Archives for August 2018

Adaptive reuse has a proven track record and has been integral in Los Angeles’ resurgence and transformation over the past decade.

Adaptive reuse projects have played an integral role in the resurgence and transformation of cities, including Los Angeles’ transformation over the past decade. Architecture and design firm HLW is an expert in adaptive reuse projects and an ardent supporter of recycling and reusing buildings as a pathway to city growth. The firm says that existing buildings have an interesting history and adapting existing buildings is a more sustainable approach to development. The biggest benefit, however, is the value potential of adaptive reuse. Existing buildings have an an inherent value that can be elevated through a reuse project.
“Buildings, particularly industrial buildings that are at the end of their commercial cycle, are not desirable and do not garner market rental rates,” Mark Zwagerman, managing director at design firm HLW Los Angeles, tells GlobeSt.com. “Therefore, the property valuations drop because of poor performance. By developing a great design that takes full advantage of the inherent qualities of a building, and then adapting to a new use, the resulting rental rates and property valuations can multiply by three, four, or five times. In addition, most adaptive reuse projects are “by-right” developments that save a significant amount on time by not having to go through a lengthy entitlement approvals process.”
Any dated building can be updated and transitioned to an alternative use, but Zwagerman says that former industrial projects have been particularly strong candidates for adaptive reuse. We have seen this frequently throughout Los Angeles, with industrial sites becoming offices and retail shops. “Former industrial warehouses and manufacturing buildings make great candidates for adaptive reuse projects that can be altered into commercial and creative office spaces, or mixed-use projects,” says Zwagerman, adding that the firm has experience updating many different types of assets. “We enjoy working on buildings with beautiful and historic details or unique structural systems that add to the appeal of the creative office tenant. In Southern California, having the ability to create exterior work, dine, and play spaces is highly desirable; – properties with site area, courtyards or roofs with the potential to be converted into outdoor decks are ideal.”
It is important to remember that adaptive reuse isn’t analogous to value-add. These projects require more than cosmetic upgrades, and often present unique challenges from zoning changes to legal battles. Still, these challenges are not prohibitive to achieving value in an adaptive reuse project.  “Adaptive reuse projects can be very complex, which is why we start the design process with extensive research,” Zwagerman explains. “We look into the existing planning, zoning, building code, and structural capacity of the existing building. Once we have a full understanding of the building’s limitations and potential, we begin working on the design strategy; we maximize the intrinsic value to create spaces with character, quality, and the right mix of amenities to serve the target market. Each project is unique, so we try to emphasize the authenticity of a building in our designs.”
By: Kelsi Maree Borland (GlobeSt)
Click here to view source article.

GlobeSt.com talks with Melina Cordero, CBRE’s Americas Head of Retail Research and author of it’s Omnichannel Guide about a few of the report’s findings that go against the oft-heard narrative of a retail apocalypse.

