In the latest edition of our monthly news brief, JLL’s regional team curates the top commercial real estate industry articles to keep you in-the-know. In this month’s edition, JLL spotlights the 2016 election impact, virtual reality in CRE and predictions for 2017 workplace strategy.
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Steady CRE Outlook Forecasted in Wake of 2016 Election
Similar to the aftermath of previous elections, many business owners are entering a period of uncertainty as they await the potential changes ahead. Most markets have remained fairly quiet following Trump’s win, while others have reacted positively. U.S. 10-year yields are currently hovering at 2% (its highest point in nearly eight months), while other markets have remained resilient compared to the Brexit impact.
The impact of Trump’s victory on the commercial real estate industry is still fairly uncertain. Financial markets have reacted in stride, which will create some form of stability for real estate activity. Although regulations on the financial industry are expected to loosen, which may lead to some market volatility.
The right mix of lower regulation, tax cuts and increased defense spending could trigger growth in the real estate sector. While many businesses and much of the economy remain in a wait-and-see approach, CRE markets are expected to remain steady.
CRE Firms Using Virtual Reality Gain a Competitive Edge
Virtual reality (VR) technology has taken over as one of the world’s most significant technological trends. VR has been introduced into a number of industries, including gaming and entertainment, but has also served as a new solution for CRE.
With the help of VR technology, potential buyers can take a 3D simulated virtual tour of the property they’re considering. Tenants can virtually explore the floorplan of their new office, make suggestions and see how each element of their design fits together.
For brokers and CRE firms, this technology can even help close big transactions earlier in the process. VR allows potential tenants to see their space before it exists, which is proving to be a significant selling point and competitive advantage used by firms.
VR holds a convenience factor for both tenants and CRE brokers. The 3D model can be viewed on a phone, computer, tablet or VR headset. For transactions made across seas, video brochures can also be sent and viewed on a tablet with playback options. Similarly, apps are available for download for users to access their site on demand. Studio 216 allows users to access VR models, panoramic photos and more.
Also similar to a number of VR apps and software is Blackbird, which uses geographic information system (GIS) technology and intelligence to create virtual tours for prospective clients. Read more about VR’s capabilities from JLL here.
New Year, New Workplace Strategy
The office as we know it is changing, including increased flexibilities and more advanced technologies to simplify business processes.
Among the top changes predicted by Forbes is the rise of unique benefit packages, which may include work flexibility. Research shows flexibility is a top employee benefit applicants look for—even more than healthcare. Workplace flexibility can range from remote work, allowing employees to work at home or where they feel the most productive, and untraditional hours.
New advancements in technology have also introduced a number of new players into the office, like VR, artificial intelligence (AI) and increased cyber security tools. The introduction of AI may soon automate many tasks in the workplace, giving employees more time back in their day and boosting productivity. VR continues to be seen as a unique tool to help sell, as well as connect remote workers, visualize projects and recruit talent.
With the rise of new tech tools comes the need for more security. Research shows more than 40% of U.S. companies are already using Internet of Things (IoT) tools; however, many admit they’re vulnerable to cyber attacks. Implementing more sophisticated security techniques is a top priority for workplaces in 2017.
CRE News Wrap-Up in Our Region
- Health Carousel will move its operations to Norwood after nearly doubling in size. This next spring, the firm will move into the top floor of Cornerstone.
- Cincinnati United Contractors Inc. has plans for an 8,900-square-foot multi-tenant retail development in Fairfield. Construction is expected to be complete by the end of 2017.
- Rising Star Coffee Roasters will open a “pour over and aeropress bar” in Tremont at the Fairmont Creamery. The coffee retailer signed a one-year lease, which now gives the company four locations in the Cleveland area.
- The city of Akron is moving forward with plans to redevelop its Lock 4 block. The $33 million redevelopment would bring residential and commercial space to Main Street.
- A $500 million mixed-use redevelopment is slated for a 21-acre piece of the Scioto Peninsula. The development will include residential, retail, office space and potentially hotel construction.
- A $2 million project just south of Nationwide Children’s Hospital is on track to become a new restaurant with a potential microbrewery next door. The development will join four other buildings on-site.
- Tenants in search of prime downtown office space will need to widen their search to areas like New Center and Midtown. However, with a 14.2% vacancy rate, there is still enough space available to accommodate tenants.
- Nearly 1,600 multifamily units will be finished in and around Detroit’s metro area by 2018. The new units will create walkable neighborhoods and accommodate the city’s recent job growth.
- Eight community partners are moving forward with plans to redevelop Roosevelt Park. The project includes plans for affordable housing, a high school as well as health care services.
- Grand Action, a local nonprofit, previewed a number of multimillion dollar projects, including a soccer stadium, hotel and DeVos Place expansion. The projects are intended to elevate the Grand Rapids area as a “top-tier visitor destination.”
- The former ceramics factory Corhart Refractories site has been sold to an Owensboro investor, which may have plans to redevelop the property. The property includes nearly 17.4 acres divided among three parcels and was sold for $871,450.
- MOLO Village Community Development Co. has begun pre-leasing space in a new Russell mixed-use development in an effort to revive West Louisville. Prospective tenants have expressed interest in including a restaurant, retail space and health care services.
- Two North Shore buildings—11 Stanwix Street and 225 North Shore Drive—are for sale. The former Westinghouse Tower, located at 11 Stanwix, is currently under agreement to be sold, and 225 North Shore was recently placed on the market with 100% of its space leased.
- Pittsburgh was awarded $50 million from the U.S. Treasury Department’s New Markets Tax Credit Program. Recipients include the Women’s Center & Shelter of Greater Pittsburgh and Schoolhouse Electric & Supply Co.