Friday, May 24, 2019

How On Line - On Purpose has Changed Commercial Real Estate

Image Attribution: www.paradym.com
Admittedly - the way we buy goods has evolved. No one will dispute that. Some that I know refuse to enter a brick and mortar store. Why should they? With a better selection, lower prices, and fewer attitudes on line - there is really no reason. Darkened display windows and news of retailer bankruptcies are further evidence of this perspective.

Fewer folks watch network television or read publications. Doubt what I say? Have you cut the cable in favor of Netflix, Disney, Amazon, or Hulu? Are your fingers stained with newsprint or are you reading this column on your phone? When is the last time you bought a magazine? Traditional media sources with which advertisers push their products have morphed. Now, if you perform a Google search for a product - you see a creepy ad for a similar product in all of your internet pages. How did they know?

You may wonder what any of this has to do with commercial real estate. A few things - actually.

People shop for commercial real estate differently. Currently 90% of commercial real estate searches start on-line. Historically - if you were in the market to buy a building - you jumped in your car and drove the area where you wanted to locate. Carefully observed were broker For Sale signs. You called and inquired. Created was a connection to a commercial real estate professional who became your tour guide through the available inventory. However, folks who shop for commercial real estate on-line get frustrated as our consumer facing sites pale in comparison to our residential colleagues. But people still try. Absent are Zillow, Realtor.com, and Redfin - which provide reams of data for your perusal. Sure - Loopnet will give you a taste - but if you want a full meal - you’ll need to connect with a commercial broker. Once you find a building to purchase - the process is largely unchanged - although streamlined. Offer, counter, acceptance, escrow, due diligence, contingency waiver, fund and close are still the norm. iBuyers and auction platforms? Sure. But - a very small percentage of sales occur these ways.

Our job as marketers. We must - as commercial real estate professionals - appeal to the on-line searcher. A common mis-conception is we simply use the modern media sources - FaceBook, Twitter, YouTube, Instagram - as a way to advertise available properties. Unfortunately - these ads get deleted like that cable subscription. What pulls a building shopper to us these days is content. Content that portrays us as experts in our field - not simply a name on a sign. Content that inspires to action, entertains, or educates as a means of demonstrating our knowledge. Good content - videos, “how-to” articles, thought pieces - serve as a large net for existing and future buyers. Advertising buildings for sale only appeals to folks in the market today - a very small slice of the population.

Retail apocalypse. Yes. Retail buildings are commercial real estate. Yes. The way in which consumers consume has torpedoed traditional retail. Think about sporting goods, pet items, books, office products, clothing, furniture, electronics - all have seen dramatic reductions in the number of locations. Sports Chalet, Sports Authority, Borders, Circuit City, Wickes and countless others are gone forever. Left in their wake? Large blocks of vacant space - which owners struggle to fill. A partial re-purposing to residential perhaps - such as MainPlace Mall considers and the Spectrum or the District has accomplished. An experiential conversion like the LA Times building in Costa Mesa or the Packing House in Anaheim. Or an entire re-branding akin to the furniture retailers south of South Coast Plaza. Innovation such as these examples will generate foot traffic and sales. But as the lights flicker in your favorite mall - shining bright is the beacon of e-Commerce. What’s on sale through your computer screen gives life to another genre of commercial real estate - warehouses, trucking companies, logistics operators and delivery services - who must work hard to ensure your purchases arrive at your front door.


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