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Making First-Rate Investments in Secondary Markets

Smaller markets may yield bigger returns

While commercial real estate in major metropolitan areas remains in high demand and continues to command top rates, supply is limited and competition is fierce for the spots that do become available. Many investors are therefore turning their attention (and dollars) to secondary and tertiary markets. And with good reason—transaction volume in these markets soared from $2 billion in 2000 to $45 billion by the close of 2017.

Markets: A brief overview

Market definitions are fluid and can depend on the specific needs of a developer or investor, but there are general guidelines that can help professionals navigate the landscape. Population, job growth, capitalization rate analysis, occupancy rates, and the volume of sales and investment in a community are some of the traditional indicators in a market classification. Nontraditional indicators such as a region’s professional sports franchises or the number of direct flights may also come into play.

Out of the more than 50 metropolitan statistical areas (MSAs) with populations over one million and the 30 MSAs over two million, five to seven of them—New York, San Francisco, Boston, Los Angeles, and Washington, D.C., with Chicago and Seattle sometimes thrown in—are considered core markets. The “secondary” level includes places like Denver, Phoenix, and San Diego, with “third-tier” tertiary markets like Las Vegas, Pittsburgh, and Salt Lake City rounding out the list. Characteristics of this last category include a population of under one million, a mix of traditional and alternative economic indicators, and controlled but consistent job growth.

Why secondary and tertiary markets?

There are many reasons to consider investing in these smaller markets that will have an impact on both your budget and long-term prosperity:

  • There’s less opportunity in major markets. Many developers find themselves all but priced out of New York, Los Angeles, Chicago, Boston, San Francisco, and Washington, D.C. In tertiary markets such as Orlando and Austin, prices (and costs of living) are lower due to less competition—and populations are growing.
  • Eighteen is the new 24. While the “big six” mentioned above are valued as 24-hour cities, 18-hour cities like Denver, Nashville, and Portland are growing in popularity with renters and owners across generations.
  • E-commerce is a huge economic engine. The continued rise of digital retailers has pushed industrial production into secondary and rural areas, spawning healthy economic growth.
  • They are more stable during a downturn. And therefore, more appealing late in the investment cycle.
  • It’s easy to overlook them. Many investors are boxed in by traditional schools of thought and may miss the opportunities inherent in these markets.

Before you build …

While it can be tempting to jump into secondary or tertiary markets with both feet, it’s important to do your homework and make sure each region is a good fit for your investment needs.

Economics at a glance don’t tell the whole story. It’s important to look at a market’s individual traits and put them side-by-side with national trends. There are also factors outside of traditional drivers that can have a big impact on a region’s fortunes. Denver without cannabis or Orlando without Disney are far different investments than naked numbers may show on paper.

Finally, a dose of reality is always helpful. The growth of these markets can’t last forever and in the event of another economic downturn, be prepared to pivot should the local economy take a dip.

Invest early, be patient

In the words of hockey legend Wayne Gretsky, “skate to where the puck is going, not where it has been.” Early investors in secondary and tertiary markets may find a great opportunity where others haven’t yet ventured. Morris Southeast Group is proud to serve South Florida—one of the nation’s most vibrant and exciting secondary markets—and hope you will consider partnering with us. For a free consultation on property management services or commercial real estate investment, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Are Multistory Warehouses on South Florida’s Horizon?

A new concept may provide a solution to the need for warehouse space. But it has its own challenges

For several years now, we’ve all heard how e-commerce is changing the retail landscape. As consumers continue to click to shop, there is a greater expectation for rapid delivery. For e-retailers, that means establishing local distribution centers, most likely using vacant warehouse space or newly built facilities close to urban centers and airports.

At the moment, in locations like Miami-Dade where population is dense and available space is sparse, that formula seems to be working. But e-commerce shows no sign of slowing down and more distribution space will be needed. And the solution may involve looking upward.

Is it time for the warehouse of the past to go?

Today’s warehouse usually comes in one size: sprawling. Very often, these structures took advantage of open land on the outskirts of populated areas. They were designed to be cavernous structures, a holding place for goods stacked to the height of the high ceiling, able to manage forklift maneuvering and trailer deliveries.

In places like Miami and other densely populated urban markets, the outskirts have disappeared. This lack of buildable land has increased its value, which in turn has led to rent increases in buildings that already exist.

