5 Random Commercial Real Estate Thoughts

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Well, we are clipping along at warp speed - three months of 2021 in the books. But, occasionally, several issues burden my in-box. Therefore, please consider this column a “spring cleaning” of sorts.
 
Two recent appearances. Recently, I was honored to sit on a panel of commercial real estate experts and as a guest on a radio show. The cool thing was I never left my garage office. The Institute of Real Estate Management - IREM - panel was conducted via ZOOM and the radio spot over the phone. Coincidentally, both had similar themes - what impact has the Pandemic had on Commercial Real Estate? Of course the answer depends upon what genre - industrial, office, or retail. The differences between the three are as stark as the Mojave desert. Chances are, if your company makes or ships things - you’ve high-fived your employees for a record 2020. Conversely, if you visit a suite of offices each day - considered are ways to reduce your square footage, when your workforce will return - if ever, and how to conduct business in a hybrid environment - virtual and in person.
 
Shortage of Inventory. Never, in all my years have I seen the shortage of industrial inventory this skimpy. At the same time, vacant regional mall space abounds. You may be thinking - why not simply convert that vacant Sears store to a logistics hub? Good thought! But, the challenges lie with zoning and the physical plant. Simply, that behemoth store that formerly housed more Kenmore tools than the Carpenter’s Union once generated monster sales taxes for its city. Warehouses don’t. Plus, modern industrial buildings are equipped with much higher ceilings - the cost to retrofit would be mammoth.
 
Prices, prices, prices. The acute lack of available industrial space has caused prices to jump higher than a Gonzaga player at the buzzer. Yeah. Maybe next year, Bruins. But I digress. In one small slice of the Inland Empire East and in a sliver of sizes, witnessed was a 12% hop in pricing - in four months!
 
My favorite time of year. NCAA Final Four, MLB opening days, Masters golf tourney, the fragrance of Orange blossoms, more daylight. All are experienced this time of year! Considered. A tournament basketball game is akin to my profession - you lose, you go home. Consolation doesn’t pay the bills. Professional golfers start their year the same way brokers do - at zero earnings with no safety net. Finally, 162 baseball games over six months is a marathon. Some of our deals are long races as well.
 
Live, live, live. Three of my close friends have gone home to the Lord in the last thirty days. I’m reminded. This is not a dress rehearsal. It’s caused me to focus on what’s important, squeeze my loved ones a bit tighter, look past petty squabbles and LIVE each day as though it may be my last. Rest In Peace Erik, Kevin, and Mike!
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.