Hey everyone, and welcome back for another deep dive. Today, we’re taking a look at commercial real estate. Ooh, CRE. CRE, exactly. Yeah. With a special focus on the US and. Especially Texas. Yeah, Texas. We’ve got a ton of sources here. Recent news forecasts, industry analyses. The whole shebang. Yeah, the whole shebang to give us a clear view of what’s hot and what’s not.

And what savvy investors should be looking at. Right, exactly. It’s interesting, you know, while some parts of the CRE market are, you know, hitting some bumps. Yeah. We’ll get into that. We will get into that. But Texas is really standing out. It’s true. It’s like a magnet for growth. It really is. The numbers are mind blowing, honestly.

Yeah. Texas added 562, 000 new residents. Wow. Just between July 23 and July 24. Just one year. It’s the fastest growing state in the U. S. Incredible. I know. It’s not just people moving from other states though, right? No, it’s not just moving vans. Yeah. It’s, uh, there’s strong natural population growth, too.

What does that mean? More births than deaths. So you combine that with folks relocating from other states. Especially those expensive coastal areas. Exactly. You’ve got this built in long term demand for real estate of all types. Yeah. You need places to live, places to work. Places to shop. Places to shop, exactly.

Oh, that’s obvious, but it seems like a recipe for CRE success. Yeah. What does this actually look like on the ground? So what are the specific sectors that are really being impacted by this? Well, the multifamily sector is a really good example. Okay. Then on a construction tear. Just trying to keep up.

Trying to keep up, accommodate all these new Texans. Makes sense. And forecasts suggest that things might cool down a bit in 2025, but that doesn’t mean demand is going away. Okay, that’s good to know. Yeah. But, um, one article mentioned something called first generation retail space. Oh! Hopping up in Texas.

Yeah. What is that? That’s a really interesting trend. So basically it means brand new retail spaces. Like, never occupied before. Never occupied before. Built in these high growth areas. Okay. And because Texas is seeing so much growth, these first generation retail spaces are Very in demand. Very in demand.

Makes sense. Yeah. They can’t have all these new people without new places for them to shop. Right. How does this play into the bigger picture for investors and businesses in Texas? So it creates this really unique opportunity, like a fresh start, you know, a chance to shape the retail landscape in a booming market.

That’s exciting. Yeah. And because demand is so high, investors are seeing this as a way to potentially get ahead of the curve. Interesting. To capitalize on Texas’s growth. So while other markets might be tapping the brakes. Right. Texas seems to be hitting the brakes. The gas pedal. Yeah. And I read a quote from the CEO of Jamestown.

Yeah. Jamestown, which is a big real estate investment firm. And he basically said that they see the sunbelt as a whole, like from the Carolinas to Texas. Yeah. All the way to Texas as a safe bet for long term CRE investment because of those demographics and growth. That’s a pretty strong statement. It’s a really strong endorsement.

Yeah. It really emphasizes How Texas’s growth is attracting serious attention from people with money, right? It’s not just hype It’s backed by real investment dollars. It’s real. Yeah, and you know, it’s spilling over into those fun quirky cultural aspects Yeah, you know those bumper stickers. I wasn’t born in Texas.

Oh, yeah the classic I got here as fast as I could Exactly. I wonder if they have one for, I’m building first generation retail space as fast as I can. That’s a good one. But in all seriousness, it really does capture that sense of momentum and opportunity that’s driving Texas right now. Absolutely. So Texas is booming.

We’ve established that. For sure. But even within a boom, there can be, you know, variations. I noticed an article talking about a slowdown in multifamily construction. Interesting. And some of the big Texas cities, Austin, Dallas, Fort Worth, Houston. What’s going on there? Is the Texas magic fading? Not necessarily.

It’s more of a rebalancing. Okay. I think, you know, those rising interest rates, construction costs, tighter lending are definitely impacting the pace of development. Makes sense. But that underlying demand is still incredibly strong. Because of the population because of the population growth. Exactly. Okay.

And Freddie Mac is even projecting that multifamily originations will actually increase in 2025. So it’s not that people aren’t interested in Texas multifamily. It’s just that the market’s kind of adjusting. Adjusting to the new realities. Yeah. Yeah. So maybe a little less pedal to the metal and a bit more like steady cruising.