New tenants are shopping for space

At the same time, the tenant base has changed. In the past, most tenants would be content with 20,000 to 30,000 square feet of warehouse space but with a changing marketplace, many tenants are now seeking ten times that amount. And some experts predict there are about 10 years of available square feet remaining.

While a decade may seem like a long way off, the impact of Miami’s unique predicament is already being felt. Rising rents are encouraging potential tenants to shop for better deals, and many of these can be found north of Miami-Dade. Both Broward and Palm Beach counties tend to have lower rents and more space available, and both are close enough to Miami-Dade to still be able to provide efficient and rapid delivery.

The multistory warehouse: a potential solution with challenges

Miami is seen as a potential market for the multistory warehouse, and although it does seem to solve a problem, it also runs into a few challenges that are uniquely American. Typically, multistory warehouses are located in dense areas. As a result, their design often involves tighter turns on ramps and in aisles, as well as loading and unloading areas on each of the floors.

At first glance, this doesn’t seem like much of an issue—until one considers the size and length of the typical American tractor trailer, a mainstay of the nation’s delivery of goods. In Asian and European cities, this wasn’t too much of an issue since they already use smaller trucks that are easily maneuverable in tight city streets and on warehouse ramps.

In America, big trucks could bring urban traffic to a standstill which could delay the movement of goods, which could then eat into profits. While smaller trucks and vans could solve the issue, developers and potential tenants may see compact vehicles that transport less product as inefficient, too risky, and too expensive.

Why it’s important to consider a multistory future

Generally speaking, multistory warehouses are a new concept. As a result, initial rents would be higher, and the tenant would need to feel especially secure that the investment would be worth the return. That being said, can the Miami-Dade market afford not to look at warehousing solutions for the future? At Morris Southeast Group, we have always felt it’s important to look ahead in order to meet the CRE challenges and changes that are sure to come, from multistory warehouses to using  virtual reality to prepping for climate change. To learn more about property investment opportunities and our other services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Hipsturbia: CRE’s Vibrant New Home?

How hipsters as well as many other fleeing city-dwellers could remake the suburbs

From Brooklyn to Boca Raton, the once ultra-hip urban core of America’s cities now finds itself beyond the reach of many of the professionals who helped make it so desirable. These former residents are fleeing big metropolises in search of affordable rents and mortgages, safe schools, and open space. But they still crave the comforts of urban life—walkable neighborhoods, vibrant food and culture, access to the city—and, where these features don’t yet exist, they may bring these qualities with them.

This migration marks a new take on the move by an earlier generation, which left cities out of fear for their safety due to rising crime rates. Now, city dwellers are leaving because they simply can’t afford to live there.

Neighborhoods shift

This shift has become a large enough trend that some realtors now specialize in it. One realtor spends much of her time moving New Yorkers out of New York (85 percent from Brooklyn alone), to “laid back” villages and towns in Westchester, along the Hudson River, and in suburban New Jersey—areas once thought of as boring bedroom communities.

The youngest (and largest) generation makes up a significant portion of those making this move. According to global real estate company CRBE, approximately 103,000 more millennials ages 25 to 29 moved out of cities than moved in, and 167,000 more ages 20 to 24 did the same.

Granted, some of this migration can be attributed to underemployed young professionals moving back into their parents’ basements – but a significant portion moved to find a more affordable lifestyle. And it doesn’t stop with millennials. The numbers for Gen X are even more striking: 660,000 more fled cities than settled in them.

Where are they going?

Yes, these young professionals are heading to the suburbs. But not just any ‘burbs will do.

No sprawling neighborhoods with few sidewalks surrounded by causeways clogged with big box stores. For these former urbanites, a healthy mix of affordable housing, locally-based food culture, and cultural literacy are necessary ingredients to complement the leafy-green streets. Towns like Irvington and Hastings in New York, Homewood, and Berwyn near Chicago, and Doral and Plantation in South Florida have stepped up to fill the bill.

Developers have noticed. Many towns within striking distance of the Big Apple have significant building projects underway and in the planning stages:

  • Westchester County saw a seven-fold increase in rental units from 2015 to 2018.
  • The value of new developments in Yonkers grew 50 percent from 2015 to 2016.
  • New Rochelle is in the midst of a $4 billion redevelopment plan.
  • White Plains, Sleepy Hollow, and Ossining are among the towns undergoing similar growth.

