What Drives Demand? The Forces Powering Today’s Commercial Real Estate Market

A funny thing about commercial real estate: while the buildings themselves are fixed in place, the forces that create demand for those buildings are anything but. They shift with time, trend, and turmoil—and if you’re not paying attention, you might miss the cues that tell you when and where activity will ignite.
Take lease expirations, for example. It’s one of the most fundamental drivers of deal flow in our business. When a lease winds down, a decision must be made—renew, relocate, or remain on a month-to-month basis. That single moment often becomes the catalyst for months of planning, broker engagement, site tours, financial modeling, and ultimately, action. No expiration? No pressure. And no pressure means no urgency—one of the key ingredients in getting deals done.

But leases alone don’t tell the whole story.

As we turned the corner into 2025, the tail end of 2024 gave us a master class in commercial real estate hesitation. Activity slowed not because companies lacked need, but because they lacked certainty. Three macro forces kept tenants and investors glued to the sidelines:

1. Presidential politics. Decision-makers wanted to know what kind of business climate they’d be operating in before signing on to long-term commitments. Red or blue, regulation or deregulation, tax incentives or new compliance rules—these all influence corporate planning and therefore real estate strategy.

2. Interest rate direction. The Fed kept everyone guessing. Would rates go up again? Plateau? Begin to fall? Capital markets hate ambiguity, and so do CFOs staring at lease vs. own models.

3. Consumer confidence. As goes the consumer, so goes much of our economy. Businesses took a hard look at spending patterns, savings rates, and employment numbers before deciding whether now was the right time to expand.

Add to that a steady churn of mergers, acquisitions, and dispositions, and you’ve got another strong source of demand—though not always in the ways you might expect. M&A can consolidate two footprints into one, freeing up space in one market while triggering new need in another. Dispositions, meanwhile, open up inventory for others or signal a company’s shift into a new vertical altogether.
But let’s zoom out even further.

Sometimes, real estate demand is born from entirely new industries—and those moments often follow technology breakthroughs or policy shifts. Consider:

• Electric vehicles and their supporting infrastructure: battery plants, charging stations, and parts distribution centers.
• Lithium-ion batteries, which require massive and specialized manufacturing space.
• Data centers, the digital backbones of our modern lives, quietly taking down millions of square feet with very specific utility and security requirements.

We’ve seen this before. The 1980s research and development boom created entire submarkets for tech, biotech, and medical device firms. Those buildings weren’t just shells—they were incubators for innovation.

Sometimes the spark comes from government regulation. Remember when the EPA mandated the elimination of Freon from air conditioning units? That one change sent shockwaves through the HVAC industry, creating demand for new service hubs, training facilities, and parts distribution warehouses. A political decision translated directly into square footage demand.
In short, demand drivers in commercial real estate are everywhere—you just have to know where to look.

The next wave of activity might not come from a lease expiration or a low interest rate. It might come from an emerging technology, a new federal incentive, or even a global conflict that reshapes the supply chain. Our job, as advisors, is to interpret the signals, anticipate the shifts, and help our clients position themselves ahead of the curve.

Because buildings may be stationary—but the forces behind them are always in motion.

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.
 
 

Seven Unconventional Ways to Source Your Next CRE Deal

I get this question a lot: “Where do you find your deals?”
 
The easy answer is everywhere. The real answer? Deals find me—because I’ve spent years putting myself in the path of opportunity. Yes, cold calls and referrals still work, but the best transactions of my career have come from places most brokers overlook.
 
So, in the spirit of helping you add a few more tools to your sourcing toolbox, here are seven unconventional—but highly effective—ways to find your next commercial real estate deal.
 
1. Cooperating Brokers
Wait… cooperate with the competition? You bet. Some of my biggest wins came from fellow brokers who brought me into a deal because they trusted me to get it done. Cooperation can extend your reach, reduce friction, and lead to repeat business—if you approach it with integrity and a long-game mindset. This business has a short memory for egos but a long one for fair dealing.
 
2. Social Media
LinkedIn isn’t just for job seekers. I’ve had decision-makers reach out directly after reading a post I wrote that spoke to their pain point. One recent industrial tenant prospect came from a short post I published about navigating rising lease rates in the Inland Empire. The key? Don’t sell. Share insights. Be useful. The right people will notice.
 
3. Strategic Networking
Not all networking is created equal. Swapping business cards at a crowded mixer rarely leads to real relationships. I’m talking about high-trust, targeted networking—alumni boards, civic groups, niche masterminds. Years ago, I joined a local CEO roundtable—not to get business, but to give value. Guess what? A few of those CEOs are now clients.
 
4. Speaking Engagements
Public speaking has been one of the most unexpectedly lucrative parts of my career. Whether it’s a chamber event, a CRE panel, or a real estate summit, standing behind a mic positions you as an authority. One audience member asked a question during Q&A that led to a tour, then a proposal, and ultimately a closed deal. The lesson: don’t underestimate the power of putting yourself out there.
 
5. Blogging
I’ve kept a weekly blog going for over a decade. It’s never been about flashy graphics or keyword tricks—it’s about consistency and insight. Many prospects tell me they feel like they know me before we ever speak. One client read my blog for six months before reaching out. When we finally talked, it was like we were old friends. That kind of trust accelerates the sales cycle.
 
