Commercial Property Executive June2012 : Page 27
What’s in Store Associate editor Mike Ratliff reached out to the CPE 100—our select panel of top-level industry executives—to get their take on the biggest changes that will shape our industry over the next 25 years. Richard Ader Chairman U.S. Realty Advisors My own feeling is that retail is probably the asset class that is going to change the most. Its evolution will largely be due to the impact of online shopping. Stores might get smaller and maybe even more like distributors, where you order something and pick it up at the store or have it sent to your home. In the same vein, I think that distribution centers are going to be-come much more important. If you think about Amazon, they are basically a distribution com-pany. They started out with books and music, and now they sell anything you can think of. I don’t expect that offi ce is going to change much, because I think people still like going to a workplace and sharing space and ideas with oth-ers. It’s more stimulating and creative. I don’t think everybody is going to want to work from home—it all sounds good until you do it and have no one to talk to.” kets, this institutionalization of commercial real estate will be partly due to capital needs, as well as the state of the capital markets. Another trend that I think we are moving toward is a less leveraged view of real estate. This downturn hit hard, and the memory is go-ing to stick with us. The people who survived the downturn were the people who were less leveraged. But to be less leveraged means you need more capital in the beginning. Owning on a lower-leveraged basis will give institution-al holders a greater ability to conduct business. Doug Firstenberg Principal, Stonebridge Associates Inc. I think that one big continuing change will be mixed-use devel-opment. The asset class is evolv-ing. If you asked people what mixed-use was 10 or 15 years ago, many would say retail at the base of an offi ce building. Now you have got to have multiple uses to really be defi ned as mixed-use. What has evolved more recently—and I think this trend is going to continue—is that even people who don’t need mixed-use—for example, an offi ce tenant—will have a strong preference for mixed-use projects as a means of attracting and maintaining their staff. In a mixed-use environment, they can go out at lunch time and get back to the offi ce quickly. Offi ce tenants love residential, not only for the fact that their employees can live next door but because there will be more retail activity and the area will be lighted at night. Though there are numerous benefi ts to mixed-use projects, they are inherently more complicated to develop, more complicated to approve, more complicated to fi nance. But I do think there is a better chance of doing these projects now, because people understand the synergy. I think the money will ultimately get more comfortable with it. Ric Campo Chairman & CEO Camden Property Trust What has started to happen in the apartment industry in the last four or fi ve years is that spac-es are getting smaller. I think this is a trend that is going to continue for another 10 to 20 years, as well. People want more effi cient units and can deal with less space, thanks to technology and innovation. Part of the driver is that residents are social-izing more outside of their space. To serve this need, we are designing more social spaces within the properties. These spaces might be alcoves where people can sit around and chat and have coffee, or sit and look at the view. It is not just the space but the social and technological con-nectivity you build into these spaces. High-speed Wi-Fi and electrical outlets are a must. Our prop-erties are going to be smaller, but they are going to be technologically well connected. If a prop-erty isn’t, then you are going to be in trouble. Robert Aisner President & CEO, Behringer Harvard Holdings L.L.C. I believe we will continue to see the institutionalization of real estate. While we have already witnessed the growth of the public REIT mar-ket over the last 20 years, I think that the gen-eral institutionalization of real estate will en-dure. Whether it is through more ownership by pension funds, hedge funds or the public mar-Ross Ford President & CEO TCN Worldwide One trend that I think we will witness over the next 25 years CPExecutive.com | June 2012 27
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