What do they want?

In short, these new transplants want the best of urban life, through a suburban lens:

  • Schools. Educating children in urban schools can be a challenge. Suburbs often have fewer students per teacher, and more resources on hand.
  • Walkable downtowns. Former city dwellers are setting up shop on main streets across suburbia, transforming downtowns into havens for artisanal chic.
  • Vibrant food culture. Like their shopkeeper counterparts, restauranteurs and mixologists are bringing the farm-to-table aesthetic a step closer to the farms themselves.
  • Access to the city. Many of the new and upcoming building projects are known as “transit-oriented developments” and are placed squarely in the path of commuter stations.

South Florida is seeing the CRE shift

While much of the focus of the “hipsturbia” movement has been focused on places like New York City, South Florida is no stranger to the trend. Some CRE developers have increasingly turned their attention away from downtowns like Miami, West Palm, and Fort Lauderdale to put down stakes in the likes of Doral, Plantation, Sunrise, and Boca Raton. Indeed, 64 percent of new construction in South Florida has moved to these suburban markets.

Chief among the reasons for this shift are workers reaching their breaking point on commute times and traffic congestion. On the developer side, land costs are significantly less, sometimes by as much as $10 to $15 a square foot.

Make no mistake, the vibrant urban cores of our cities aren’t going anywhere. But just as a rising tide lifts all boats, the suburbs are now seeing a real share of that vibrancy come to their communities. We at Morris Southeast Group are excited to see where this trend leads and are ready to work with you on your CRE project, no matter the locale. Call us at 954.474.1776 for a free consultation on commercial real estate investment or property management services. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Opportunity Zones & Commercial Real Estate in Florida: The Potential & Pitfalls

Opportunity Zones & Commercial Real Estate in Florida: The Potential & Pitfalls  on morrissegroup.com

A tax incentive that could build communities

A hallmark of the Tax Cuts and Jobs Act passed in 2017 was the creation of Opportunity Zones. In short, the program was another effort to encourage investment in economically depressed communities around the country. And true to the current state of politics in the country, both cheerleaders and critics were quick to voice their opinions.

In 2018, Florida joined the list of states eager to participate in the program. The candidate neighborhoods, identified as census tracts, represent counties throughout the state but South Florida leads the pack in the number of communities in need of investment. Nevertheless, nearly two years after its passage, Opportunity Zones (OZ) remain a highly debated topic.

How Opportunity Zones work

The basis of the program is to promote economic investment while offering a tax break incentive. In short, when taxpayers sell an appreciated asset, they can then invest that gain in governor-nominated census tracts. Some key details:

  • If the amount of the gain is invested in a qualifying opportunity zone within 180 days, the gain is not included in the investor’s income until the investment is sold or when the program comes to an end on December 31, 2026.
  • If the OZ investment is held for at least five years, the taxpayer will receive a 10% discount on the capital gains tax. If held for at least seven years, that discount increases to 15%. Because of the December 31, 2026 deadline, taxpayers must invest no later than December 31, 2021, to receive the 10% discount, and no later than December 31, 2019, to receive the 15% discount.
  • In addition, if the taxpayer holds onto the Opportunity Zone investment for 10 years, there will be no taxes on the sale of the new investment.

Pros and cons of Opportunity Zones

Naturally, there are pluses and minuses – philosophical and economic – to investing in Opportunity Zones. For investors, it’s a tax incentive that also holds the potential to do good: reduce poverty, increase employment, and spur growth in some of the poorest communities in the nation. In fact, of the top 10 cities predicted to benefit the most from the Opportunity Zones program, five are in Florida: Orlando (1), West Palm Beach (2), Tampa (3), Fort Lauderdale (8), and Miami (10).

Critics, on the other hand, say, “not so fast.” Some point to previous programs that they say failed in the long run, as well as the number of people who would be displaced as a result of living in an Opportunity Zone and the convergence of investments in neighborhoods that were already seeing a surge in investments prior to the start of the new law.

