The world of work – or at least the world of the workspace – is undergoing a major evolution as a result of a changing workforce, technology, and the twists and turns of the modern economy. As a result, the commercial real estate market is also seeing a shift in demand due to how that space is utilized.
Advances in technology have allowed workers, particularly those in Generation Y and Z (who are most comfortable with tech), to be exponentially more mobile and more connected. This freedom and adaptability means an increasing number employees are able to work from home, the car, a hotel, or the neighborhood coffeehouse.
Similarly, economic changes have forced workers to meet financial challenges by adapting their approach to work. In the absence of full-time employment, they have embraced temporary or contractual work to help make ends meet. One leading analyst has referred to this as the “Gig Economy.”
In the course of the CRE revolution, cubicles have been torn down and corner offices dismantled. Instead, floor plans embrace open and collaborative spaces, with areas dedicated to small groups and focused work away from the maddening office crowd.
The end result of this design shift is a smaller footprint for many businesses. Mobile workers, it seems, don’t necessarily need their own in-house office. They merely need a place to log on while in the office.
A recent study found that workers in non-traditional employer/employee relationships grew from 10% in 2005 to 16% in 2015. To put these numbers in another perspective, between 2003 and 2008, 118 square feet was dedicated for each new office worker. By 2012, that number had dropped to 60 square feet.
The new workspace model, according to the World Economic Forum, means streamlining and cost savings for businesses, from small to large, start-up to established. For example, Aetna –which has long embraced telecommuting as a means of retaining employees – has reduced its office space by 2 million square feet, generating a savings of $78 million. In addition, its 1.3 million square-foot “office park of the future” was shut down and demolished.
Other companies, however, have brought back employees from the field. Yahoo, for one, believes that many great ideas are born in hallways and cafeterias – a nod to the strength of collaboration, or at least collaborative spaces in overall office design.
In a world in which concepts like Airbnb and Uber have become commonplace, it’s very likely that similar innovations will impact the CRE market.
Mature markets, it’s believed, may have seen a peak in rents. As commercial demands have changed, landlords have begun to lower rents or to consider possibilities that would have seemed taboo ten years ago.
One such idea is co-location or shared work environments, a concept that’s ideal for smaller companies, those that lack capital, or those that seek to avoid non-negotiable items, such as furniture. Rather than leasing their own spaces, these companies may be interested in sharing the same location, or at least the collaborative meeting areas within that space.
Two companies spearheading the co-location phenomena are Büro, based in South Florida, and WeWork, with shared locations around the world. By providing fast Internet services, stylish furnishings, conference rooms, monthly events, and a host of other office amenities, both companies are able to bring small businesses, entrepreneurs, and freelancers together to create a work community that’s inspiring and collaborative. Currently, Büro has more than 300 companies sharing workspaces across the Miami area.
Similarly, as companies crisscross the country for deals that best meet their new needs, there will inevitably be a void in the locations that were vacated. To help fill these voids, it will be necessary to do what tech companies have done all along: to think outside of the box.
South Florida continues to provide opportunity for CRE. The combination of weather, innovation, a vibrant multicultural workforce, low taxes, and new and improving properties are tremendous commercial benefits.
For a free consultation about CRE and shared work environment opportunities in the area, contact the Morris Southeast Group today at 954.474.1776 or reach out to Ken Morris directly at 954.240.4400 or via email at firstname.lastname@example.org.
Once upon a time, anyone with a commercial real estate (CRE) investment opportunity could only offer it, courtesy of a 1933 law, to a select group of people – only those with whom they had a substantial business relationship. That usually meant friends, family, and business associates.
All that changed in 2012, when President Obama signed the Jumpstart Our Business Startups (JOBS) Act. One of the key components of the law was opening up that 1933 investment restriction. With the new law, individuals earning more than $200,000 per year, couples earning over $300,000 per year, or anyone having a net worth of $1 million, excluding their primary residence, could invest.
Crowdfunding was – and is – a game-changer in the CRE investment market.
Although the country is now five years into the legislation, it took until 2015, when Titles III and IV of the law were enacted, for real estate crowdfunding to explode. For starters, these new components eliminated the $1 million net worth requirement, thereby opening up investment opportunities to an even broader range of people.
To date, statistics are overwhelmingly positive:
Now that investors no longer need to know a sponsor, there is a growing investor interest in crowdfunding platforms.
Benefits are equally apparent for the sponsors and developers of real estate projects. As interest rates gradually inch upward, developers need to look outside of the traditional fundraising box in order to raise capital for their projects.
With the JOBS Act, they have been able to take advantage of new technology via the Internet to reach a broader pool of investors. With more and more individuals participating, there is a greater opportunity to do more projects.
Experts agree that crowdfunding is able to benefit larger metropolitan areas and smaller cities. In a place like South Florida, that’s especially important. Our largest cities are surrounded by satellite smaller cities.
Assisting South Florida in the crowdfunding frenzy is its population. In addition to American citizens, many of the residents from Latin America, the Caribbean, and Europe are cash-rich but comparatively contact-poor. With the JOBS Act, they can more easily participate in real estate development both at home and abroad.
Morris Southeast Group is among the top commercial real estate brokers in South Florida. To learn more about commercial real estate investment opportunities in the area, contact our team today at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com for a free consultation.