6. Industry Organizations
Want to surround yourself with serious players? Join serious organizations. SIOR has been a game-changer in my career. But here’s the catch—you have to participate. Don’t just add the designation to your email signature. Attend the meetings. Join a committee. Moderate a panel. Deals often arise not because you showed up, but because you showed leadership.
 
7. Writing a Newspaper Column
This month marks my 10th year as a contributing columnist for this paper. What started as a way to give back to the industry has become one of my most powerful branding tools. It’s built credibility, opened doors, and—yes—produced deals. People I’ve never met feel like they know me because they’ve read my thoughts every Sunday for years. That kind of visibility is priceless.
 
Wrapping it Up
If your only deal-sourcing method is pounding the phones, you’re missing out. Today’s opportunities are as much about pull as they are push. The more value you give—publicly, consistently, and authentically—the more likely deals will find you.
 
Pick one of these seven and put it into play. You don’t need to try them all at once. Just start. Because the best deal of your year might come from the place you least expect.

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.
 
 

Before You Pursue That Deal, QUALIFY It First

In commercial real estate, not every opportunity is created equal. Some sparkle at first glance but fade with time. Others seem ordinary but blossom into career-defining deals. After decades in this business, I’ve learned that success often comes down to asking the right questions before diving in.
 
That’s why I developed the QUALIFY framework.
 
QUALIFY is an acronym — a checklist, really — designed to evaluate whether a prospect or assignment is worth your time and effort. It stands for: Quantitative Need, Urgency, Authority, Loyalty, Intent, Fuel, and Yearning. Let’s take a quick look at each piece:
• Quantitative Need: Is there a real, measurable requirement? A client who says, “I’m looking for space,” isn’t enough. How much space? When? Where? Why?
• Urgency: Is there a compelling timeline? Deals without deadlines often drift. Urgency adds gravity.
• Authority: Are you dealing with the true decision-maker? Chasing opportunities through multiple layers of approval rarely ends well.
• Loyalty: Is the client committed to working with you exclusively, or are you one of many brokers they’re contacting?
• Intent: Is the client serious about transacting, or are they simply “testing the waters”?
• Fuel: Do they have the financial resources to complete the deal? No amount of motivation can overcome a lack of funding.
• Yearning: Finally, is there emotional motivation? A client who needs to move, grow, or solve a pressing problem will push through obstacles.
 
Years ago, I was approached by a business looking for a large industrial building. On the surface, it seemed like the perfect assignment. But as I ran through QUALIFY, warning signs appeared: vague needs, no urgency, and no clear decision-maker. I politely stepped back. That “opportunity” dragged other brokers through months of wasted effort.
 
On the other hand, a small but highly motivated manufacturer came along shortly after. They checked every QUALIFY box — and we closed their lease within 45 days. It became one of the smoothest and most rewarding transactions of my career.
 
The lesson? In business — and in life — our most precious resource isn’t money. It’s time. We owe it to ourselves to invest our time wisely.
 
Before you chase the next shiny opportunity, take a moment to QUALIFY it first. Your future self will thank you.

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.

Will Blend-and-Extend Lease Strategies Make a Comeback in 2025?

In the aftermath of the pandemic, industrial lease negotiations entered uncharted territory. But unlike the Great Recession, this period saw a surge—not a collapse—in rental rates, particularly in Class A logistics warehouses throughout Southern California. Rents doubled, in some cases even tripled, driven by soaring demand, constrained supply, and e-commerce acceleration. 
 
That upward trajectory has since leveled off, and we’re now seeing a return to more normalized leasing conditions. However, rental rates have not yet subsided to pre-pandemic levels. 
 
Many in the industry expect downward pressure to continue throughout 2025, especially in markets with rising vacancy and macroeconomic uncertainty.
 
As this shift unfolds, landlords and tenants alike are revisiting an old but effective strategy: the blend and extend.
 
For those unfamiliar, a blend and extend is a lease modification that resets the rental rate—usually blending the remaining term’s rate with a new, often lower rate—in exchange for an extension of the lease term. It’s a win-win, in theory: tenants secure near-term relief, and landlords gain longer-term income stability.
 
During the early 2010s, this strategy was a go-to for owners and occupants after the Great Recession. But in recent years, it fell out of favor as rising market rents and tight industrial vacancy rates made lease concessions less necessary. 
 
Now, with shifting market dynamics—especially here in Southern California—the blend and extend may be poised for a comeback.
 
Here’s what makes this moment unique:
               •             Tariff uncertainty is rattling supply chains. Many importers and logistics companies operating near the ports of Los Angeles and Long Beach are reevaluating their long-term space needs in the face of potential cost increases. Locking in a lower rent through a blend-and-extend gives them breathing room while global trade policies shake out.
               •             Tenants are more cost-conscious than ever, and many are considering downsizing or relocating. A landlord who offers a reasonable blend-and-extend may retain a tenant who otherwise might leave.
               •             Landlords face longer lease-up times, particularly in softening sectors like class A logistics space. Extending a current tenant—even at a major discount—may be preferable to enduring months of vacancy.
               •             Lenders like stability. A longer lease term improves the property’s valuation and supports refinancing conversations.
 
However, not all spaces or situations qualify. Blend and extends work best when:
               •             The tenant is stable and has a solid track record of payment.
               •             The current rent is above market or nearing expiration.
               •             The landlord wants to avoid the risk (and cost) of vacancy and re-tenanting.
 