Investors need to pay attention

Even in the midst of the debate, though, opportunities are there – but for the investor, the best advice is to proceed with caution, for some very good reasons:

  • The purpose of the Opportunity Zone program was to encourage investment in very poor communities. As a result, investments may carry more risk than if one were to invest in a more solid, established neighborhood. If the investment results in a loss for the taxpayer investor, that loss may erase the initial benefit of the hoped-for tax break.
  • Opportunity Zone investments are managed through “Qualified” Opportunity Funds (QOF), which are partnerships that can be formed and managed by anyone. In other words, “qualified” doesn’t necessarily indicate that the QOF and its investments are under the umbrella of any regulatory agency. The onus is on the investor to do the vetting.
  • It’s also important to keep the program’s end date in sight. On December 31, 2026, the taxman will come knocking to collect the capital gains tax, regardless of if the investment has sold. Again, the onus is on the taxpayer/investor to have the funds to pay that tax.

Opportunities in South Florida

Morris Southeast Group is excited about the possibilities found in Opportunity Zones throughout the region – especially when one of these investments is researched thoroughly and represents the right move for one of our clients. To learn more about property investment opportunities, and/or other services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Start Now: Prepare Your CRE Property for Hurricane Season

Don’t wait for the warnings

While it may seem a far way off, June 1 is right around the corner – the start of the 2019 Atlantic hurricane season. You don’t have to be a meteorologist or climatologist to know the far-reaching effects that hurricanes have on South Florida. After a storm hits, the future of the local economy sometimes hangs in the balance, and CRE plays a crucial role in helping get businesses and neighborhoods back on their feet.

This makes it all the more important to set your disaster preparation in motion to protect your commercial property from mother nature’s wrath.

Review your insurance policy

Don’t wait until your property is in the midst of repairs or a rebuild to consult your insurance policy. When prepared properly, these policies are living documents, adapting to the ever-shifting risk landscape. Review them annually, if not more frequently, to be sure they accurately reflect your understanding of what will happen once they take effect.

Some questions to consider:

  • Do you have a flood insurance policy through either the National Flood Insurance Program (NFIP) or a private company, and what does it cover? Policies through NFIP are often insufficient to cover most commercial property needs.
  • Are there any limitations – in any policy – on coverage in the event of a hurricane or named tropical storm?
  • Does each tenant have mandatory insurance (if so, usually required in the lease)? And if they do, do they have proof of insurance?

Make a plan

When that “Hurricane Watch” alert flashes across your screen, it is typically too late to begin complete preparations for what’s likely to come. Ideally, the planning process begins every January – just over a month after the close of the previous season – which will give you the time and clarity to properly plan your disaster response.

Every CRE business should have the following on their active agenda, even while hurricane season is the faintest glimmer in the distance:

  • Write a hurricane plan with step-by-step instructions for each stakeholder on how to protect your facilities during the storm. This should include a communications component that outlines the property manager’s responsibilities to keep key personnel informed throughout the hurricane and its aftermath.
  • Be clear about what triggers the plan going into effect.
  • Set evacuation procedures and allot certain times of the year to drill your teams in them.
  • Establish protocols to secure and safely back up all digital properties and equipment.

Once that “Watch” bulletin pops up, these protocols should be put into action. If you wait until the alert elevates to a “Hurricane Warning,” time may not be on your side. As always, contact your local emergency management agency to learn about specific risks in your area.

Hurricane-proof the property

Some hurricane preparations will come in the form of standard facility maintenance, such as trimming trees, cleaning roofs, and clearing gutters. But there are a number of additional steps to take in order to fully protect your property:

  • Examine all doors, windows, and the roof to make sure they will keep out water and strong winds.
  • Stock extra fuel for generators (and test them regularly).
  • Securely store outdoor fixtures including building signage, trash cans, and promotional displays.
  • Book your clean-up crew now and avoid the scramble after the storm hits.

Stock your supplies

In the event that a storm temporarily forces you and your staff to hunker down at work, you’ll want a fully-stocked supply of essentials to get you through until the sun shines again. Some items to include:

  • Food and water, such as non-perishables (energy bars, dehydrated fruits and vegetables, and canned items) and at least three days of purified water (typically two quarts per day, per person).
  • Flashlights, glow sticks, and flares.
  • An up-to-date First Aid kit that includes supplies to treat broken bones and heavy bleeding. When the storm hits, it is not a good time to discover you have torn bandages or expired medications.
  • Lightweight blankets with fire and shock retardant.
  • Two-way radios, portable radios, and, of course, batteries. Also consider radios that power up by crank and don’t require electricity (many of them can also charge your phone).

