Here it is.
The big 20-18.
The time is here to set goals, reevaluate priorities and take 2017’s lessons to good use. So how can we adapt to maximize value in a new year of commercial construction? With the help of Deloitte’s 2018 Commercial Real Estate Outlook report and a few other honest sources, I’ve grasped a decent hold on some first concerns.
There’s a strong disruption in many sectors that requires a shift in how companies structure their real estate. How are these new moves predicted and strategized along with? Some options include heat mapping to monitor population and usage of electricity to dictate active markets. Other methods of overseeing markets involve using mobile apps and any available (legal) resource to track user location, habits, and routines to reveal data by GPS location. Real estate companies are using any tech innovations to their benefit wherever feasible, and this is setting the stage for some pretty intuitive real estate placement.
While being mindful of the correlation between business productivity and technology, many companies in 2018 will likely see the benefit of “trimming the fat” in their property portfolio. This means that companies are reassessing ways to not only reconsider the location of their properties, but also redefine their construction process to eliminate time/resources wasted.
From strictly a construction perspective, this can involve a few different strategies, but some main relationships include:
– Eliminating confusion by working with a construction manager to manage areas unfamiliar. Many contractors will see an increase in work under an “open book” agreement, where the client will have visibility into each subcontractor quote and settle on an agreed upon profit percentage.
– Saving time by having an experienced GC/CM manage all areas of a construction process. Some of the smartest people are able to recognize they do not know everything. With an investment as large as construction necessitates, many clients will increase their comfort with handing over all construction to the experts, once there is a strong level of trust and desire to eliminate time wasted.
After a construction strategy is fine-tuned, companies should perform their research to recognize which underperforming real estate can be eliminated. Once a valuable property focus is set, these assets should be assessed to be continually competitive in cost of capital, operational capabilities, and attractiveness to top talent.
Trends are important to pay attention to, but scare tactics like “retail is dead” – should be taken with a grain of salt.