Work Out Loud

In a land far away but not so long ago, my wife encouraged me to “work out loud.” A foreign concept at first, but brilliant in its simplicity.
 
You see, in 2009, Carla was introduced to social media marketing while earning an advanced degree in apparel manufacturing from the Fashion Institute of Design & Merchandising, better known as FIDM. Her advice was prescient. Take what I do in commercial real estate brokerage every day, the work, and digitize it, the out loud.
 
The Location Advice blog was born shortly thereafter, and 17 years later, it’s still published every week. Here, I provide advice to owners and occupants of industrial real estate throughout Southern California.
 
What started as an experiment became a habit. That habit became a body of work. And somewhere along the way, working out loud became one of the most important business development lessons of my career.
 
So, what exactly does it mean to work out loud?
 
Simply put, don’t invent content. Document your work.
 
Commercial real estate brokers spend their days solving problems. We tour buildings, negotiate leases, advise owners, analyze alternatives, track market activity, uncover opportunities and occasionally talk clients off the proverbial ledge.
 
Each encounter contains a story.
 
Years ago, the challenge was finding a way to tell those stories. Today, the challenge is choosing among the countless ways to do so.
 
A blog was my starting point. Then came LinkedIn, YouTube and other social platforms. In August 2013, I recorded my first TUESDAY Traffic Tips video. The premise was ridiculously simple. I was already driving to work, so why not use those few minutes to discuss something I had encountered in my brokerage practice?
 
Once again, the work became the content.
 
Now artificial intelligence has added another dimension.
 
I can take notes from a client meeting and organize the important themes. I can research a topic I encountered during the day. I can analyze a complicated issue from several angles. I can turn an idea into an outline, challenge my assumptions and identify questions I haven’t considered.
 
But there is an important distinction.
 
AI can help me create content. It cannot give me 42 years of experiences from which to draw.
 
That distinction matters.
 
Spend five minutes scrolling through LinkedIn and you’ll encounter plenty of content that sounds polished but says very little. Artificial intelligence has made producing words incredibly easy. Producing something worth reading remains difficult.
 
Which brings me back to Carla’s advice.
 
Work first. Out loud second.
 
If you own a manufacturing company, perhaps you just wrestled with whether to renew your lease or buy a building. There’s a story there.
 
If you operate a logistics company, maybe rising rents forced you to reconsider your distribution network. There’s a story there.
 
If you own an industrial building and your tenant suddenly announced plans to leave, you learned something about leasing, timing and risk. There’s a story there too.
 
The most compelling content generally comes from experience, not imagination.
 
Certainly, confidentiality matters. I don’t identify clients or disclose information that should remain private. But the lessons surrounding a transaction can often be shared without revealing the parties involved.
 
What happened? What did we learn? What might another owner or occupant do differently?
 
Answer those three questions and you probably have something useful to say.
 
There is another benefit to working out loud that I didn’t appreciate in 2009.
 
You create a digital record of your expertise.
 
One blog becomes 10. Ten become 100. A weekly column becomes hundreds. A short video recorded every Tuesday becomes years of conversations about your craft.
 
Individually, none seems particularly significant. Collectively, they tell the market what you know, how you think and whom you help.
 
And now, with artificial intelligence able to search, organize and repurpose that body of work, those years of accumulated knowledge become even more valuable.
 
The technology will continue to change. Blogs gave way to social media. Video became ubiquitous. Podcasts exploded. Artificial intelligence arrived. Something else will surely follow.
 
But I suspect Carla’s advice will survive all of them.
 
Do good work.
 
Pay attention to what the work teaches you.
 
Then work out loud.

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.
 
  

US Cities

I’m penning this column from one of our great U.S. cities, Chicago, Illinois. The scale of the downtown area is overwhelming. Massive skyscrapers rise from the banks of the Chicago River as it meanders toward Lake Michigan. The El bangs along rickety tracks in its endless loop around downtown. Of all the major metropolitan areas in our country, Chicago may be the most impressive.
 
Later today, I’ll address the Lee & Associates Chicago office. My topic is The SEQUENCE AI, derived from my book, The SEQUENCE, with a bit of artificial intelligence magic spun in.
 
But on to the topic of today.
 
As I walked Chicago this weekend, I was struck not simply by its size, but by its resilience. This is a city built around transportation, commerce and real estate. Yet the way each of those functions today bears little resemblance to the city that produced many of the magnificent buildings surrounding me.
 
Which caused me to wonder. What makes a piece of commercial real estate endure?
 
Is it the building, the location, the infrastructure surrounding it, or simply our willingness to imagine a different use when the old one no longer works?
 