South Florida has – and needs – a lot of experience in hurricane prep

While the exact path and timing of a storm can be uncertain, the preparations needed to withstand it are not. With proper planning and regular maintenance, your team and your property will be ready when the winds begin to blow. Such diligence minimized the impact of Hurricane Irma on South Florida’s CRE market and set new national benchmarks for building codes and construction standards. Morris Southeast Group is proud to serve this market and invite you to consider partnering with us. For a free consultation on commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Motels Are So Cool, They’re Hot

Retro revivalism is breathing new life into roadside accommodations

There’s an old joke that if one holds onto old clothes long enough, they will eventually be back in fashion. While it may be some time before ‘70s polyester leisure suits are chic again, the same cannot be said about motels.

What was once a dilapidated and dying element of the hospitality industry has undergone a revival revolution in recent years, and the momentum isn’t slowing down. In fact, it’s quite the opposite. With a limited number of properties available, more and more smaller independent and larger hoteliers are working feverishly to make kitsch cool – and South Florida, because of its long love affair with midcentury architecture, is at the heart of the motel revival movement.

The birth of the motel

In many ways, the motel industry is the result of a post-WW2 booming middle class from decades ago. With a strong economy and automobiles, American families embarked on road trips, and motels satisfied a need for affordable accommodations located near roadside attractions, such as small amusement parks, western town re-creations, and caverns.

As the nation became more connected through an extensive and well-linked interstate highway system, motels and local roadside attractions were often bypassed. Travellers were more likely to stay in no-frill chain accommodations located near on and off ramps. In order to stay afloat, motel clientele changed, its reputation now tarnished by whispers of extramarital affairs, hourly rentals, criminal hideouts, and overall seediness.

The birth of the new motel

In the decades since the motel’s decline, more branded chain hotels swept in to fill the void and luxury hotels grew more luxuriant and expensive. A younger generation of travelers, weighed down by college debt and a weaker economy but valuing experience and affordability, helped to put Airbnb on the map.

The intimacy of renting accommodations in a stranger’s house, though, wasn’t for everyone – and inventive and creative hoteliers see an opportunity in the supply of aging motels. Often, these relics had remained in families for generations or had owners who were simply overwhelmed by the challenges of running a profitable operation. Either way, buyers and investors found eager sellers – and the revivalism revolution began.

How to make an old motel new again

The new hoteliers have pretty much stumbled upon a formula for re-doing an old motel, one that celebrates the personality of the structure without demolition. That formula’s success, though, is based on a few key elements:

  • No matter where a motel is located, from Austin, TX, to Jackson Hole, WY, to wherever the road takes you, it’s important to be restrained in design. Kitsch can quickly and easily become a cliché.

  • When considering a motel update, it’s important to leverage the work of local craftspeople and artisans. It’s a perfect way to celebrate the local flavor and to add a sense of uniqueness to the traveler’s stay.

On a local level, several South Florida motels have found a way to pay homage to the region’s historic and nostalgic architecture while creating a hip-but-authentic place for not only a new generation of travelers but also an aging Baby Boomer population looking for a stroll down memory lane. In Miami, there’s Vagabond and the New Yorker. Both are known for their nod to classic vintage style and an independent and community mindset. A little further up the coast, in Fort Lauderdale, is Manhattan Tower, with its iconic tower and Intracoastal views.

Searching for a hidden gem in SoFlo

At Morris Southeast Group, we’ve written extensively about the opportunities to repurpose old structures into something else – and we think it’s fantastic to repurpose an old motel into a celebration of its glory days that serves a new market of travelers. To learn more about hidden retro gems and other property investment opportunities, and/or our other CRE services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Looking For A Building? Print It!

The 3D printing revolution is on the horizon and the technology is already impacting construction and CRE

Although it was developed in 1984, it took until quite recently for 3D printing to become part of our everyday vernacular. In recent years, its use has grown by leaps and bounds – from printing artificial limbs and organs to weapons to food. It seems that the only thing that might hold back 3D technology from here is lack of imagination.

That’s why it’s time for anyone interested in CRE to pay attention. While experts debate how long it will take for 3D printing to become a viable, common technology in the real estate business, there is no doubt that it will – and that it is set to have an impact on all aspects of the industry.