Owners and occupants alike should revisit lease portfolios and look for opportunities where both sides might benefit. In 2025, creativity and collaboration will again be the keys to unlocking deals—and the blend and extend might just be the versatile tool needed.

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.
 
 

What The Masters Can Teach Us About Commercial Real Estate

Every April, like clockwork, golf fans across the globe tune in to The Masters. From the blooming azaleas to the hushed reverence of Augusta National, it’s a tournament steeped in tradition and excellence. But beyond the pageantry and prestige lies a masterclass in preparation, strategy, and mental fortitude—qualities that resonate far beyond the fairway.
 
As I watched the tournament unfold this year, I was struck by how many parallels exist between The Masters and the world of commercial real estate. Whether you’re chasing birdies or escrows, there are lessons to be learned.
 
1. Preparation Wins Tournaments—and Deals
The grounds at Augusta are groomed with year-round precision for one magical week in April. Nothing is left to chance. In commercial real estate, preparation is no less important. Before a property ever hits the market or a buyer steps onto a site, there’s a mountain of research, underwriting, and planning that must be done. Deals go sideways when we cut corners—successful ones are built on the bedrock of preparation.
 
2. Strategy Over Strength
Sure, power off the tee is exciting. But it’s how a golfer manages the course—choosing shots wisely, knowing when to lay up, and navigating hazards—that determines the scorecard. The same is true in our business. Chasing every deal, every lead, and every shiny object is a recipe for burnout. Smart brokers know how to assess risk and reward, focus on the opportunities with the greatest potential, and let go of the ones that don’t fit.
 
3. The Short Game Seals the Win
Drives might get the crowd roaring, but tournaments are won with putts and chips. In commercial real estate, our short game shows up in the details: lease language, escrow instructions, title exceptions, and timelines. Deals don’t fall apart over asking price—they fall apart because of overlooked details and poor follow-through. Mastering the short game means fewer surprises and smoother closings.
 
4. It’s All in Your Head
Golf is as much mental as it is physical. Just ask any pro who’s blown a Sunday lead. The same goes for us. When a buyer backs out, a building fails inspection, or a deal dies in committee, we have two choices: spiral or steady ourselves. Longevity in this business favors those who stay calm, adapt, and keep moving.
 
5. Legacy Matters
At Augusta, legacy is everything. Champions are immortalized, and respect for the game runs deep. In commercial real estate, our reputation is our calling card. Over time, how we treat clients, competitors, and colleagues becomes part of our own professional legacy. It’s not about one big win—it’s about consistency, character, and how you play the long game.
 
So while most of us won’t slip on a green jacket anytime soon, we can still learn from those who do. The Masters reminds us that excellence is never accidental. It’s earned—through discipline, patience, and the relentless pursuit of better. In golf, in real estate, and in life.

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.
 
 

What the Commercial Real Estate Industry Can Learn from Tesla

Our aging vehicles finally cried “uncle.” And as someone with Scottish roots and a frugal mindset, I’ve always approached car buying with a specific formula: find a certified used vehicle, pay cash, and drive it until the wheels practically fall off. That method has served us well over the years with a low cost-per-mile—but lately, the repair bills started stacking up. It was time for a change.
 
What followed was a multi-week odyssey of AutoTrader scrolling, dealership visits, and spirited discussions with my wife over the best powertrain option—gas, hybrid, or electric. Due to a shortage of the car I originally wanted, we found ourselves walking into a Tesla showroom.
 
Fast forward to today: we are officially Tesla owners. And while I could fill a separate column with thoughts about the vehicle itself, I was struck by how much the Tesla experience mirrors trends—and opportunities—within commercial real estate. Let me explain:
 
1. The Search Mirrors Site Selection
Car shopping is not unlike the process tenants and buyers go through when sourcing new locations. There’s a checklist of needs, emotional and financial considerations, and ultimately, the choice that best aligns with priorities. The more intuitive and guided that search is, the better the experience.
 
2. Tesla Has Reimagined the Buying Process
Gone are the cubicles, the “let me talk to my manager” routines, and the hours-long negotiations. Tesla has engineered a customer journey that’s seamless—from the online order to the app-based updates to the five-minute pickup process. What if commercial real estate transactions were just as frictionless?
 
3. CRE Meets EV: Repurposed Real Estate
Many Tesla delivery centers and showrooms are in repurposed buildings—former big-box stores, warehouses, or auto dealerships. These adaptive reuses demonstrate that outdated space can be reimagined in bold, relevant ways. This is a huge lesson for property owners with obsolete inventory.
 
4. Tech as a Differentiator
From the test drive to the paperwork, everything is tech-forward. Not just modern—elevated. In CRE, we’re seeing the same trend: clients expect more digital tools, faster response times, and transparency. Firms that embrace smart tech—not just as a bolt-on, but as part of the DNA—will win.
 
The future of commercial real estate isn’t just about location—it’s about experience, adaptability, and efficiency. Just like Tesla rethought how we buy cars, maybe it’s time we rethought how we lease, sell, and manage properties.
 
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.

Deal “SEQUENCE”

In my over five decades of commercial real estate brokerage, I’ve transacted over 2000 times! Some have found me on the occupant side of the aisle and in others I’ve advocated for an owner with a vacant building. Rarely - but it happens - I’ve straddled the two factions ala Ben Hur. This is legal in our world and is known as “dual agency”. Candidly, I prefer the separation where two professionals are involved.
 
