These days, ever more unique spaces are becoming a part of the real estate market. From micro-units in converted malls and factories to apartment complexes born from stained-glass churches, the way that investors, developers and buyers are viewing space potential is changing.
In order to stay up-to-date with all of the potential changes, investors and developers need to stay quick on their feet and flexible. Yet, there’s much more to be considered in the process as well. To help, 11 members of Forbes Real Estate Council share what they believe is the most effective way for investors or developers to adapt to the changing use of commercial spaces.
Members discuss some key things to keep in mind when considering commercial spaces.Photos courtesy of the individual members
1. Provide More Flexible Lease Terms
Owners of office space need to provide more flexible lease terms for growing tech businesses — shorter leases, furnished options, easy plug-and-play solutions. This is the main reason why We-work has grown: Their product is very expensive, but it’s very easy and low hassle. I also think office conversion to hotel usage depending on the city is something very appealing. – Adam Mahfouda, Oxford Property Group
2. Do Your Research
Be sure to research the previous business and history of the property. You’ll be able to determine past uses that may streamline your efforts and provide credits for impact fees or change of use fees. – Damian Gallo, Permitdoctor.com
3. Invest In Mixed-Use Zoning
Invest in or develop properties with mixed-use zoning, allowing for a variety of simultaneous uses. Small offices are out. Look for large clear spaces that can be redesigned into retail, residential or live/work. – Glenn Shelhamer, Shelhamer Group
4. Focus On Smaller Commercial Spaces
Depending on the type of market and changing commercial needs on a sub-market level, multiple strategies can be considered. Where we focus on urban core development, we are moving toward a focus of smaller commercial spaces in terms of square footage with a higher percentage focus on other uses — primarily multifamily. This typically results in higher net dollars per rentable foot. – Michael Gardner, Gardner Capital
5. View From A Best-Use Perspective
I don’t believe the concept of commercial space is an applicable term in today’s real estate market from a use perspective. We are seeing developers create beautiful loft apartments and office spaces in former warehouse spaces, and retail spaces are now home to medical users such as urgent-care facilities. Developers and investors have to view all space from a best-use perspective for their markets. – David Kaufman, Cleeman
6. Remain Flexible
The key word is flexibility. Whether you are developing new space or converting old space, ample ceiling heights and wide spans are vital. These characteristics offer designers a myriad of choices to cater to the specific needs of their clients. In today’s world, employers are focused on providing workspace that is healthier with more light and air. Without that, a landlord is dead in the water. – Marcello Porcelli, LargaVista Companies
7. Value Amenities And Location Over Space
We are seeing a change in the way people live and work. People now value amenities and location over space. Co-living and co-working companies are becoming increasingly popular as a shared economy, where people have their own private living/working space but shared communal spaces are cheaper, while increasing consumer happiness through increased amenities. – Ari Shpanya, Blok Living
Read more in Forget Location — It’s Convenience, Convenience, Convenience
8. Incorporate Placemaking
Mixed-use real estate developments must find ways to incorporate placemaking into their projects. Consumers willing and able to spend money at mixed-use projects are seeking experiences, such as places to take selfies, places for kids and dogs to run around safely (not necessarily together), or spontaneous entertainment. Placemaking can drive retail sales as well as residential pricing premiums. – Geoff Koski, Bleakly Advisory Group
9. Provide An Experience And Flexibility
Looking at spaces beyond just a place for a company to park its store or employees is evident. Whether a retail space, multifamily or offices, it’s seemingly evident that shared spaces that provide an experience and flexibility are the way of the future. – Aaron Popowsky, Gallery Kitchen & Bath
10. Consult Qualified Professionals
Just as one would consult the most qualified medical doctor for a specific malady, one should consult qualified professionals to adapt to the changing use of commercial space. For example, an architect from Los Angeles provided key ideas for a high-rise in the Tampa Bay area that we are renovating. A local Clearwater, Florida, architect is walking us through the local codes to get it done. – Brian Andrus, Stonebridge Real Estate Company
11. Incorporate Latest Technology
We constantly seek to incorporate the latest technology and functionality into developments to ensure their long-term viability. We also look for ways to increase flexibility in how space can be utilized or adapted in the future to avoid expensive improvement costs. Simple things like conduits for future fiber, communication or electrical lines as technology evolves creates savings and utility. – Aaron Mesmer, Block Real Estate Services