It can seem that e-commerce is supplanting bricks-and-mortar retail each time news surfaces of another national chain closing stores. But CBRE outlines in its Definitive Guide to Omnichannel Real Estate digital report that online and in-store retail actually are blending into a more effective and convenient whole, rather than one supplanting the other. Melina Cordero, CBRE’s Americas Head of Retail Research and lead author of the report, spoke with GlobeSt.com about a few of the report’s findings that go against the oft-heard narrative of a retail apocalypse.
GlobeSt.com: Your report posits that e-commerce and in-store shopping are meshing rather than competing. How is that?
Melina Cordero: Many studies have found that shoppers prefer to shop across channels, from online to in-store to mobile. Call it ‘channel surfing.’
Sure, the final purchase will take place in a single channel, but the shopper’s research beforehand easily could take place in a separate channel from the purchase. For example, a shopper might use a retailer’s website or app to determine if a given product is in stock in their nearby store and then reserve that product for them to pick up that same day.
Several proof points verify this perspective. First, Forrester Research calculates that 38.5% of in-store purchases last year were ‘digitally influenced’ in that the shopper researched the product online beforehand. Forrester predicts that share will increase to 41% by 2022. The flip side of that is the growing number of e-tailers opening stores – the clicks-to-bricks movement, if you will – to allow their customers the opportunity to view their product and sample it in person.
This omnichannel approach is effective. Consider that a recent Harvard Business Review study found that channel-surfing shoppers spent 10% more online and 4% more in stores than their single-channel counterparts.
GlobeSt.com: What will this mean for retail landlords?
Cordero: Many, many things. First, retail-center owners who support their retailers’ omnichannel efforts will succeed. That can include providing apps that steer shoppers to their tenants, offering free wifi in certain areas and simplifying parking and access for quick pickups.
Just as important for center owners is to know the e-commerce penetration ratio of various retail categories and to assemble their tenant mix accordingly. For example, most people know that e-commerce accounts for big portion of electronics sales (38% last year) and office-product sales (35%). It’s not entirely surprising that Forrester forecasts those to grow to 66% and 50% respectively by 2022.
But not many know that sporting goods, currently at 24% e-commerce penetration, is projected to rise to 39% by 2022.
Meanwhile, there are categories that remain relatively underpenetrated by e-commerce with minimal increase predicted, including food and beverage (3%), home-improvement goods (3%), furniture (8%), jewelry (15%) and footwear (15%).
GlobeSt.com: What else should we be talking about more these days regarding omnichannel retailing that we aren’t?
Cordero: Well, most discussion is focused on the growth of e-commerce, which accounted for 8.9% of US retail sales last year and is projected to reach 15% by 2022. What we should also consider, though, is that the composition of e-commerce itself is changing.
By that, I mean that mobile commerce – or making purchases from smart phones or tablets – is projected to grow from a 34.5% share of online purchases last year to 54% by 2022. That has tremendous implications for retail-center owners and retailers alike. The former need to do everything possible to connect with shoppers on their phones, namely through apps.
The latter must be fully functional and effective through mobile commerce. That entails ensuring that their mobile app fits seamlessly within their e-commerce and in-store operations. An additional benefit to the retailer is that mobile commerce yields a trove of data about their customers’ traffic patterns and shopping preferences.
GlobeSt.com: What does this omnichannel movement mean for warehouses and distribution centers?
Cordero: That market, which we call the Industrial & Logistics market, has grown rapidly since 2012. Many indicators point to that momentum continuing, especially since e-commerce distribution requires roughly three times as much space as does traditional warehousing.
Our researchers at CBRE calculate that each additional $1 billion of recurring e-commerce sales in the US results in the need for another 1.25 million square feet of distribution space. Consider, then, that e-commerce sales will grow by many billions of dollars as it expands to a projected 15% share of US retail sales by 2022. That’s a lot of additional warehouse space that will be needed.
By: Natalie Dolce (GlobeSt)
Click here to view source article.

Put back the ping-pong table. Internet with a quality connection is the number one amenity that office users are demanding today.