In considering the deal, I developed - with a little AI help - an acronym for for the steps taken in a commercial real estate transaction. I believed them to be column worthy - so here goes.
 
• S – Source - Developing opportunities before they exist.
This includes outbound efforts like mailers, marketing campaigns, social media content, tapping into inactive clients, direct-to-owner outreach, and any strategic activity that creates deal flow where there previously was none.

• E – Evaluate and identify a lead 
Through sourcing, a lead is uncovered. Whether it’s identifying an active tenant requirement or uncovering a property that fits a buyer’s criteria, this is the moment a generalized opportunity becomes a targeted pursuit.

• Q – Qualify - Determining if the lead is worth the pursuit.
This includes my 7-step QUALIFY framework: Quantitative Need, Urgency, Authority, Loyalty, Intent, Fuel, and Yearning—the litmus test for whether the lead has traction and potential.

• U – Under Control - Securing the right to act. Using an exclusive authorization to represent, listing agreements, or exclusive agency agreements, this step ensures you are no longer guessing—you’re executing under formal terms.

• E – Execute - Activating the plan.
Here, you’re touring buildings, sourcing off-market options, or locating buyers or tenants for vacant buildings. It’s about making the market work through active engagement, creative matchmaking, and transactional momentum.

• N – Negotiation and close - Signing on the dotted line.
Whether a lease is executed or escrow closes, this is the transaction’s inflection point—when opportunity becomes reality.

• C – Commission (Bill & Collect) The first rule of brokerage: get paid! 
Delivering the invoice, ensuring documentation is complete, and creating accountability for payment. This reinforces professionalism and prepares for the next critical step. The transaction isn’t truly complete until commission is received. Collection is part persistence, part process, and part diplomacy.
 
• E – Expand (Capitalize) - Turning today’s deal into tomorrow’s momentum. This includes sending press releases, updating social media, client thank-you's, marketing your success, and most importantly, nurturing referrals and building repeat business from experience.

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.
 
 

Reshoring: A Boon for U.S. Real Estate and Local Economies

For decades, American companies sent manufacturing operations overseas in search of lower costs. Cheap labor, fewer regulations, and efficient global supply chains made offshoring the dominant strategy for everything from electronics to pharmaceuticals. But the tide is turning.

 
Reshoring—the process of bringing manufacturing and supply chains back to the U.S.—has gained momentum in recent years. Supply chain disruptions during the pandemic, geopolitical tensions with China, and rising overseas labor costs have forced companies to rethink their strategies. Add in government incentives like the CHIPS Act and tax credits for domestic production, and reshoring are no longer just patriotic talking points—they are a business necessity.
 
While this shift brings economic benefits, one sector poised for significant gains is industrial real estate. Industrial space and logistics hubs are seeing increased demand as companies look to rebuild supply chains on American soil.
 
Industrial Real Estate’s Big Moment
Manufacturing may have been outsourced, but demand for industrial real estate has remained strong, thanks to e-commerce. Now, reshoring is adding another layer of demand, particularly for manufacturing and distribution space.
 
Manufacturers looking to reshore need factory space, and they’re not just eyeing traditional industrial strongholds like the Midwest. Texas, Arizona, and the Southeast are emerging as major reshoring hubs due to business-friendly policies, affordable land, and proximity to key transportation networks. Even California, despite high costs, is benefiting from semiconductor and biotech reshoring, thanks to its deep talent pool and access to ports.
 
With this shift, developers are repurposing outdated office and retail properties into industrial use. The conversion of big-box retail into warehouse and distribution centers is already happening, and underutilized office campuses could be next in line for transformation into R&D labs or advanced manufacturing facilities.
 
The Logistics Boom
Manufacturing doesn’t work in isolation. It needs a strong logistics network to move raw materials in and finished products out. That’s why reshoring is fueling growth in warehouse and distribution space, particularly in regions with easy access to rail, highways, and ports.
The trend is especially pronounced near inland logistics hubs like Dallas-Fort Worth and Atlanta, where vast warehouse developments are emerging to support reshored manufacturing operations. Port cities like Savannah, Charleston, and Los Angeles are also seeing an uptick in industrial activity as reshoring strengthens domestic supply chains.
 
Challenges to Overcome
Reshoring isn’t a magic bullet. Companies bringing production back to the U.S. face significant challenges, including labor shortages, infrastructure gaps, and higher operating costs.
The U.S. manufacturing workforce has shrunk over the years, and finding skilled workers is a growing concern. Companies investing in reshoring must also invest in workforce training and automation to bridge the skills gap. Community colleges and vocational programs are beginning to step up, but this will be a long-term effort.
 
Another hurdle is infrastructure. While industrial construction boomed prior to 2023, roads, bridges, and ports need upgrades to handle increased freight movement. Power supply is another issue, particularly for energy-intensive industries like semiconductor and electric vehicle battery production.
 
A Long-Term Shift
Despite these challenges, reshoring is not a short-lived trend—it’s a structural shift that will reshape American industry for decades. Advances in automation and AI are making domestic production more cost-competitive, and companies now recognize the risks of over-reliance on overseas supply chains.
 
For commercial real estate, this means continued demand for industrial space, adaptive reuse opportunities for underperforming assets, and expansion of logistics hubs. Cities and states that invest in infrastructure and workforce development will be the biggest beneficiaries of this new era of American manufacturing.
 