The 3D printing future is playing out now

When it comes to engineering and design, 3D printing was once considered a novelty act – a tool to create three-dimensional models of future projects that clients could examine from all sides – and household décor items. Printers, though, have gotten quite a bit larger and the technology has jumped forward.

Using a technique called “additive building” or “additive manufacturing,” the 3-D printer scans a blueprint of a structure, and then “prints” with a soft concrete that is applied in stacked layers. Around the world, construction and technology firms have joined forces to make this technology possible, and nations are taking notice:

  • China: In 2015, a 3D printed apartment building was constructed at a rate of one floor per day for $160,000.
  • Japan: In less than 45 days, a Japanese-based firm constructed a 4,305 square-foot 3D printed concrete house that could reportedly withstand an 8.0-magnitude earthquake.

  • Dubai: Perhaps because of the available capital to invest in the technology, innovation here is the greatest. It’s home to the world’s first 3D printed office building – completed in 17 days. In addition, with the help of a 20’ tall, 120’ long, 40’ wide 3D printer, a 2,700 square-foot office space was created on the campus of the Museum of the Future. Government officials are so taken with the technology that they have committed to the goal of 25% of Dubai’s buildings being 3D printed by 2030.

  • As a result of these projects, numerous other countries from Egypt to Haiti to El Salvador are all embarking on 3D printing projects to solve housing crises and build in difficult-to-reach locations where traditional construction methods are impossible at best.

3D printing on the home front

In the United States, 3D printing has been relegated to specific projects, such as efforts to restore the facades of historic buildings in NYC or as exhibition projects on college campuses. Much of this is because the long-range vision for 3D technology has outpaced what already exists. While some imagine a future of entire 3D-printed communities filled with homes for less than $4,000, there simply is not a system in place for field inspections and building codes to ensure a project’s structural, electrical, and plumbing integrity.

There’s also the matter of jobs. 3D printing is sure to cause a disruption in the job market, particularly in the construction field. While there will be a greater need for designers, engineers, and innovators, many construction workers will have to be re-trained to be incorporated into this new field or find work in other areas.

3D printing and the real estate industry

Similarly, the real estate industry will also have to adapt to a 3D future. As the technology becomes more cost effective and readily available, professionals will have to understand the technology and help clients to also envision 3D possibilities – from new construction to remodels to interiors.

At the same time, available properties will also undergo a transformation. Some retail properties, for example, will only need to house a 3D printer and it’s supplies for print-on-demand products; everything from housewares to furniture to whatever else one can imagine. Similarly, small industrial properties and warehouses may again be re-purposed, this time into local 3D printing centers or storage and fulfillment facilities.

If all of this sounds like the stuff of some far-fetched sci-fi film, Morris Southeast Group would like to remind everyone that it wasn’t so long ago that virtual reality just seemed like a neat gimmick. Today, it can be a necessity for a real estate deal. Similarly, e-commerce has radically reshaped CRE as well as commerce as a whole in a relatively short time. This is why we keep an eye on the future while providing top-notch service and investment advice in the present. To learn more about property investment opportunities, and/or our other services in South Florida, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Using Light to Attract CRE Tenants

CRE and LED is a bright idea

When it comes to attracting quality tenants, there’s already plenty of information about using lighting. Much of it, though, has to do with landscape lighting, security lighting, and specific lighting – such as ambient and task – for residential properties.

When it comes to commercial properties, lighting can be just as crucial to attracting top-quality tenants. For years, LED has been the standard but we are now experiencing a lighting revolution. In fact, new and improved technologies are almost being developed as fast as, well, the speed of light.

A bright idea is getting brighter

The first LED light was developed back in 1962, and its early usage was usually in the computer tech industry. Over the decades, improvements in delivery of LED light, as well as its relatively low cost and energy efficiency, have made LEDs very common. This increase in demand combined with what some experts see as a glut on the market have led to a push for differentiation – and this, in turn, is leading to customizable options for specific industries.