Put back the ping-pong table and the yoga mats. Internet with a quality connection is a top priority for office users today, second only to location. Not only is it the number one concern of office users signing new leases, it can ultimately determine lease renewals as well. According to research from Wired Score, which analyzed the value of connectivity, 77% of tenants would sign a longer lease in a building with quality connectivity. Internet has become so important to office users because so many companies experience connection issues. According to the same report, 80% of office users experience connectivity in the office and 77% of office users say that connection issues impact the company business. We sat down with Arie Barendrecht, CEO of Wired Score, to talk about the importance of quality Internet today and what office owners should be doing to ensure quality Internet.
GlobeSt.com: Why has a digital infrastructure become so important to the value of an office asset, and how does it impact office leasing?
Arie Barendrecht: For decades, office leasing decisions were driven by C-Suite decision-makers with preferences that favored features like executive boardrooms and flashy corner offices. That top-down mentality has been largely abandoned and the industry has seen a shift towards creating experiential offices that serve as a tool to attract and retain talent across the organization. This is reflected in the rise of new community amenities like green spaces, collaborative and flexible configurations, and a pivot towards providing optionality for different working preference, which in turn fuels productivity.
Excellent digital connectivity is required to support this fluid, flexible way of working. Tenants want seamless WiFi so they can work from the roof deck or green space you’ve developed, reliable mobile coverage so that they never drop an important call, and in-building IoT devices, connected to apps like Comfy, that can adjust the environment within a building for maximum comfort. All of these features you’re seeing in a leasing brochure rely on a foundation of resilient digital infrastructure.
Given that great connectivity is a prerequisite that supports the experiences tenants are looking for, it is impacting office leasing. A survey of office leasing decision makers we conducted last year, The Value of Connectivity, reported that 91% of leasing decision makers say that lack of reliable connectivity would impact their leasing decision. If you think about it, it makes perfect sense: would you sign a 5-10 year lease if you didn’t have confidence that your business would be successful there?
GlobeSt.com: How does poor connectivity impact productivity in an office?
Barendrecht: Today, we expect to be connected wherever we go, at home, during our commutes, and at the office; we can even access the Internet in-flight. Losing connectivity is frustrating in any of those situations, but it is critically important in an office setting where connectivity is directly tied to productivity and, ultimately, profitability.
There’s an incredible demand for bandwidth in an office setting. Consider the day-to-day activities that depend on having reliable access to the internet: you need to answer emails in real time, video conference with contacts across the country, and collaborate on documents hosted on the cloud like Google Pages. When the Internet fails, productivity halts and employees report increased stress, frustration, and distraction as a result.
It’s a dramatic example, but a neuroscience study measuring user reactions to poor network performance found that website delays resulted in a heart rate increase comparable to the spike you might experience when watching a horror movie. Environments that are regularly triggering stress or frustration are not healthy or conducive to productivity.
GlobeSt.com: What should building owners do to create quality digital infrastructures in an office building that is flexible for future technology advances?
Barendrecht: The first step is for owners and developers to understand that connectivity is just as important as electricity, HVAC, and other utilities. It is the responsibility of the owner, not the tenant, to provide access to these crucial utilities and build out the necessary infrastructure to support that service. That proactive mentality ensures your organization will be able to adapt to whatever innovations impact the office sector next.
Every building is different, but ensuring you are looking to the future and the patterns of the industry is important. People are more connected than ever, so planning for more telecom room space, more fiber, more mobile coverage is crucial. The WiredScore team can provide the exact technical recommendations and strategic improvements that should be made to future-proof any asset.
GlobeSt.com: What is a Wired Score and Wired Certification, and why is it becoming an important benchmark in office leasing?
Barendrecht: WiredScore is the operator of Wired Certification, the international rating system for connectivity in commercial office buildings. We make it easy for tenants to select office space that meetings their critical technology needs, while allowing owners and developers to better understand, improve, and promote the connectivity in their buildings.
Across Southern California, adoption of Wired Certification is steadily increasing. In Los Angeles, Brookfield Properties has achieved Wired Certification for the majority of their portfolio, including The Gas Company Tower, Bank of America Plaza, Wells Fargo Center, and 777 Tower downtown. EQ Office is another leading adopter of Wired Certification in the US, certifying the Howard Hughes Center on the Westside. In San Diego, The Park and First Allied Plaza are some of the first office properties to achieve Wired Certification. These are prime examples of CRE leaders that have integrated connectivity into their tenant-focused strategies.
By: Kelsi Maree Borland (GlobeSt)
Click here to view source article.

After the first wave of innovation, advancement in commercial real estate technology stalled, but it’s picking up again. Learn how brokers are taking advantage of the current stream of tech changes.
I started my career in commercial real estate in 2004. When I attended my first national sales meeting as a broker soon after, “disintermediation” was a popular topic of discussion. Many people seemed to be saying that at some point in the near future technology would obviate the need for brokers altogether.
Fast forward a few years, and I’m out of brokerage and on the tech side of commercial real estate. The first industry panel I sat on as a company founder raised the specter of disintermediation. And last year, it was covered yet again at several other conferences I attended.
The thing is, it’s just not going to happen.
Technology has changed the role of the broker in some ways, it’s true. But after the first wave of innovation—CoStar and LoopNet, in particular—progress stalled out for about a decade. And now that it’s picking up again, we’re not seeing anything like disintermediation. Instead, brokers are finally enjoying the benefits of workflow efficiency that other industries saw many years ago. Technology isn’t replacing brokers, but empowering them to be more productive and enabling them to focus on the human side of the commercial real estate business.

