Thinking Inside the Box
Chicago developer Related Midwest has put a new twist on pop-up retailing. In June, the developer opened Box Shops by Related, a six-store retail market made of refurbished shipping containers of 160 square feet each. The container market, in Chicago's West Loop, is on the site where the company plans to develop a 58-story mixed-use tower; the concept is scheduled to be open through the end of the year. The containers have lighting; heat and air-conditioning; skylights; and wireless internet. Occupants include small local retailers, a bar/beer garden for a neighboring pub, and a small fitness center.
Source: Related Midwest
Crafting Cross-Border Fire Safety Standards
More than 30 organizations from around the world launched the International Fire Safety Standards Coalition in Geneva, Switzerland, in July. The group plans to develop a shared set of standards for fire safety in buildings. “All over the world, we see the need for more high-rise structures -- some residential, some commercial, and some mixed-use buildings -- particularly in cities. Our concern is not with the height of these buildings, but with the risks they pose in the absence of a coherent and harmonized approach to setting global standards in fire safety,” says Gary Strong, chair of the coalition. “The IFSS Coalition aims ... to bring together the design, construction, and management aspects of ensuring fire safety of building assets.”
Multifamily Goes Green
Apartment residents, particularly younger ones, are interested in sustainable and green features for their homes, and are willing to pay a little more for them. In a survey of 2,800 apartment dwellers -- 59 percent under age 34 -- 64 percent said they'd pay slightly more to live in a green community.
Most Valued Apartment Features
- Smoke-free community -- 94%
- Energy- and water-efficient features -- 93%
- Access to public transit, along with strong walk/bike scores -- 85%
Source: AMLI Sustainable Living Index
Work Trends Drive Shift to Lower-Cost Cities
Because of escalating rents, many multinational corporations are looking to decentralize to areas with lower costs. The rise of technology firms has made a difference as well; newer companies no longer feel obligated to locate in traditional -- and more expensive -- power cities, particularly if many of their employees work remotely.
Source: “Disruptive Office Trends in 2018,” Cushman & Wakefield
Industrial Property Sale-Leaseback Options on the Rise
Companies that own and occupy industrial space are becoming more interested in sale-leaseback options, thanks to three factors.
- The growth of e-commerce has increased demand for industrial space, driving down vacancy rates to record lows.
- Industrial property values have risen, so property owners have access to higher profits that they can reinvest back into the business.
- The new tax code contains favorable rules for owner-occupied businesses, including 100 percent depreciation of certain assets over a year.
Source: Marcus & Millichap Industrial Spotlight
Top Five U.S. Hotel Development Markets
Number of New Rooms Under Construction
- New York = 11,000 rooms
- Las Vegas = 7,400 rooms
- Dallas = 5,300 rooms
- Denver = 4,100 rooms
- Nashville, Tenn. = 3,500 rooms
Source: National Real Estate Investor
Real Estate Costs Top Law Firm Expenses
The top fixed expense in law firms after salaries is real estate, according to Cushman & Wakefield's 2018 National Legal Sector Benchmark Survey. Of those law firms responding to the survey, 17 percent said they already had shifted to single-size offices. In the next 10 years, 70 percent targeted ratios of 500 sf per attorney, and 88 percent said they planned to implement single-size offices.
Multifamily -- Rising construction costs, paired with the rise of ride-hailing and car-sharing services, have shifted many cities' thinking about minimum parking requirements in new developments. Architects David Baker and Brad Leibin, writing in Urban Land, note that cities such as Buffalo, N.Y., and Hartford, Conn., have reduced or eliminated parking minimums, and San Francisco has even begun establishing parking caps for areas that have abundant public transit.
Retail -- The popularity of grocery-anchored shopping centers is increasing among investors. Real Capital Markets notes that 48 percent of investors surveyed said such properties were their most preferred investment. While brick-and-mortar grocers do face competition from online merchants, Colliers' Anjee Solanki points out that consumers remain loyal to their local grocery stores -- and they can be combined especially well with residential properties and experiential conveniences in mixed-use developments.
Office -- The forecast for West Coast office markets should remain positive through 2018, Kidder Mathews says. Factors include high demand and participation by tech giants in San Francisco; attractive accessibility and amenities in Sacramento; employment growth and economic confidence in Seattle; and low unemployment in Phoenix.
Industrial -- The industrial property market will continue its strong performance through the end of the year, according to CoStar. The increase in demand for same-day or next-day delivery is driving demand for more expensive properties that are closer to urban centers. Labor costs at such properties also are increasing because of competition for workers, and some developers are even including amenities such as daycare centers and fitness trails.
Hospitality -- The quest to offer unique hotel experiences has led to disruptive ideas for the market, says JLL Americas Head of Hotel Research Geraldine Guichardo. New offerings include adding a coworking option in a business center; adding rotating museum-style art displays; and even including an urban amusement park, complete with a carousel and mini-golf course.