  • Indoor spaces exposed to daylight have been shown to improve worker morale and productivity, as well as regulate human circadian rhythms. The good news is that high-CRI (Color Rendering Index) LED bulbs are able to mimic natural daylight, which can be tremendously appealing to potential tenants.
  • Similarly, tunable lights can create different moods for different tasks. Cooler lighting with high intensities is better suited for concentration and focus; warmer lighting and lower intensities are ideal for creativity and cooperation – and all of this can happen in a single space with the help of a switch.
  • For retail tenants, there is fierce competition as they battle to offer shoppers a new and more personalized experience. The combination of LED lights and smart mirrors in the dressing room allows customers to adjust lighting so they can see clothing at different times of day. An outfit’s color, for example, will look very different in the white light of midday and the warmer tones at sunset.
  • In the simplest of terms, connected lighting is a system of light fixtures, connected to a network, that can send and receive data. Data can be used to better manage the building, from usage to temperature to humidity to efficiency. This system can either be delivered through a retrofit of existing light fixtures (also known as network control lighting) or Power-over-Ethernet, which is the installation of an all-new connected lighting system.

Lighting delivers more than light

Perhaps the most exciting innovation in the world of light is Li-Fi, which is short for Light Fidelity.  Presently, we are all familiar with broadband and Wi-Fi – and just as the name implies, Li-Fi means the light bulb is the router, with data traveling at 224 gigabits per second on the rapidly blinking waves of an LED bulb. In other words, where there is an LED light bulb, there is Internet.

Presently, a major disadvantage is also one of its advantages. Since LED light cannot penetrate walls, a signal’s range can be limited. On the other hand, it means that a company’s internal communications are secure from users in another room, building, or even outside.  

The brightest and the best in SoFlo

The team at Morris Southeast Group is always excited about advances in technology and its impact on commercial real estate. It’s important to keep properties relevant to meet the changing needs of owners, investors, and tenants. To learn more about property investment opportunities, and/or other services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Embrace Your Opponents: A Modern Approach to NIMBY

Listen, communicate, and collaborate to get a CRE project off the ground

Most urban dwellers agree that development projects such as renewable energy, homeless shelters, public transportation, and affordable housing are good for their communities. But when it comes to where those projects are located, many local residents come down with a case of NIMBY (Not in My Backyard). One of the many results of this syndrome is an increase in land use restrictions, which a 2015 study estimated cost as much as $1.5 trillion in lost productivity.

In South Florida, developers have had their successes and failures in countering the NIMBY response. Below we detail several thoughtful, proactive ways to engage a community and respond to concerns about a new development.

Put yourself in their shoes

It can be tempting to adopt a defensive posture when a community group pushes back on a project. In these situations, step back and imagine the scenario from their side. We all have families, live in neighborhoods, and want a quiet, safe place to call our own. Anything that seems to threaten that can be seen as dangerous and scary. Show respect for local residents and take the time to listen to their concerns.

To effectively mitigate this opposition, it’s crucial to address its root causes, which often fall into these buckets:

  • Misinformation. In the digital age, incorrect or biased information can circulate in a heartbeat. Correcting it quickly and clearly is essential to effective community engagement.
  • Conflicts of values. Odds are, project leaders and community residents actually share a set of values and goals (reducing unemployment, increasing local resources, improving schools) but have different opinions on how to get there. Focus on what you share and make the case for your project in that context.
  • Emotional needs. In the end, local zoning boards or planning commissions have the same desire – they want to be heard and expect to be involved in the decision process. Approach them with deference and treat them as partners. A gesture as simple as that can go a long way towards turning adversaries into allies.

Personal connections made in one-on-one conversations or meetings of small groups are the most effective way to build support. Large, public hearings are more difficult to manage and can often fuel the fire of resistance by giving potential opponents an opportunity to network on site.

Most people are not economists or urban planners. They don’t care about the 30,000-foot view; they care about the view from their porch.

Engage your supporters

An essential starting point in working against any NIMBY opposition is to find those who already believe in your cause. People will follow the crowd and if they believe that a majority of their friends and neighbors support your project, they are more likely to follow suit.

If you can rally supporters to speak out on your behalf – in person or online – even better. Residents who may be on the fence are more likely to lean in your favor if they hear testimony from their neighbors in a public forum or see positive chatter on social media.