Reshoring is more than an economic shift—it can be a real estate revolution!

 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.
 
 

Tariffs: Trade Policy or Just Another Negotiation Tactic?

The other day, the issue of tariffs came up in a casual conversation. You see, a friend—we’ll call him Jim, because that’s his name—enjoys reading my column. I was flattered! Anyway, he mentioned that tariffs would make a good column topic. We quickly agreed, however, that the underlying motivation of an administration imposing tariffs is often less about economic policy and more about negotiation.

Since Jim and I both negotiate for a living—he in the courtroom and I in commercial real estate—it struck me that tariffs aren’t just about leveling the playing field. More often than not, they’re a tool wielded to push for better deals. And in that respect, they’re not so different from the tactics used in boardrooms, lease negotiations, and legal disputes.

Take a recent example: when an administration announces a tariff on imported goods, it’s easy to assume the goal is to make domestic industries more competitive by making foreign products more expensive. That’s the textbook definition. But in practice, tariffs are often more about leverage. A country imposes tariffs not necessarily to keep them in place forever, but to extract concessions—lower tariffs on their own exports, stricter protections for intellectual property, or better trade terms overall.

If that sounds familiar, it’s because the same playbook is used in real estate negotiations all the time. Sellers list properties at inflated prices not because they expect to get them, but because they know buyers will push back. Landlords demand above-market rents knowing tenants will counter. In each case, the initial position is not the true goal—it’s a starting point in a larger negotiation.

Attorneys, like my friend Jim, take a similar approach. Motions, objections, and procedural tactics aren’t always about winning outright; sometimes, they’re just tools to gain leverage. A well-placed motion might force the other side to rethink their position, just as a newly imposed tariff might push a trade partner back to the bargaining table.

And yet, for those caught in the middle, the impact can be very real. In real estate, when negotiations drag on, tenants may face uncertainty, and deals can stall. In legal battles, a drawn-out process can drain resources. With tariffs, businesses that rely on imported goods—manufacturers, retailers, and consumers—often bear the immediate burden of higher costs, even if the long game is about brokering a better deal.

So how do you navigate these tactics? Whether you’re a business owner, investor, or consumer, recognizing the difference between a firm position and a negotiation strategy is critical. Is the other side genuinely standing their ground, or are they just applying pressure to move things in their favor? Understanding this can help you stay level-headed in negotiations and avoid making knee-jerk reactions that could cost you in the long run.

In the end, whether in global trade, real estate, or the courtroom, the art of negotiation remains the same. The first offer, the initial demand, or the newly imposed tariff isn’t always about the outcome—it’s about the process of getting there.

Jim and I left that conversation with a shared conclusion: tariffs may shape economic policy, but at their core, they’re just another tool in the game of negotiations. And as any good negotiator knows, it’s not about the first move—it’s about who walks away with the better deal.

 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.

 
 

The Office Space Reckoning: What’s Next for Empty Buildings?

I have a friend who ran a small accounting firm in a mid-rise office building off the 405. He had a corner suite with a view of the freeway—nothing glamorous, but solid. For years, he paid his rent on time, kept his staff of five happy, and felt secure knowing his office space was a symbol of his firm’s steady success. Then came the pandemic, and with it, the great work-from-home migration. By 2021, his lease was up, and he made a decision that landlords across Southern California now dread: he let it go.
 
Fast forward to today, and that once-bustling office tower is still struggling to fill vacancies. My accountant friend, like so many others, now operates remotely, with employees who have no desire to return to a traditional workspace. His old office? A ghost town—one of many scattered across the region.
 
The Office Space Dilemma
Southern California’s office market is at an inflection point. Vacancy rates in key markets like Downtown Los Angeles, Orange County, and even the tech-heavy hubs of the Westside are at record highs. According to industry reports, some buildings now hover around 30-40% vacancy—numbers that would have been unthinkable pre-pandemic.
 
Many landlords are feeling the squeeze. With high interest rates and declining property values, some are defaulting on loans or handing the keys back to lenders. Others are scrambling to repurpose their spaces, but office-to-residential conversions—while a hot topic—are easier said than done.
 
The Affordable Housing Mandate and Office Conversions
California has long been in an affordable housing crisis, and state leaders see underutilized office buildings as a potential solution. Governor Gavin Newsom and local municipalities have been pushing zoning changes and incentives to encourage office-to-housing conversions. On paper, it sounds like a perfect match: empty buildings meet an urgent housing need. In reality, it’s a far more complex equation.
 
Many office towers were never designed for residential use. Deep floor plates, lack of windows, and outdated infrastructure make conversions expensive and, in some cases, structurally impractical. 
 
Developers also face regulatory hurdles, with zoning laws, permitting delays, and financing challenges slowing progress. 
 
While some successful conversions have taken place—such as the historic Tribune Tower in Oakland—most landlords are finding it more feasible to hold out for office tenants than take on the massive costs of redevelopment.
 
So What Happens Next?
The commercial real estate industry is at a crossroads, and the future of office space will depend on creative solutions. Some landlords are embracing mixed-use redevelopment, incorporating residential, retail, and entertainment into former office hubs. Others are investing in high-end amenities to attract tenants back—think wellness centers, private clubs, and hospitality-driven office experiences.
 
