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Commercial real estate will see 'era of less'

PriceWaterhouseCoopers and Urban Land Institute recently released Emerging Trends in Real Estate 2011, which indicated that the commercial real estate market will experience an ‘era of less’ throughout the upcoming year.

One of the key points is that America is seeing a return to multigenerational households, where children continue to live with their parents into adulthood because of the sluggish economy and decreased job prospects.B Likewise, parents are moving into homes with their children instead of retirement communities because of a lack of savings.B The year-over-year increase in households from 2009 to 2010 was the smallest since 1947.

Out of different property types, apartments are seen as the best investment in this upcoming climate, followed by industrial, hotels, office, and retail.

The end may be in sight for many industries, but they will all have to cope with this ‘era of less.’B For more information on this report, please refer to Retail Traffic.

Image: EquitySolve.com

A role for innovation: Chief Innovation Officers

Coming up with new ideas for business is not a new concept, but assigning the role of Chief Innovation Officer (CIO) is, and itbs one many companies are adding to their leadership teams. Citigroup, Coca Cola, Humana and other top businesses all have CIOs. This new role is being created in part because companies now have a clearer understanding of how innovation works and how to manage it in a business setting.

The role of a CIO embraces three main areas: bdevising a language with innovation, testing assumptions with prototypes and using structure to unlock creativity,b according to this Businessweek article. Learn more by reading the full viewpoint, bThe Role of the Chief Innovation Officer.b

Has your company employed a Chief Innovation Officer? What steps is your business taking to embrace innovation? Leave a comment to let us know.

Image: Seth1492 via Flickr

Survey: Going green popular in CRE

Even despite current economic conditions, many businesses view investing in energy efficiency as a priority in their buildings, according to the 2010 Green Building Survey that was conducted by National Real Estate Investor in conjunction with the U.S. Green Building Council.

As property owners struggle financially, going green still seems to be taking a hold in the commercial real estate industry. According to the survey report,

bAn overwhelming 95% of corporate respondents stress that green design is important in the site selection process. Many corporate executives are passionate about protecting the environment and saving energy: 82% say energy efficiency is important this year in selecting green buildings to buy or lease, compared with 63% last year.b

Developers are considerably less interested in green initiatives. The percentage who view green design as an important part of future projects has actually decreased since last year from 37 percent to 19 percent.

You can read more about the survey results here. Is your company interested in sustainability? Leave a comment to share your thoughts.

Image: nreionline.com

Trends in business innovation

Following the Product Development and Management Associationbs Global Conference this year, Business Innovationist Chris Dolan summed up 10 predictions he has for 2020, helping define a vision of companies of the future. Here are a few of the predictions we found most interesting:

  • Virtual offices become more standard, which could also result in more flexible work schedules. Read more about this from our former post, The virtual office: Is it worth the hassle?
  • More open source collaboration. Dolan suggests taking this past collaborating with employees within a company to seeking ideas from customers and clients as well.
  • Exercise breaks to enhance cognitive performance. Look for more gyms in offices and calendar events that include an exercise break.
  • Passion projects. Look for employees to be able to focus on matters that interest them while, of course, also completing their day-to-day work.

Read more about his future-of-business predictions here. Which of these do you see coming to fruition? Leave a comment to share your thoughts.

Image: business-strategy-innovation.com

Businesses using mobile apps

As companies have begun embracing smartphones for business, more apps for businesses are being developed, according to this Businessweek article. Google and IBM have internal mobile apps available for their employees to complete tasks such as scheduling conference rooms or doing expense reporting.

These companies are also expanding beyond the BlackBerry as the business-related smartphone, with some testing apps on iPhones and iPads.

Although these apps provide useful workplace solutions, they also create unique challenges for IT departments, including having to work with various mobile operating systems. Companies are handling this differently, with some allowing employees to choose from a variety of smartphones, while others are using very specific phones and apps.

Read more about business applications on Businessweek.com. What do you think about companies encouraging the use of smartphones and mobile apps? Leave a comment to share your thoughts.

Image: Robert Scoble via Flickr

Investors interested in core

Real estate investors are shying away from risky funds in new developments and shifting more toward the bcoreb funds of buildings that already are well-leased and looking stable, according to this Wall Street Journal article.

WSJ reports,

bThe trend has effectively split the real-estate market: Values of mature, well-performing properties are increasing, while turnaround situations continue to suffer.b

Buildings with higher vacancy levels are being avoided by investors, meaning their value likely will continue to drop. Wall Street has also taken note, with Goldman Sachs Group Inc. starting an asset-management business centered on bless-risky property deals.b Raising money from investors and pension funds, the business will try to acquire core property with long-range tenants and only small amounts of debt.

Read more about the investorsb switch here, and then let us know what you think. Will stable buildings continue to stabilize as barely leased buildings continue to suffer?

Graph credit: The Wall Street Journal

Do small businesses see opportunity in CRE?

Small business owners could see a glimmer of hope in this rough economy in the lower values of commercial real estate, but only 6 percent have purchased property during the last two years, according to the CIT Small Business Commercial Real Estate Study. In fact, more than half reported that they havenbt even thought about purchasing commercial property. Still, another 28 percent do think investing in real estate presents a bgreatb opportunity.

Some of these small business owners still face financial anxiety, as they canbt purchase real estate when they canbt afford the down payment for a loan. Small businesses are important to the overall economy as they employ about half of all private-sector workers.

You can learn more about the studybs results on Market Watch, and then share your thoughts by leaving a comment. Are you a small business owner? How do you view purchasing real estate in the current economy?

Image: The Entrepreneur Blog

Building expected to recover next year

A McGraw-Hill Construction forecast projects the U.S. construction industry will start to recover in 2011. The value of new construction projects starting next year is predicted to rise $445.5 billion, which would be up 8 percent from the low this year.

Although single-family housing is the sector expected to see the largest rebound in 2011, commercial buildings such as offices, stores and warehouses should see a 16 percent gain next year after dropping 17 percent this year and 43 percent in 2009. Additionally, bconstruction-starts hit a 50-year lowb this year, according to this article in The Wall Street Journal, so naturally the recovery is expected to be slow.

Learn more about the McGraw-Hill Construction forecast here. For more information about commercial real estate, the changing workplace, marketplace and occupancy trends and more, join us on Facebook (Morris Southeast Group) and follow us on Twitter @KenMorrisBroker.

Image: ell brown on Flickr

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