Five Commercial Real Estate Trends for 2017

The Newsletter

REAL ESTATE
Five Trends Likely to Impact Commercial Real Estate in 2017
According to commercial real estate industry insiders, 2017 is bound to be an interesting year! Currently, all eyes are on the new administration, which will take office on January 20, 2017. The crystal balls are out, and CRE market watchers are looking ahead to likely industry trends for next year.

Interest rates? As goes the economy, so goes CRE. Market volatility continues and may for some time. Many are now unsure about interest rates, which had been widely expected to rise by the beginning of 2017 (with subsequent hikes in coming years.) Currently, it’s a question mark.

Low supply: All things being equal, we can continue to expect very limited increases in inventory in most sectors of construction. Possible exceptions may be office and multifamily projects.

Foreign investment: Economic uncertainty around the globe has made U.S. real estate an attractive destination for international capital. This is expected to continue – and possibly grow – in 2017.

Energy: Unstable energy markets still threaten economies worldwide. The 2016 crash in oil prices raised concerns on the part of investors, and lenders believe those feelings are likely to last well into 2017.

Densification: As the population flows toward urban centers, there will be an increase in the development of mixed-use centers containing space for work, entertainment, living, greenspace, and education. This will extend to the suburbs.

However good their crystal balls are, it’s hard for even experts to anticipate. The fact is that the industry must continue to move forward carefully into 2017.


HOT BIZ TRENDS
The Changing Face of Biz Collaboration Solutions
Clock

Long ago, people went to a place called “work.” But then technology came along and changed the workplace forever. Individuals could work in different locations and communicate as if they were in the same room. What’s more, this technology saved money, streamlined service, and advanced communications. It was called desktop virtualization. Which, as Technopedia notes, “… provides a way for users to maintain their individual desktops on a single, central server … through a LAN, WAN or over the Internet.”

Then, according to a 2014 article in ZDNet, desktop visualization went cold, frozen out by mobile devices: “What appears to be happening instead is individuals have chosen a different approach. They’ve asked their companies to encapsulate workloads and offer them as IOS or Android apps or make those applications accessible through internal Web sites.”

A lot can happen in three years. Now products such as Slack and Yammer are providing popular business collaboration options via social networks. So it only makes sense for the social network phenomenon Facebook to provide its interpretation. And Facebook’s Workplace, says Jack Madden of brianmadden.com, just may be a “game changer.”

Why? Says Madden: “Everybody already knows how to use it. …” And, most important, “Workplace isn’t just for corporate employees in the office, rather it’s for all sorts of extended enterprise users, like field workers, contractors, technicians, and other employees that may not have a desktop or even a corporate email address.”

Will Workplace replace e-mail, messaging, and other collaboration options? Time will tell. But it’s a serious challenger. As Madden says, don’t discount it.


MANAGING
Are Bosses and Employees at Odds over Corporate Culture?
Office Gossips

Most business leaders believe they head organizations that value and encourage innovation, resourcefulness, initiative, and teamwork. However, their employees see it differently, believing that conformity, predictability, and deference to authority are traits that are rewarded.

Why the disconnect? Are senior execs that out of touch with their rank-and-file workers?

A recent study by Joseph Grenny and David Maxfield, of the corporate trainer VitalSmarts, found there is often a significant chasm between how managers and workers perceive their company’s culture.

Grenny and Maxfield’s survey of more than twelve hundred employees, managers, and executives revealed that employees tend to view their company culture far more negatively than do their bosses – the higher up in the organization, the more positive the view of the corporate culture.

Not surprisingly, this gap in perception has an impact on performance, execution, talent retention, and general morale. According to the VitalSmarts researchers, when employees have a negative view of their company’s culture, they are less likely to be engaged, motivated, and committed to the organization. And that affects everything: When employees believed the culture promoted values such as predictability, “(t)hey were 26% less likely to rate their organization as successful at innovating and executing.”

The way to deal with company culture issues is with honest, open dialogue, Grenny and Maxfield advise. They urge leaders to adopt internal communication strategies and hold frank discussions about company culture. Among the tactics they recommend:

  • Clearly articulate the desired company culture and be open about the business case underpinning it.
  • Focus on vital behaviors that will make a measurable difference in performance.
  • Engage with employees at all levels and listen actively to their feedback.
  • Take action to address concerns and respond to issues quickly.

REAL ESTATE
2017: Year of Disruption or Same Old, Same Old?
So, it’s 2017. The end of the second decade of the twenty-first century is in sight. And you bet things can and will change.