Exactly. Yeah. Investors are playing the long game here. They’re in it for the long haul. Yeah, they see potential for really solid returns down the road even with these short term adjustments. So if multifamily is adjusting. Right. What about all that shiny new first generation retail space? So what’s the reality on the ground there?

Well, the data tells an interesting story. Okay, so Co star the real estate data experts gurus the gurus Yes, they say that Texas is actually leading the entire u. s. In newly built available retail space Wow, which is pretty remarkable that is impressive and Houston is the star performer within Texas Houston All right, go Houston.

This just shows that developers are incredibly bullish on the Texas retail market. Wow. High demand can create some, you know, unique challenges as well. Absolutely. And even major players like McDonald’s are feeling the squeeze. Really? I came across this quote from their senior VP of development. Oh, yeah.

Her name is Tabassum Zalatrawala, and she was talking about how hard it is to find prime retail space for new stores. Oh, wow. They’re having to get creative, explore different location strategies to adapt to this limited supply. It really shows that even in a booming market like Texas, securing the right location is still so important.

Yeah, it’s not just about building it. It’s about building it in the right spot. That’s exactly right. And that’s why understanding those nuances. Of each market. Of each market within Texas is so important. So it’s not one size fits all. No, it’s not. Okay, so we’ve talked multifamily and retail in Texas.

Right. But what about those other CRE sectors? Where are the investors looking next? Well, one area that’s attracting a lot of buzz is data centers. Data centers. The demand for data storage is just skyrocketing. Makes sense. Thanks to the rise of AI cloud computing. And of course, our insatiable appetite for streaming everything, everything, all the time, all the time, data centers in Texas.

Now, that’s an interesting connection. I hadn’t made. Yeah. Tell me more. I will. Well, it’s really a combination of factors. First, you have that massive surge in demand for data storage and processing we talked about. Right. But Texas also offers this attractive package, you know, a business friendly environment.

Right. Relatively low energy costs and lots of land. It’s like the perfect storm. It’s like a data center developers dream. Yeah. And on top of that, the federal government’s getting involved too. Yeah. President Biden signed this executive order making federal sites available for data center development.

Oh, wow. So it’s getting support from all angles. Interesting. So it’s not just Texas being Texas. There’s like a national push behind this too. Exactly. And you can see that play out in some of the major projects in the state. Like what? So Lincoln Property is developing this billion dollar data center campus south of downtown Dallas.

Wow, a billion dollars. Yeah. That’s a lot of money. Partnered with Gigabit Fiber and Tradition Holdings, that’s a serious investment. They’re not messing around. No, they’re not. Are there other big players making moves in Texas? Oh yeah, absolutely. Provident Data Centers is another one. Okay. They’re building a hyperscale data center campus.

Wow. In Grand Prairie, Texas. I’ve heard of that. With their partner, Powerhouse Data Centers, and these projects are massive. Yeah. Not just in terms of money, but also in terms of their physical footprint. It’s interesting. These data centers are huge. Yeah, they’re like these giant buildings. Yeah. Full of servers and stuff.

Yeah, it’s a different beast than like A shopping mall or an office building. Right. It feels like a real shift. It’s an evolution. In the CRE landscape. Yeah, for sure. And while those traditional sectors are graveling with some headwinds. Yeah. We’ll get into that in a bit. Yeah. Data centers in industrial spaces are showing a ton of momentum.

Yeah, and speaking of industrial. Okay, let’s talk about that. That’s another area where Texas, particularly Dallas, is making waves. Okay. So Dallas and Phoenix are actually leading the nation in industrial building completions in 2024. Those giant warehouses we see popping up by the highway. Yes, exactly.

That’s the industrial boom. That’s it, and it’s not just about storing stuff anymore. Oh, really? No. These facilities are increasingly hubs for advanced manufacturing driven by this push for reshoring. What’s reshoring? So, it’s about bringing manufacturing back to the U. S. Oh! You know, it’s tied to those economic and demographic tailwinds that we talked about.

Okay. People moving in businesses, expanding all those goods, needing a place to be made and stored. So, it’s like this whole ecosystem developing in Texas. TikTok. TikTok. TikTok. From the people, it’s all at the top. From the businesses to the buildings. Yeah, and that 1. 2 million square foot distribution building.

Oh, wow. That was recently finished in Bulch Springs, Texas. That’s a prime example. That’s huge. Massive. Okay, so we’ve painted this picture of Texas as this CRE hotspot. Population growth, multi family retail data centers. Industrial development? It’s a lot. It’s a lot to take in. It is. But like any market, there’s got to be another side to this story.