How the First Wave Affected Brokers

Consider the history of the commercial broker value proposition and how their day-to-day has changed over the past decade or so. In the ’80s and ’90s, brokers were the only ones with access to property information, so they had to find and build relationships with everyone and know their market—and its inventory—cold.
Then came CoStar and LoopNet, which made that information more broadly available. With them, the first wave of concern about disintermediation arrived. People worried about what other technology was going to pop up and disrupt the role of the broker. Of course, brokers soon realized that by sharing information they could do more deals, rather than fewer, and do them faster as a result of enhanced technology.
Then commercial real estate tech stopped evolving for a while. I suspect for a few reasons: completing a commercial real estate transaction is a time-intensive, complex process involving many people and a lot of moving parts. It’s not an easy workflow to simplify, and the customer base for that technology wasn’t big enough to attract the interest of many investors outside the industry. Then there’s the fact that commercial real estate practitioners haven’t had to invest much in technology because they’ve been able to make good money without it. That meant there was less intra-industry motivation to advance technology.
Meanwhile, residential real estate technology advanced faster and more continuously. Mapping technology to suit the residential process is easier because houses are more homogeneous than commercial property, and residential transactions are generally simpler. Other residential technology drivers have been the sheer number of residential transactions, and the fact that the business is consumer-facing and, arguably, even more competitive than commercial in some respects.
During the lull in commercial tech innovation, the brokers who succeeded were able to manage workflow and data mostly through sheer will and manual labor. They continued to make the best of often crude old-school tools, with results that were sometimes pretty ugly.

What’s Changed in Recent Years

About five years ago, the commercial tech landscape began to shift again, and that’s where it gets interesting. Notably, a bunch of young, hungry brokers got tired of inefficient processes and decided to do something about it. Innovators and entrepreneurs came out of commercial real estate—CompStak’s Michael Mandel, Nic Romito and Ryan Masiello at VTS, Hightower founder Brandon Weber, Jonathan Wasserstrum of SquareFoot, Transcend CRE’s Patrick Braswell, and yours truly—and decided it was time to take technology further and make it simpler so commercial brokers would be willing to get over their fears and doubts and the learning curve of implementation. These people said, “Enough is enough. It’s time to move commercial real estate tech forward.”
Their visions were made possible in large part by the cloud computing revolution, which lowered the cost and reduced other impediments to deliver modern technology to the commercial real estate world.
Then, in response—and in acknowledgement that the time was right—new technologies were adopted by tech-forward brokers, many of whom happened to be on the younger side. They saw some success and started to pressure their more established colleagues to adopt those technologies. And that brings us to today.

Something’s Happening, But It Isn’t Disintermediation

We’re currently observing a dramatic shift in commercial real estate. But it’s not about replacing the broker. It’s about work processes and how they’re shifting.
Today, a commercial broker can use data to prospect for clients and manage transactions in ways that were unimaginable even five years ago. Two examples:

• Cutting-edge CRM systems integrate data on tenants, buildings, submarkets, lease expiration dates and more, so that when a broker calls a prospect or client, he or she has a treasure trove of information on one computer screen while talking to that contact. The same data can be shared by all members of the broker’s team so that everyone is in the loop. Duplicative, redundant tasks are eliminated.
• Today’s technology also allows brokers to track and manage transactions entirely online from start to finish. Online deal books provide total visibility to brokers as they pursue an assignment, source leads, negotiate deals, review documents, and close. Every detail is electronically trackable, and the technology actually prompts brokers to advance transactions. No more spreadsheets. Goodbye, Gantt charts. Time to repurpose the whiteboard!

What’s Next

These days, other industries are talking about disruption via machine learning and artificial intelligence, but I suspect that’s a ways off for commercial real estate. Still, the technology is further along than we might think. Companies like Reonomy and Leverton are already leveraging tech in ways that not long ago we would have thought impossible by building tools for reading leases and piercing the corporate veil to find those pesky owners. In the future, I see a machine’s ability to read human emotion as something that could enhance brokers’ historical relationship-building value.
In the meantime, technology will continue to simplify the lives of brokers and their support staffs by optimizing workflow and making it easier for brokers to build relationships, maintain market expertise, and help their clients find and procure great properties. The commercial real estate broker isn’t going away, just adapting to a new future with technology that is light years ahead of where it was just a short time ago.
By: Tanner McGraw (REALTOR Magazine)
Click here to view source article.