the point where it won't get to be a frenzy where it's unhealthy,” Gensler Atlanta's James Puckhaber told our audience of nearly 400 commercial real estate pros. This constrained market has tempered the “pile-on effect” by developers that saw five office towers built on spec in Buckhead in the last cycle.
4. WATCH FOR THE GROWTH OF THE FRINGE
HJ Russell & Co's Jerome Russell says the growth inside Atlanta's urban core is making areas like Castleberry Hill—those just on the fringes—locations where development and activity is likely to spread. Take Old Fourth Ward, for example, which only a few years ago was not a desirable area. Today, it's one of Atlanta's hottest submarkets, Jerome says.
5. GLASS WILL TRANSFORM EVERYTHING YOU KNOW
There's technology advances coming with windows that will wow even the best sci-fi writers. Mark says the tech advances in glass will change the way buildings use and conserve energy. Windows that tint during the hottest part of the day, while letting in abundant natural light at other times. Even some glass that doubles as solar panels, so sides of buildings become energy producers. But, as Mark notes, that tech is expensive, and it will take one or two developers to “pioneer” its use before it's commonplace.