But the hard truth is that Southern California will have to adapt to a world where remote and hybrid work are permanent fixtures. That means some office properties will never return to their pre-pandemic heyday. It also means that cities and developers will need to work together to make adaptive reuse more financially and logistically viable.
 
As for my accountant friend, he doesn’t miss his office much. His firm is thriving, his staff enjoys the flexibility, and he no longer has to sit in rush hour traffic on the 405. 
 
For him, the office space reckoning isn’t a crisis—it’s a new reality. And for commercial real estate, it’s time to figure out what that reality looks like.
 
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.
 
 

The Next Big CRE Disruptor: What’s Coming for the balance of 2025?

Commercial real estate is no stranger to disruption. Over the years, we’ve seen tech booms, financial crashes, pandemic-induced pivots, and policy shifts—each shaping how, where, and why properties are bought, sold, and leased.
 
Now, as we  have eclipsed two months of 2025, the question is: What’s next? What trends, policies, or economic shifts will send ripples—or shockwaves—through the commercial real estate industry this year? While no one has a crystal ball, here are the key forces that could redefine commercial real estate as we know it.
 
1. The Interest Rate Wild Card
After a rollercoaster ride of rate hikes in 2023 and 2024, all eyes are on the Federal Reserve. If interest rates come down, expect renewed investment activity as buyers jump back into the market, particularly in asset classes like multifamily, retail, and industrial.
 
On the flip side, if rates remain elevated, property values could continue their adjustment downward, forcing sellers to get realistic about pricing. Distressed assets may hit the market at more aggressive discounts, creating opportunities for well-capitalized investors to scoop up deals.
 
Either way, financing costs will remain a major player in 2025—shaping everything from new development to refinancing strategies.
 
2. The Great Office Reset Continues
Office space is still in a state of flux. While some markets have rebounded, others are saddled with record-high vacancy rates. The remote work debate is far from settled, and companies are still rightsizing their footprints.
 
The trend to watch in 2025? Adaptive reuse. Cities like New York, San Francisco, and Chicago are actively pushing for office-to-residential conversions, and the success of these projects could pave the way for similar initiatives nationwide. If office landlords can’t lease their space, many will be forced to sell, redevelop, or repurpose—and that shift could redefine entire downtowns.
 
3. The Rise of AI-Driven Commercial Real Estate
Artificial intelligence is quickly moving from novelty to necessity in commercial real estate. By 2025, expect AI to play a bigger role in:
·        Market forecasting – Predicting tenant demand, property values, and investment trends.
·        Automated transactions – AI-driven platforms could streamline leasing and deal negotiations.
·        Property management – Smart buildings will rely on AI to reduce energy costsand optimize occupancy.
 
The biggest disruptor? AI-powered brokerage tools. If a machine can analyze a property’s value, predict tenant turnover, and match buyers with sellers in seconds—where does that leave traditional brokers? The smart ones will adapt by using AI as a tool rather than seeing it as competition.
 
4. Industrial’s Growth Slows—Especially in Class A Logistics
For years, industrial real estate was the darling of commercial property investment, fueled by e-commerce expansion, supply chain shifts, and reshoring efforts. But as we move into 2025, cracks are beginning to show—especially in the Class A logistics sector.
 
After years of feverish development, many major markets are now oversupplied with large, high-end distribution centers, leading to rising vacancy rates and flattening rents. Markets like Dallas, Phoenix, and Inland Empire have seen an influx of new construction deliveries at a time when demand from major tenants—especially e-commerce giants—has cooled.
 
This isn’t a collapse, but it is a correction. Leasing activity is still happening, but at a slower pace, and landlords are being forced to offer concessions or lower rentsto attract tenants. Investors who banked on continued breakneck absorption rates are now reassessing their strategies, particularly in overbuilt logistics corridors.
 
That said, not all industrial real estate is slowing. Smaller, last-mile distribution centers in dense urban areas remain in demand as retailers optimize delivery networks. Similarly, sectors like cold storage and specialty manufacturing continueto see steady interest.
 
For industrial owners, 2025 will be about differentiation—Class A landlords may need to get creative with tenant incentives, while niche industrial assets will likely hold their value better in a cooling market.
 
5. Retail’s Reinvention Continues
The so-called retail apocalypse never fully materialized, but the sector is definitely evolving. In 2025, successful retail centers will be those that blend experience, entertainment, and essential services.
 
Expect to see:
·        More medical and wellness tenants filling retail spaces.
·        A continued boom in grocery-anchored centers, which have proven resilient.
·        The rise of “click-to-brick” showrooms, where online brands open physical stores to engage customers.
 
Retail landlords who embrace tenant diversity and mixed-use elements will stay ahead of the curve, while those clinging to outdated formats may struggle.
 
Final Thoughts
If history has taught us anything, it’s that commercial real estate never stands still. Every market cycle, every technological advance, and every policy shift brings new challenges—and new opportunities.
 
As we’re into 2025, the industry’s next big disruptor could come from any direction—interest rates, AI, adaptive reuse, or even a policy shift we haven’t seen coming yet. The winners will be those who stay ahead of the trends, adapt quickly, and embrace change as the only constant.
 
So, buckle up. The next CRE transformation is already underway.
 
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.
 
