Industrial building owners worry about inflation and recession – Orange County Register

Sometimes it is cathartic to clear the cache of our consciousness. Today is that day. As someone famous once said, these are just thoughts, but they are random and all mine.

So without further ado, here we go!

Summit Lee and Associates

Last week, we met at the Encore in Las Vegas for our annual party, aka the Summit. Attendees from across North America and the UK took part. To recap: 2020 has been scrapped entirely; 2021 was virtual. So it was the first time we were together since 2019.

A lot has changed, including an overfed industrial market, an uncertain office environment, and a changing retail experience. I should mention that our technological tools have also improved. Months of lockdown will do that to an industry.

This is followed by the highlights of the industrial panel bringing together professionals from the Rockefeller, Dermody and Prologis groups…

Institutional owners are wary of inflation, an impending recession, and the impact both will have on cap rates. All agreed that the industrial was the darling of the pandemic and even if all new construction projects lay fallow, our vacancy would still be slim – around 5.5%.

Fuel conservation, automation and a larger, more efficient inventory are our future. With the advent of self-driving trucks, truck lots can be shorter.

The use of technology in commercial real estate has lagged behind our residential counterparts.

Since a home purchase is largely a consumer transaction versus a business transaction, target-rich social media sites aren’t as plentiful. Additionally, we do not share our available inventory and rental comps through a commercial real estate clearinghouse. Consequently, we have been slower to adapt.

We’ve seen a lot of technology vendor consolidation, as evidenced by Lightboxes’ acquisition of ClientLook, Real Capital Markets and Digital Map Products. Additionally, Buildout recently added Apto, Rethink CRM, and Prospect Now. No one dares to confront the great gorilla, CoStar.

Some in the audience wondered if brokerages would eventually be squeezed out? The consensus was that more money would be made by selling to brokers rather than replacing their role.

Who knows where we will be next year. Most agree that Las Vegas is hard to beat for its ease of travel, entertainment, and enormous convention know-how. It’s a tough eastern schlep, though.

The World of Orange County Offices

As readers know, my expertise focuses on manufacturing and logistics buildings and the family businesses that occupy them. I’m not looking for office assignments, but once in a while they find me.

Our current task is an offshoot of an industrial agreement. You see, we were hired to sublet the warehouse of a building. The plan included the remaining tenant in the office portion of the building. As our campaign unfolded, two groups emerged who wanted both – the warehouse and the offices.

Now the operating group plans to move into an office suite. Therefore, we visited eight suites in five buildings over the past week. The world of the office is changing to meet an ever-changing workforce. The open collaborative spaces disappear and return to the benches of private spaces.

After all, virtual meetings require privacy. The outdoor space is sought after for respites, meetings and receptions. On-site amenities such as conference rooms, fitness centers and game rooms are emerging. Corporate America sees amenities in office buildings as a way to attract new workers and convince existing ones to return.

A rather interesting turn of events, indeed.

Allen Buchanan is a Principal and Commercial Realtor at Lee & Associates, Orange. He can be reached at 714.564.7104 or [email protected]

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