VR a Likely Boon to the CRE Industry

The Newsletter

VR Likely to Be a Virtual Boon to the CRE Industry
Virtual reality (VR) is one of the most exciting technological advances of late, and one that packs huge potential for many industries, including commercial real estate. VR enables buyers to explore spaces from around the world or across the street – before they’re even built.

Currently, the most widely available form of VR provides a kind of interactive walk-through. With a mouse to navigate, users can explore spaces through renderings, concepts, and 360-degree photos on their computers. By strapping on a headset, users actually feel part of the space, exploring rooms and features by simply turning their heads.

Next-level immersiveness holds huge potential for commercial real estate. Content developers can devise VR environments from photos of built properties, or create new environments for planned or under-construction buildings. The opportunities provide huge benefits for both sellers, who can boost their odds of making a sale, and buyers, who are given a realistic understanding of the spaces they’re interested in.

How soon the technology becomes widely available remains to be seen. Creating realistic, detailed virtual reality environments is both intensive and expensive.

For now anyway, the application of high-end VR technology in the CRE industry remains mostly limited to large players. But this is no flash-in-the-pan technology. According to an article in Medium, Goldman Sachs predicts the global VR market will be worth $80 billion by 2025 – some $2.4 billion of that from the real estate industry.

So while it’s likely out of range now, VR may be accessible to virtually everyone sooner than we think.

It May Be “Borrrring,” but if It Boosts Creativity, Bring It On
Cat Yawning

For the chronically bored among us, here’s a news flash: we actually need (to a certain extent) that state of ennui. In fact, it’s good for us. Perhaps, like banging our heads against a wall, it feels good when we stop. It seems, after time spent being bored, we’re psyched to come up with creative ideas.

This is great news for employers, who sometimes find their employees (or themselves) procrastinate when asked to perform tedious but important tasks. Now science sees boredom as a phase that ushers us into a state of creativity, according to a recent article in Wired online.

As Wired writer Clive Thompson notes, separate experiments by researchers at the University of Central Lancashire and Pennsylvania State University suggest that boredom can actually be leveraged to enhance creativity and abstract thinking.

After engaging in a series of dull, mundane tasks, participants in both studies saw improvement in their creative output. In one, bored subjects came up with more and better ideas than a control group. The explanation may be that their minds were actually primed for the curiosity and creativity that comes after boredom.

These days we often escape boredom by turning to our devices. We seem frightened of being bored. Instead of seeking to escape through our phones and other diversions and activities, we should, as Thompson says, “lean into it,” and consciously experience the journey through boredom to curiosity, and ultimately, to creativity.

We need periods of ennui to come up with the creative ideas that employees welcome and employers value. But not the kind of boredom that disincentivizes us (lethargic boredom). Instead, call it “useful boredom” – acknowledged as valuable in its own right.

Have You Considered Every Option to Grow Your Business?
Growing biz

You’re an entrepreneur with ambition, and the next step in your upward trajectory is deciding how to grow your small or medium-sized business.

One option you may not have considered is franchising. Does your product or service lend itself to this kind of business model?

If so, here are some things to consider when thinking through the franchise option.

Isaac Singer (of Singer sewing machines fame) became the first franchisor in 1851 when he contracted with other entrepreneurs to sell his products in different locations, ensuring a broader customer base for his sewing machines.

The franchise sector grew dramatically in the 1950s, when restaurants began to expand through franchises.

This year the International Franchise Association expects a 5.2% increase in the franchise industry’s gross domestic product, to a total of $426 billion.

Annual job growth in the sector has also been higher than that of other business categories for the past five years.

As a franchisor, you will be the parent company, and other entrepreneurs will purchase the right to operate a separate location of your business.

The contract between the franchisor and the franchisee defines the rules under which the new location will operate, but among other things, the franchisor will dictate quality control and management philosophy to ensure the new location maintains the same standards as the parent company.

Finally, realize that you’re putting on the line the “goodwill” you’ve built up over the years, and make certain that you and your franchisees are on the same page.

The E-Commerce Disruption: Good News for CRE
When e-commerce first began to make a difference in the retail environment, some predicted an epic upheaval in the industrial real estate sector. So tied was the sector to the traditional retailer, it seemed like the end.

Now, it looks like the e-commerce disruption is a positive one; instead of declining, the industrial sector has been buoyed by the new kid on the block.