Commercial real estate is littered with buildings constructed perfectly for yesterday.
 
Chicago provides plenty of examples. The city grew because of its strategic location, first as a connection between the Great Lakes and the Mississippi River system, then as a railroad hub linking eastern markets with the rapidly developing West. Commerce followed the transportation, people followed the commerce and real estate followed the people.
 
Sound familiar?
 
Southern California developed differently, but the fundamentals are remarkably similar. Our ports, freeways, airports, population and enormous consumer base created one of the largest industrial markets in the country. Manufacturers, distributors and logistics companies needed places to make, store and move things, and an industrial real estate market grew around them.
 
But markets change.
 
Manufacturing processes become more sophisticated. Distribution becomes more automated. Companies require more power, greater clear heights, better loading and fewer employees per square foot. Buildings that were state of the art 40 years ago can suddenly find themselves functionally obsolete.
 
Office buildings face an even greater challenge. Remote and hybrid work have changed the amount and type of office space many companies require. A magnificent downtown tower can still occupy a great corner, offer spectacular views and sit adjacent to tremendous infrastructure, yet struggle because the original assumptions upon which it was built have changed.
 
So what happens next?
 
Some buildings will continue doing exactly what they were designed to do. Others will be renovated and repositioned. Some may find entirely new uses, while others will eventually disappear and give way to something the original developer never contemplated.
 
We see the same thing happening in Orange County.
 
Older manufacturing buildings are being occupied by advanced manufacturers whose products their original occupants could scarcely have imagined. Corporate campuses are being reconsidered. Industrial buildings are being modernized. Office owners are wrestling with what their properties should become if traditional office demand never fully returns.
 
Which brings me back to Chicago.
 
Great cities endure because they adapt. The river that once moved raw materials now carries architectural tour boats beneath skyscrapers. Elevated trains designed in another century still rumble above streets filled with people carrying smartphones and ordering rides from apps. Buildings constructed for yesterday remain valuable because the infrastructure, location and human activity surrounding them continue to matter.
 
Therein lies the lesson for commercial real estate owners.
 
We tend to think of a building as a permanent asset, but its usefulness is anything but permanent. Markets change, technology changes, companies change and the way people work changes.
 
The dirt, however, remains.
 
And sometimes the greatest value in a piece of commercial real estate isn’t what it is today, but what someone can imagine it becoming tomorrow.

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 to expect for the balance of 2026

Summer 2026 is over. As the last tent was collapsed at the International Street Fair over the weekend, fall signaled its return, albeit with high temperatures, humidity and a bit of rain. Hurricanes in the Pacific will do that, but I digress.
 
Other than Christmas decorations in our local home improvement stores, what can we expect in our industrial real estate market for the final months of 2026?
 
Allow me to forecast.
 
Vacancy will remain elevated, but the worst may be behind us.

Depending upon whose statistics you follow, Orange County industrial vacancy ended the second quarter somewhere in the mid-5% to upper-6% range. One major brokerage firm pegged vacancy at 5.5%, its highest level in 20 years. Other surveys calculate it somewhat differently.
More important than the precise number is the direction.
 
After several years of companies shedding excess space, leases expiring and newly constructed buildings searching for occupants, we are beginning to see signs of stabilization. Industry reports show positive absorption for the third consecutive quarter in Q2.
 
I expect that trend to continue through year-end. Vacancy may bounce around, but I don’t anticipate another dramatic increase.
 
Lease rates will find a floor.

Average asking rents have fallen considerably from their late-2023 peak. Recent market reports place average asking rents around $1.49 per square foot, triple net, compared with $1.80 at the peak. Other surveys place the current average slightly lower at $1.46.
 
That correction was necessary.

For several years, occupants renewing leases faced enormous increases. Today, they have choices. Landlords are competing again, concessions have returned and tenants willing to commit can negotiate.
 
My prediction? Asking rates remain relatively flat through the balance of 2026, but effective rents, after free rent and tenant improvements are considered, will continue to favor occupants.
 
Large buildings will continue to struggle more than small ones.

This is really several industrial markets masquerading as one.
 
Recent market data indicates that buildings between 5,000 and 10,000 square feet had vacancy below 2% in the second quarter. Buildings between 100,000 and 250,000 square feet had vacancy exceeding 14%.
 
That is an enormous difference.

Small owner-user buildings remain scarce. Large distribution facilities have considerably more competition. Expect that disparity to continue.
 
Construction will virtually disappear.

Only a fraction of the industrial space that was under construction a couple of years ago remains in the pipeline. Recent market reports counted just 676,000 square feet underway at midyear, down almost 66% from a year earlier.
 