 

How Presidents Have Shaped Commercial Real Estate

As I pen this column, we celebrate Presidents’ Day—a cool winter holiday originally meant to honor Washington and Lincoln’s birthdays but now mostly a day off from work and school. When I was a kid, February was a rapid-fire month of celebrations—Lincoln’s birthday on the 12th, Valentine’s Day on the 14th, and Washington’s birthday on the 22nd. Over time, two of these events have merged into one, but this year, a well-placed Friday-to-Monday stretch created a four-day weekend for SoCal school kids.
 
Reflecting on presidential legacies got me thinking: beyond politics, what decisions have truly shaped the commercial real estate landscape? From massive land acquisitions to economic policies that influenced leasing, investing, and development, presidential decisions have had a lasting impact on how, where, and why commercial real estate thrives.
 
So, in honor of Presidents’ Day, here are ten of the most influential moves that changed our industry forever.
 
1. The Louisiana Purchase (1803)
With one signature, Thomas Jefferson doubled the size of the United States, opening vast territories to expansion. This set the stage for land speculation, western development, and the eventual rise of cities that became hubs for commerce and industry. Imagine what CRE looked like before places like St. Louis, Denver, and New Orleans became economic powerhouses.
 
2. The Panama Canal (Completed in 1914, championed by Theodore Roosevelt)
By cutting transit time between the Atlantic and Pacific Oceans, the Panama Canal revolutionized global trade and transformed U.S. port cities into industrial and logistics hubs. Today’s industrial real estate boom—think massive distribution centers near ports—owes much to this early infrastructure investment.
 
3. The Smoot-Hawley Tariff Act (1930)
Passed under President Hoover, this protectionist tariff worsened the Great Depression by stifling trade. The ripple effects devastated commercial real estate, as businesses closed, industrial demand plummeted, and office vacancies soared. A lesson learned: real estate is highly sensitive to trade policy and economic shifts.
 
4. The Small Business Administration (1953, Eisenhower)
By providing federally backed loans to small businesses, the SBA made it easier for entrepreneurs to purchase office and industrial spaces. Countless shopping centers, strip malls, and local office buildings have been filled by SBA-assisted businesses over the years, fueling demand for small-bay industrial, retail, and professional space.
 
5. Nixon Opens China (1972)
When Richard Nixon reestablished diplomatic and trade relations with China, the move triggered decades of economic transformation. Factories in the U.S. closed as manufacturing shifted overseas, reshaping industrial real estate. Warehouse and logistics space replaced manufacturing plants, and West Coast port cities like Los Angeles, Long Beach, and Seattle became critical import hubs.
 
6. Reagan’s 1986 Tax Reform Act
This landmark tax overhaul eliminated many real estate tax shelters and changed depreciation rules, altering how investors approached CRE. The shift led to a market downturn in the late ’80s, followed by a new focus on long-term, sustainable investing strategies. Investors learned that tax policy alone shouldn’t dictate real estate decisions.
 
7. Enterprise Zones (1980s-Present)
Various presidents have championed enterprise zones—designated areas offering tax breaks and incentives to encourage business investment in struggling regions. These policies, from Reagan’s initiatives to the Opportunity Zones under Trump, have fueled development in underutilized areas, sparking growth in commercial real estate.
 
8. The Affordable Care Act (2010, Obama)
While primarily a healthcare law, the ACA’s impact on commercial real estate was profound. The expansion of medical facilities, urgent care centers, and specialty clinics surged, increasing demand for medical office space. Meanwhile, some businesses downsized their footprints in response to new insurance mandates. When selling real estate assets, a 3.8% tax was imposed as well.
 
9. Trump’s Tariffs (2018-Present)
Trade wars with China and other nations led to increased manufacturing costs and supply chain disruptions. However, these policies also triggered a renewed push for domestic production, fueling demand for industrial space and reshoring manufacturing facilities—a trend that continues today.
 
10. COVID Lockdowns (2020, Trump & Biden)
Perhaps no recent event has reshaped commercial real estate more than the COVID-19 lockdowns. Office vacancies skyrocketed as remote work took hold, retail faced massive upheavals, and industrial real estate boomed with e-commerce demand. The long-term effects are still unfolding, but one thing is certain—CRE will never look the same again.
 
Final Thoughts
Presidents’ decisions don’t just influence policy—they reshape the very fabric of our cities, our businesses, and the commercial real estate from which we operate. From land acquisitions to tax laws to trade policies, every move in Washington sends ripples through our industry.
 
Looking ahead, the question remains: what policy decisions today will shape the next era of commercial real estate? If history is any guide, the effects will be felt for decades to come.
 
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.
 
 

The Industrial Gold Rush Slows: Why Class A Logistics Development in Southern California Is at a Crossroads

If you’ve driven through the Inland Empire lately, you’ve likely noticed the seemingly endless stretch of massive warehouses sprouting up like weeds after a rainy season. These aren’t your grandfather’s industrial buildings—these are Class A logistics facilities, the gold standard of modern warehousing.
 
But what exactly defines a Class A logistics building, and why has Southern California been ground zero for their development?
 
What Makes a Logistics Building “Class A”?
In commercial real estate, “Class A” is the best of the best. For logistics buildings, that means high ceilings (32 to 40 feet clear height), wide column spacing, expansive truck courts, and an abundance of dock doors. These facilities are designed for maximum efficiency, helping retailers and logistics companies move goods as quickly as possible.
 