In an article for bisnow.com, Spencer Levy, head of research for CBRE America, notes, “Online retailers have created a boost in industrial as they expand their warehouses in city centers.” Additionally, e-commerce has increased the availability of foreign capital to the industrial sector: “It’s really changed the way the industrial market has worked,” says Levy. “[In 2015], foreign capital was the No. 1 investor in industrial for the first time, when historically industrial was not an investment-grade asset type.”

According to NAI Global, instead of freezing out bricks-and-mortar retailers, the e-commerce revolution has “blurred” the division between on- and offline, with the result that most of the big retailers have a presence in both camps.

For offline retailers, the focus is about enhancing customers’ in-store experiences; consumers seeking great shopping and personalized service needn’t look beyond their closest mall.

Meanwhile, those shopping online find the process increasingly easy, especially with free shipping and returns. Returns, in particular, are generating the need for increased warehouse space to manage the volume of goods sent back. As CBRE’s Levy notes, this is having a positive impact on the demand for real estate.

Retailers are now seeking different kinds of warehouse space, points out NAI Global: “The logistical challenges for retailers [are] more complex. With companies like Amazon offering same-day and, in some cases, one-hour delivery, merchandise must be close at hand. This is leading to a good deal of repurposing of existing ‘light industrial’ properties.

Getting merchandise to stores in urban areas in a short time frame is creating a demand for a wider network of smaller (under 200,000 square feet) warehouses and distribution points.”

Globally, e-commerce has become a major driver of demand for industrial real estate. In a REIT.com article, Chris Caton, senior vice president and head of global research for Prologis, points to a 20% annual growth rate in global e-commerce, driven, in part, by consumer consumption. “The other two demand drivers are the modernization of the supply chain and trade, particularly in gateway markets,” Caton says.

The prognosis for U.S. e-commerce: full speed ahead. Online shopping compared to its in-store counterpart is growing at a rate of 5 to 1, according to NAI. Yet bricks-and-mortar stores account for 94% of total retail sales – spending in-store is currently $144 billion compared to $38 billion for online shopping. There’s room to grow. And CRE’s industrial sector will grow with it.

Says Britton Winterer, senior vice president for investments at Gramercy Property Trust, “Industrial real estate isn’t very sexy, but it’s certainly more attractive now than in the past.”

SA Realty Watch Group
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Worth Reading
If You’re Too Busy for These 5 Things…
By Benjamin P. Hardy

You may not notice that most flights are off course 90% of the time, says Hardy. But with course corrections along the way, the pilot still lands the plane on time at its intended destination. The trick is to make corrections immediately – and so it is with life. Address these five key lifestyle areas to keep on course and in control.

Let’s Stop Calling Them “Soft Skills”…
By Seth Godin


In baseball, it doesn’t much matter if you’re a nice guy as long as your stats are good. Business is more complex. Employees can’t be rated like ballplayers, and yet staff is hired according to a linear scale that measures vocational skills and ignores the rest. Big mistake! Vocational skills are teachable; soft skills are the real skills driving corporate home runs.

Complete Beginner’s Guide to Blockchain
By Bernard Marr


This isn’t a Dummies Guide to Blockchains. It’s for the computer-familiar. A blockchain is new tech that safeguards data and seems to be transforming business one block at a time. It protects a list of records, called blocks, by separating them so they’re not connected to a common processor. Blocks are time-stamped, linked and encrypted, making information secure and retrievable only with a key to the blocks you “own.”

This Month: Spurring your creativity
The idea is in there somewhere. How do you unleash it? The following links will help you achieve a greater level of ingenuity in the workplace and at home:

Feeling “blocked” is a common issue. How do you get unstuck? Here are a few simple tips to help you get the creative juices flowing:
10 Effective Tips for Spurring Creativity

What methods have creative geniuses of the past used for inspiration? Try Picasso’s practices:
3 Secrets of Radical Creativity

Having more “aha” moments may not seem easy. But it is. Learn the four crucial steps that lead to those great aha moments here:
4 Steps to Having More “Aha” Moments

Do you want to increase creativity among your employees? Here are some helpful techniques:
The One Thing That’s Blocking Your Creativity

Just how do other people get new ideas? Discover the answer from Isaac Asimov:
Isaac Asimov Asks, “How Do People Get New Ideas?”

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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