With more employees working remotely and more people ordering everyday essentials online, office and retail space are becoming a less needed commodity for business. As a commercial real estate investor, this doesn’t mean your future is bleak; you just need to be smart and strategic to succeed.
We’ve compiled our best advice to help you think ahead and keep up with the times to keep your portfolio relevant:
Invest in Multiuse Properties. When looking for investment properties, consider options that can accommodate various types of businesses. This could mean an office building that can house multiple renters of varying sizes and industries or a strip mall with an array of tenants. Even as the world shifts to be more online, the need for real-life shopping options and service-oriented businesses will never go away. Having a diverse set of tenants will ensure you’re never in a tough spot.
Think Small. While many of the big players have been able to stay afloat by adapting their business model, traditional department stores and big box retailers have dwindled over the past decade. For CRE investors, gone are the days of relying on one mega retailer to account for the majority of your income. You may be forced to cater to boutique retailers and mom-and-pop restaurants making proper tenant clustering even more critical than before.
Stay Relevant. As society evolves, you must keep up in order to keep your tenants. Ensure your properties are technologically capable to attract as many types of businesses as possible. Listen to your tenants and be willing to work with them to help their businesses thrive. In many cases, the industry they are in is also changing rapidly, and they may need to adapt to stay relevant as well. By keeping your properties in conditions that support retail trends, you’ll enjoy happier, healthier tenants and be able to command higher rents.
Be Flexible & Adapt. Be prepared and ready to repurpose your space or think differently about how it’s being used. Be open to different office setups like co-working spaces and even temporary pop-ups in smaller restaurant or retail space to fill in any gaps between tenants. You can also add tenants that don’t compete with online retailers like hair salons, coffee shops, gyms, restaurants, and bars.
Invest in Industrial Properties. As online retail demand increases, the need for warehouse space increases in stride. Often, warehouse and manufacturing space is less expensive to own and operate than other commercial investments making them a solid bet for the future.
These are some solid thinking points as we constantly reassess and plan for the future, but every market is different, and a local licensed commercial broker can help guide your decisions best. If you’re in the Lowcountry, we’d love to hear from you!