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Steve Cranford
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Commercial Realtor
Commercial Realtor

96 followers
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A few months ago I published an article about the chaos coming to the commercial real estate world. Here is an interesting article on some the changes taking place. Apparently, sea containers are like duct tape in that their uses are endless. Walmart will be on this like, well you know. 
 
http://www.costar.com/News/Article/Coworking-Ventures-All-the-Rage-as-Startups-Pursue-Office-Sharing-Concepts-with-Staples/181227?rpt=1

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GET READY FOR AN EXCITING AND PRODUCTIVE 2016!

Although 2016 will not be a ‘pedal to the metal’ year for commercial real estate growth, it does have all the indications for a strong upswing with vacancies declining and lease rates improving through 2017, so say most commercial real estate analysts.

That’s consistent with our analysis as well. In 2015, the Frederick commercial real estate market experienced a mild spring but a robust 3rd quarter spilling into the 4th quarter. We ended the year with solid sales setting up strong fundamentals for 2016.

Keep in mind, this is an election year and it promises to be everything its broadcast to be. As you know, with the election comes a lot of market indecision and that generally means another slowdown in the business world.

So, do you take advantage of the market, step on the gas and get in the passing lane to make your real estate decision sooner than later? Or do you stand on the brakes and wait a couple of years until the business community reacts to the new administration?

Those are not easy or simple choices. You’ll need quality information and experienced guidance to help make the right decision.

Give me a call and we can review your current and future real estate needs to help you determine your best real estate opportunities.

The phone call is free and the coffee is on me.

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IoT in Commercial Real Estate – The Good, The Bad and the Wow.

Let’s begin by identifying the Internet of Things (IoT). IoT as defined by Wikipedia “is the network of physical objects or "things" embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data.”

We are all familiar with connections that involve on demand information. For example, you want to know how long it will take to get from the airport to your meeting with current traffic, or you want real-time visual display of your dog chewing up your couch, or you can get instant access to historical data like sports scores or news.

Although introduced just a few years ago, these are now life altering technologies that we can’t live without. However, real IoT is much bigger, broader and bolder, thanks to sensors and beacons.

Through sensors animate and inanimate objects provide real-time data. Sensored concrete can transmit an alert to your car warning of icy conditions and automatically slow your vehicle, regardless of your desire. Sensors in the steel beams of a building can provide real-time data on the stress level the structure experienced from an earth quake or high winds.

Wearable sensors in your hospital gown can provide medical staff with an array of critical information without a single wire plugged into your body. The data from those sensors provide systems with information to determine if a pattern of activity within your body is a good or bad thing.
Beacons on the other hand, provide non-contact information. For example, from a beacon a retailer can tell how many people stopped by a specific area in the store and how long they were there. Based on the amount of time an individual was in an area, the beacon could transmit special offers to that customer’s phone. Talk about instant customer recognition and engagement.

So, where is the bigger, broader and bolder IoT of sensors and beacons for Commercial Real Estate (CRE)?

Currently, most of the IoT can be found in commercial building/property management operations. Beacons in the ‘connected building’ react in real time to building activity. For example, data from beacons can adjust the building’s systems to fine-tune operations based on current foot traffic, body count in any give location, outside weather and potential system failures. It can even instruct the cleaning people to focus on or skip areas based on the activity in the building for that day. The connected building is a dynamic organism and no longer just a static structure.
From all that data it’s easy to determine the building’s ability to function at the highest level for the least cost. Once all the ‘things’ start communication with each other they hold no secrets. The connected building’s data becomes the health and wellness record of the structure, which becomes another one of the key elements when determining a property’s value.

Keep in mind, IoT by its very nature is disruptive, it transforms the values, models and evolution of the business world. So it will be in the CRE industry. Data from beacons and sensors will change the ergonomics of structures, force organizational changes and alter design parameters.

The IoT can ‘do good things’ for the CRE practitioners if they embrace technology and look forward to the chaos it brings.

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Office Buildings to Apartment Complexes - The Next Big Urbanization

There are a gazillion articles, some even penned by MacRo Ltd., on the new ‘workforce’ in the new ‘workplace’ and how they will impact the “new” office environment. 
It’s clear that the future of our office market is going to be very different than what we see today, especially for the larger campus style properties. 
Unfortunately, the hard truth for Frederick and the surrounding area is that it will take years to absorb the current glut of outdated office space. Yet, a majority of these locations remain extremely valuable and useful. Just maybe not in the way they are currently positioned in the market.
Think about why developers build office buildings in certain areas. Then think about how developers select sites for apartment building construction. Notice any similarities? How about quick and easy access to transportation, restaurants, shopping, similar office product and other desirable amenities?
These characteristics—or lack thereof—determine the attractiveness and potential profitability of a building. 
Now think about the cost of demolishing an office building to have another building rise in the same spot. Compare that to simply converting that vacant and obsolete glass, concrete and steel dinosaur into a vibrant, technology-friendly urban residential hub.
Whether condos or rentals, the demand for urban-efficient housing continues to outpace supply. Office-to-residence reuse has grown rapidly in the primary market over the past several years and is now becoming financially viable in large markets and smaller markets, like Frederick.  
In fact, a perfect redevelopment storm could be brewing in Frederick. 
First, we have the empty and outdated building inventory. Next, the multifamily market shows signs of steady and prolonged growth, as well as strong financial support to extend that trend. Also, in a strange and unusual coupling, the Frederick market has a growing community of millennials and boomers seeking similarly efficient urban housing. And last but not least, there are discussions underway to finally change the land management codes to better promote and serve a lively, contemporary, and diverse community. 
The pieces are in place for growing a modern yet historic community without occupying additional land, building new roads and creating further congestion. 
So, as wise ol’ Abe Lincoln once said, “The best way to predict your future is to create it.” 
We have the vision. Now let’s begin making that vibrant, urban future a reality 
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Great article on the success of developers converting urban obsolete and vacant offices into market rate apartments and condos. This is a concept Frederick should consider given the high vacancy rate of large office space in that market. 

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ATTENTION OFFICE BUILDING OWNERS AND MANAGERS: The workplace real estate environment and market continues to evolve and you need to pay attention if you plan on successfully leasing your space.  This Washington Post article is a summary of an excellent report on the future of the commercial office/workspace. You can access the report from the article. Below are some highlights of the report:
• The global mix of employees has shifted beyond parity. Today it is: 
o 25% Baby Boomers - 38% Generation X - 37% Generation Y
• There are three types of office models:
o Physical present –Virtual state - Hybrid
• Organizations need more high quality, adaptable spaces that cater to a wider variety of worker.

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Great story on clarifying the ‘22 veteran suicides a day’ claims. The study by the VA and other health organizations suggests as a population, there are more veteran suicides than in the non-veteran population. However, within the veteran population there are higher concentrations within specific age groups. For example, the average age of male veteran suicides is 59.6 and as that population ages, the percentage increase dramatically.  To my fellow Vietnam Veterans, this is something to think about. 

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The rapid slowdown of investor funding signals biotech is now moving from a relatively high-risk investor based development model to the IPO centric stock market evolution. The question now: has biotech morphed from a socially conscious enterprise to a PE ratio valuation model? 

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As this article points out, the aging office building’s challenge to remain relevant in changing working environment is becoming a significant issue in the business world. Frederick’s office market is really feeling that challenge. (see my post “Frederick’s Office Market and the Flight to Quality” date 9/25/14).

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Fantastic story on veterans and their commitment to society - during and after their military time. A good positive read. Welcome Home!
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