Modern Class A warehouses also feature state-of-the-art technology, including automation, robotics, and advanced climate control for specialized storage needs.
 
Sustainability has also become a priority, with many new projects incorporating LEED certification, solar panels, and EV infrastructure to meet California’s stringent environmental regulations.
 
Why Has Southern California Been a Logistics Boomtown?
Southern California has long been a logistics hub, but in recent years, industrial development has reached unprecedented levels, particularly in the Inland Empire. The reasons have been as clear as a truck’s route on a traffic-free I-10 (if only that ever existed).
 
First and foremost, the Ports of Los Angeles and Long Beach handle nearly 40% of U.S. imports, making the region a critical entry point for goods from Asia. Companies have historically needed distribution centers close to these ports to move inventory quickly, reducing supply chain costs and delivery times.
 
The rise of e-commerce further accelerated demand. Consumers now expect next-day or even same-day delivery, requiring strategically located fulfillment centers. Major players like Amazon, Walmart, and FedEx aggressively expanded their logistics footprint to keep pace.
At its peak, the Inland Empire was a developer’s dream—land was more affordable than in Los Angeles or Orange County, and proximity to major transportation corridors made it an ideal distribution hub. Vacancy rates were historically low, and new warehouses were often leased before construction was even completed.
 
A Market Shift: From Undersupply to Oversupply
But what was once a perfect storm of demand has now flipped on its head. Since mid-2022, the market has cooled significantly, and supply has now outpaced demand.
 
Massive speculative development, combined with a post-pandemic slowdown in e-commerce growth and shifting inventory strategies, has led to a glut of new industrial inventory—especially in the Inland Empire. The frenzied leasing activity of 2020-2022 has slowed, leaving many newly constructed warehouses sitting empty.
 
The impact? Rents have begun to soften, and landlords are increasingly offering concessions—free rent, tenant improvement allowances, and flexible lease terms—to spur absorption. It’s a stark contrast to just a couple of years ago when landlords held all the leverage.
 
The Investment appetite Adjusts
Institutional investors, once bullish on Southern California’s industrial sector, are now treading more cautiously. Rising interest rates have further complicated the picture, making development financing more expensive and prompting some developers to hit pause on new projects.
 
Still, despite the current correction, Southern California remains one of the most critical logistics markets in the world. As long as goods continue flowing through its ports, the region will be a key player in global trade. The question is whether landlords, developers, and investors can adjust to a new reality—one where growth isn’t limitless, and strategic leasing efforts will be just as important as new construction.
 
The Road Ahead
So, what’s next? The market is recalibrating, and 2024 will be a year of absorption rather than expansion. Developers and investors who were riding the wave of relentless demand will now need to focus on filling vacancies, managing rental expectations, and offering incentives to attract tenants.
For communities, that means fewer new projects breaking ground—but also a more balanced industrial market that could lead to more sustainable long-term growth.
One thing’s for sure—those massive warehouses aren’t going anywhere. But for the first time in years, some of them might be sitting empty a little longer than expected.

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.
 
 

New Law Shakes Up Buyer Representation in California—What It Means for Commercial Real Estate

A major shift has arrived in California real estate, and if you’re in the business—whether residential or commercial—you need to pay attention.
 
As of January 1, 2025, Assembly Bill 2992 (AB 2992) requires that real estate agents representing buyers must enter into a written buyer-broker representation agreement with their clients. While this practice has long been common in residential real estate, the fact that it now extends to commercial transactions adds a new layer of formality—and potential friction—to the way deals get done.
What’s in the Law?
For starters, this isn’t just a suggested best practice. Under AB 2992, written agreements are now mandatory when representing buyers. No more handshake deals or loosely defined relationships. Brokers must present and execute a buyer-broker representation agreement with their client before submitting an offer on a property.
These agreements must include:

• The broker’s compensation terms

• A breakdown of the services the broker will provide

• The conditions under which the broker gets paid

• The duration of the agreement and how it can be terminated

For individual buyers, these agreements cannot exceed three months—and automatic renewals are prohibited. However, if the buyer is a corporation, LLC, or partnership, there’s no limit on duration.
In addition, before signing, brokers must provide buyers with a written agency disclosure form, ensuring they fully understand the nature of the representation and the broker’s role in the transaction.
What This Means for Commercial Real Estate
While commercial brokers are no strangers to formal agreements, this law forces a more structured and transparentapproach to buyer representation. In some ways, this is a good thing—establishing clear expectations up front can reduce misunderstandings later. But in an industry where relationships and flexibility are key, some see this as unnecessary government interference.
Brokers will now need to:

• Lock in client commitments earlier. Those informal “let’s see what’s out there” conversations may now need to be backed by signed paperwork sooner than some clients expect.

• Clearly define compensation terms. No more vague or open-ended agreements. Brokers must spell out exactly how and when they will be paid.

• Educate clients about the new rules. Some buyers, especially those used to the old way of doing things, may push back on signing agreements upfront. Brokers will need to walk them through why this is now required.

The Big Picture
California has been moving toward more consumer protection in real estate for years, and AB 2992 is just the latest step. While it might create short-term headaches for brokers who are used to looser arrangements, it ultimately aims to bring more clarity and accountability to buyer-broker relationships.
Whether this shift strengthens the industry or just adds another layer of red tape remains to be seen. But one thing is certain—if you’re working with buyers in California real estate, you’d better get those agreements in writing.

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.