Identify and target specific pockets of support:

  • People who benefit directly from the project, such as construction workers, property owners, new hires, and suppliers.
  • People who benefit indirectly from the project, such as area small business owners or local chambers of commerce.
  • People who make direct use of the project, such as families who need public housing or commuters who need affordable transportation

Listen and communicate

A comprehensive communication strategy can work wonders to convey a message consistently and clearly. As one-on-one interactions with residents inform your understanding of the issues involved, incorporate them into your messaging. Proactively address the most glaring concerns – traffic and parking, environmental impact, strain on services, neighborhood preservation –and your message will be one of collaboration rather than confrontation.

Share as many details of the project as possible so that they become familiar and, frankly, unremarkable, to your core audience. The more ordinary your plans seem, the less misinformation is likely to circulate.

Every NIMBY movement has its own unique motivations and local roots and thus requires a unique and locally-inspired approach. The more time you take at the outset to listen, understand and reflect back the community’s values, the more likely you are to gain supporters and minimize naysayers. We at Morris Southeast Group are proud community partners and are always tuned to the needs of our neighbors. For a free consultation on commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Who’s Bagging Your Groceries? Robots!

Disruption comes to the South Florida supermarket

Automation is the new black when it comes to speed and cost efficiency. Miami’s own Sedano’s grocery outlets, in partnership with Massachusetts-based Takeoff Technologies, is wearing this new style proudly as they deploy what is being called the world’s first “robotic grocery store.”

If successful, this new model will offer other retailers a brave new world of online growth at a fraction of the current cost of doing business. They will roll out the technology in 14 of Sedano’s 34 locations, and Takeoff plans to launch similar programs at five additional regional and national U.S. retail chains.

The process is fairly simple: customers order groceries from their phone or laptop, artificial intelligence-enabled robots at Takeoff’s automated fulfillment centers fetch the items, and Sedano’s staff helps sort and get them ready for in-store pickup or out the door for delivery. Takeoff’s system then automatically restocks inventory as needed, filters customer service requests, and provides reporting and analytics.

Cheaper, faster service

The grocery business can be cutthroat. Its low margins and high volume have companies always on the lookout for an edge. Robots bring a new opportunity to simplify processes and cut down on labor expenses. And the sector is growing, expected to reach $100 billion by 2022, with the overall warehouse robotics market expected to increase at a compound annual growth rate (CAGR) of 11.8 percent between 2017 and 2022, putting it at $4.44 billion in value.

These automated shoppers can yank 60 items off the shelf in a manner of minutes; 900 per hour. By contrast, living, breathing shoppers can only grab 60 per hour. Every week, the system processes as many as 3,500 online orders per location, with promises of delivery within two hours. These numbers dwarf those seen by traditional stores that rely almost exclusively on manual processes.

Automation means fewer square feet

These automated micro-fulfillment centers offer efficient service and significant cost savings because, among other reasons, they don’t take up as much room. They each need only 8,000-10,000 square feet, sometimes installed in the grocery store itself, which greatly shortens the distance between supplier and retailer and saves a boatload of cash, since they don’t have to build a physically separate distribution center.

It also shortens the distance between warehouse and customer, with orders able to be picked up mere steps away from where they are stored and delivery options being that much faster.

More examples of grocery automation

While a pioneer in many respects, Sedano’s is not the only grocer to dip their toe in automation.

  • Ahold Delhaize, the world’s eighth-largest grocery retailer, plans to speed up orders and trim delivery times with their own automated warehouses.
  • Albertsons hopes to establish a more efficient way to put together bags for delivery using automated packing solutions.
  • Walmart, the 900-pound gorilla in the room and the main competition for Amazon, will capture approximately 1.8 percent of U.S. consumer grocery spending this year (up from 0.8 last year) and is in the process of testing whether robots can give them an edge in fulfillment times.
  • Ocado, a U.K. online supermarket management firm that plans to enter the U.S. market via Kroger. They plan to pack 65,000 orders per week and boast battery powered units with charging stations.

In its quest to solve the conundrum facing all modern supermarkets – offer a robust and changing selection of products at a reasonable cost and still bring in enough profit to pay the bills – South Florida’s own Sedano’s has embraced disruption and is charting an exciting course towards the future. The impact on CRE will be interesting, especially if automation moves grocers toward finding smaller spaces in strategic locations – not to mention the impact the technology will have on other retail businesses.Morris Southeast Group keeps abreast of innovation and trends in South Florida business and their potential impact on CRE, and we’d be happy to help you find your next investment opportunity. For a free consultation, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.


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