With land prices, construction costs, interest rates and existing availability where they are, speculative development is difficult to justify.

That lack of new construction will eventually matter. Demand doesn’t have to explode for vacancy to tighten when very little new inventory is being added.
 
Owner-user sales will remain frustrated by financing.

Here is the wildcard.

Companies still want to own their buildings. Many simply dislike the monthly payment created by today’s borrowing costs. Meanwhile, owners who bought years ago at much lower prices and interest rates have little incentive to sell.
 
Consequently, good owner-user buildings should continue to command attention, but transactions will take longer and buyers will scrutinize pricing more carefully.
 
The Federal Reserve provides little clarity. Policymakers enter their September meeting divided over whether rates should remain unchanged or move higher, with inflation data likely determining the outcome. 
 
Finally, 2027 decisions will begin early.

This may be the biggest story of the fourth quarter.
 
Companies with leases expiring in 2027 and 2028 should be evaluating alternatives now. For the first time in several years, occupants have leverage. Waiting until 90 days before expiration wastes it.
 
So, my forecast for the balance of 2026?

More balance. More negotiation. Fewer cranes. Motivated landlords. Selective buyers. And considerably more opportunity for occupants willing to make decisions before everyone else does.
 
Oh, and Christmas decorations appearing sometime after Labor Day.
 
Apparently, some forecasts are easier than others.

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.
 
 

Client services

On occasion, one of our clients outgrows its local facility, expands into another part of the country, or needs real estate advice in a market beyond our expertise.
When that happens, our role changes.

Rather than simply referring the client to a broker in another city and hoping for the best, we employ what I call a client services approach. It includes the traditional brokerage functions of identifying alternatives, touring properties, negotiating terms and completing a transaction, but adds another layer: analysis, accountability and strategy.

Think of us as the quarterback.

We remain responsible for understanding the business requirement, helping establish the real estate strategy, identifying and engaging the right local professionals, keeping everyone accountable, comparing alternatives on a consistent basis and making certain the recommendations support the client’s larger business objectives.

Over the years, I’ve found these assignments generally begin in one of three ways.
A client has outgrown its existing operation and needs more space. A company is expanding geographically and entering a market it doesn’t know. Or an existing location somewhere outside our home market reaches a decision point: renew, relocate, expand, contract, buy or perhaps exit altogether.
In each case, our process begins before we look at a single building.

Understand the requirement
What is driving the assignment? Growth? Labor? Customers? Transportation? Cost? An acquisition? A lease expiration?

Square footage is important, but it is rarely the entire story. We want to understand headcount, equipment, power requirements, loading, clear height, yard requirements, employee commute patterns, customer proximity and the timing of the decision.

More importantly, we ask what the new location must accomplish for the business.

Build the strategy
Once we understand the requirement, we can determine where the search should occur and what alternatives should be considered.

Sometimes the answer is obvious. Frequently, it isn’t.

Should the company lease or buy? Should it expand its existing operation or open another? Is the preferred market really the best market? How do occupancy costs, labor availability, taxes, incentives and transportation compare among several locations?

This is where analysis becomes particularly important.

Assemble the local team
Commercial real estate remains remarkably local.
A broker who works a market every day understands ownership personalities, upcoming vacancies, off-market opportunities, municipal issues and nuances that someone parachuting into town simply won’t know.

Our job isn’t to pretend we possess that knowledge. It is to find the professionals who do.
We identify and vet local brokers and, when necessary, attorneys, architects, contractors, economic-development officials and other specialists. The client gets local expertise while retaining a single point of strategic accountability.

Create accountability
Here is where the client services model differs most from a simple referral.
We stay involved.

We establish the process, timetable and deliverables. Alternatives are compared using the same criteria. Proposals are analyzed consistently. Calls are scheduled. Responsibilities are assigned. Deadlines are tracked.

Someone owns the process from beginning to end.

Execute the transaction
Eventually, all that strategy and analysis must produce a result.

A building is selected. Economics are negotiated. Due diligence is completed. Documents are finalized. The company moves in.

Those are familiar brokerage functions. But by the time we reach them, much of the important work has already occurred.

Years ago, I believed our value as commercial real estate brokers was largely measured by how well we knew our local market.

I still believe local knowledge is enormously valuable.

But when clients grow beyond our geography, our responsibility grows with them. Our value becomes less about knowing every available building and more about knowing how to build the right strategy, assemble the right team, analyze the choices and hold the process accountable.

Sometimes the best way to serve a client isn’t to have all the answers.

It’s to make certain the right questions are asked, the right experts are engaged and someone remains responsible for getting the client where it needs to go.
 
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.