Some see the future as exciting, with unlimited opportunities. That would be David Allison, who consults on commercial real estate (CRE) across the U.S. and Canada.

Others, says Allison in a three-part article in RENX’s Commercial Real Estate News, prefer to bury their heads in the sand, “and hope it all goes away.” Not a good plan, because creative disruption is now impacting CRE and most other industries. And a new year is a great time to embrace the change.

A lot of it is about the millennials, who “are coming at us like a train with no brakes.” And about technology, primarily 3D printing. And, in the final analysis, it’s about how these two disrupters will work together to potentially upset the CRE industry’s apple cart.

Millennials are globally the largest demographic, having recently surpassed boomers. And, says Allison: “they are showing us all that the old ways are not necessarily the only ways.” Effectively, “they like working in clumps and changing their mind and working at home sometimes and then moving to a new city because they are bored.” It’s an oversimplified statement, Allison admits, “but we are seeing the impact of these new attitudes.”

As for 3D printing, it’s already radically altered the auto industry (among many others), making it easy and cheap for small start-ups to become involved in manufacturing vehicles.

And it’s impacting the construction industry: Allison reports on a Chinese company that, in 2015, printed out ten houses in twenty-four hours. With the rapidly growing global population, 3D printing is looking good as a source of new housing to satisfy the demand from the world’s billions of citizens.

Says Allison, “This 3D printing stuff – most people think it’s sort of fun and cute and wacky. But really, it’s the next industrial revolution.” And its next target may well be the industry that will market and sell these new homes, offices, and retail spaces.

“I can’t think of another industry other than commercial real estate that is so slow to embrace change in the way things have always been done,” Allison says. “(It’s) still largely about whom you golf with…about passing the network along to the next generation…and…those almost-identical listing brochures and online listing sites.”

To help you do the “biggest pivot of your lives” and embrace the creative disruption, Allison offers macro ideas to take you there:

  • “Disruptive ideas are the new norm. … Watch for what’s happening in the larger world and use these trends as filters to think about your business.”
  • Build a strong brand that means something.
  • Embrace today’s technology, and when that’s obsolete, embrace its successor.
  • “Ditch the conservative reserved all-things-to-all-people approach and stand for something. Take some risks.”
  • Lose the “what’s-in-it-for-me” mind-set and be successful together.

“We don’t often get a chance to…reinvigorate…a whole industry,” says Allison. So, “grab the opportunity” today.

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Worth Reading
Make Sure Your Employees Have Good Things to Say about You behind Your Back
By Nathan T. Washburn and Benjamin Galvin
Harvard Business Review

Leaders try to foster employee engagement through memos, e-mails, speeches, and meetings. But there’s a better way to create a positive leader-driven culture. Reach beyond your inner circle and cultivate admirers, who will spontaneously share their positive opinions of you with their peers. But be admirable. And most important, be authentic.

Limit How Much Information You Have to Process to Avoid “Mental Fog”
By Eric Ravenscraft

Lifehacker.com

Information overload comes at a cognitive cost. When we force ourselves to process too much information, we often slip into a “mental fog.” Although we may think we’re multitasking, we’re really just switching from one to-do item to the other, making poor decisions and mistakes, and responding emotionally, rather than rationally, along the way.

The Top Idea in Your Mind
By Paul Graham

Paulgraham.com

An oldie, but a goodie, this post will have you solving problems in the shower. Left alone, our thoughts tend to drift inevitably toward the top idea/problem in our minds. According to Graham, this is why the solution to a vexing problem often comes when you are in the shower. Be sure your top-of-mind issue is important. Or keep refocusing until it is.


LINKS YOU CAN USE
This Month: Know Your Employees
How well do you know your employees? Not just their names or favorite lunch spots – their potential.

Even the best bosses don’t always get it. Use these links to gain insight into your number one asset: your employees.

How open is communication at your company? You may be surprised at the things your employees aren’t telling you. Discover them here:
5 Things Your Employees Will Never Tell You

You want to give these seven things a miss – they make your employees mad:
7 Guaranteed Ways to Enrage Your Employees

Are your motivational techniques relevant for today’s worker? Find out here:
Leaders Get Wrong About Motivating Employees

Companies are getting creative with ways of rewarding their employees. Get ideas here:
Top 20 Employee Benefits & Perks

Discerning employers are always looking for talent. Check out these high-potential employee traits you may not recognize:
Four Things You Probably Didn’t Know About High Potential Employees

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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