Retail is shrinking. People’s spending habits are changing. Virtual stores also have a big role in the decline of traditional retailers. Some things you can buy online and some things not so much. Music, movies, electronics, and books are common items. Not often do you buy “Big Ticket Items” online. Patience could also be considered as some people want to have the item in their possession upon purchase and not having to wait for it to be shipped. This all affects retail real estate in that there is not as much need for square footage. Many retailers can be more efficient by downsizing to smaller shops.
In the higher end market may not need to reduce square footage because they built their stores to be destinations in the first place. Jason argued that the middle market such as Gap, Macy’s, Banana Republic etc. becomes very discretionary.
When it comes to restaurants and bars is there really a need for more square footage because people eat out more or are spending their time differently. So basically is the demand for restaurants increasing as people are using restaurants and bars as gathering places over churches, schools and community centers? Example would be the west 7th development in Fort Worth as there are more restaurants and bars being placed there then shops and traditional retail.
TECHNOLOGY
Depending on the business is how technology will ultimately affect you. You can have a restaurant in a crummy area but still get business because of apps like urban spoon or yelp that will help you find places to eat including holes in the wall. Would be stupid for businesses and employers not to advertise or use internet and social networking sites to get attract new customers or employees. 80% of companies today are using LinkedIn as a networking tool to hire new employees or to make business contacts for present or future endeavors. Realtor.com and other such sites actually limit the role of the buyer’s broker and helped the role of the listing agent or seller’s broker. By using these online sites it going to squeeze the commission structure because limiting the work of the agents but also creating a la carte services in which a fee can be charged for an open house or putting up a billboard etc.
The new iphone4 and the videoconferencing feature may have a dramatic effect on society. It could lead to way we live and work. Could be a game changer for medical office space in that I could call a doctor and have him look at some kind of problem I am having without having to physically go to his office. Also, could get real time decisions as someone is touring a property and can basically broadcast the tour to the major decision maker who is at a different location or city and can make real time decisions.
One thing that kind of shows how bad things really are is that as interest rates go down values will go up, but interest rates are low right now yet values are not increasing. Just indicative of what kind of shape we really are dealing with. At some point the federal reserve will have to raise interest rates, but what does that really do since values are decreasing even with such low interest rates that exist now. So essentially when interest rates rise then values could decline even more.
La Gran Plaza: Investors and Developers took a dying product of a mall and turned it into a very useful and successful project. They looked at their demographics and realized that the mall did not make sense in that the surrounding population was dominated by Hispanics. So got a more Hispanic look and feel to the property by changing the façade to a more southwestern look and just put a tenant mix in there that was more Hispanic friendly.
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