Right. What are some of the challenges that are maybe lurking beneath the surface? Yeah, you’re right. It’s not all sunshine and roses. Yeah. The CRE sector is facing some serious headwinds. And at the top of the list, I would say, is the impact of those rising interest rates. You know, REITs, Real Estate Investment Trusts, they’re feeling the pressure and it’s just becoming more expensive for buyers to finance deals.

So it’s making everyone a little more cautious. Yeah, those interest rate hikes can really throw a wrench in the works. It can. And it’s not just interest rates that are causing concern, right? No, definitely not. What else? Inflation is another big worry. Yeah, CEOs are talking about the potential for increased inflation, which could lead to higher production costs and make development projects more expensive.

Right. It’s this ripple effect that can impact the whole industry. It’s like this delicate balancing act. Yeah. Trying to keep those projects profitable with all these outside factors. It really is. Yeah. And then you add on this layer of global uncertainty. Oh, yeah. The world is kind of crazy right now.

It’s a little unpredictable. Some CEOs have even mentioned trade tensions and geopolitical risks as major concerns. That makes sense. It’s hard to predict how those will play out. Yeah. So it makes investors hesitant, right? And we can’t forget about labor shortages and rising labor costs that are affecting the entire construction industry.

It’s true. Finding skilled workers is getting tougher and more expensive, which adds another layer of complexity. Yeah. It sounds like navigating the CRE market right now requires some serious foresight and adaptability. It does. But amidst all these challenges, surely there are some opportunities emerging as well.

Yeah, absolutely. Okay, good. It’s not all doom and gloom. Phew. There are some interesting glimmers of hope. Like what? So, for example, we saw public REIT fundraising actually rebound in 2024. Oh, that’s good. Which is a signal that investors aren’t completely shying away from CRE. Okay. They’re being more selective, but they still see the potential for growth.

So maybe a bit more cautious optimism than outright exuberance. I think that’s a good way to put it. Okay. And banks are starting to feel a little bit more optimistic about lending. Good. Especially as those commercial property loan portfolios are improving. Okay. So the financing tap is maybe opening up a little bit.

Maybe a little bit. That’s encouraging. So if investors are still interested. Right. Great. And financing is becoming a little bit more accessible. Where are they focusing their attention? What are those bright spots in the CRE landscape? Well, we’ve already talked about the strength of data centers and industrial spaces.

Right. They’re doing their own thing. They seem to be doing well. Yeah. Those sectors are expected to remain strong, even with those broader economic uncertainties. But what about retail? That sector always seems to be facing an uphill battle. Yeah, it does. Is there any hope for those struggling malls and shopping centers?

I think so. Okay. It’s all about adaptation. Okay. There are these really interesting opportunities for what they call adaptive reuse. Okay. Repurposing existing retail spaces. So like turning those empty storefronts into something completely different. Exactly. Wow. And we’re seeing creative examples of this popping up everywhere.

Like what? Macy’s, for example, is shifting its strategy. Right. By focusing on these smaller format stores. Okay. And expanding its off price backstage concept. Interesting. It’s a way to stay relevant. To adapt. In a changing retail landscape. It’s not just about building new. Right. It’s about reimagining what’s already there.

Exactly. And that kind of outside the box thinking is becoming increasingly important in the CRE world. I can see that. You gotta be adaptable and willing to embrace change. Yeah. But even with those opportunities. Mm. There are still risks involved. Of course, what are some of the specific risks investors should be aware of in this environment?

Well, one example that highlights those challenges is the case of Jamison Properties. Okay. They’re facing some scrutiny over a loan on a Los Angeles office tower. Oh. And it’s causing these ripples in the CMBS market. That stands for Commercial Mortgage Backed Securities. Oh, okay. It’s a complex financial instrument, but basically it shows how one shaky loan can have this ripple effect throughout the market.

So even if things are looking up in some areas. Right. Yeah. There are still those potential pitfalls that investors need to watch out for. Yeah, it underscores the importance of thorough due diligence and careful risk assessment. Don’t just jump into any deal. Exactly. You got to understand the potential downsides.

Yes. Okay, so we’ve covered a lot of ground here, the highs and the lows. We have. For the CRE market. Yeah. What are some of the key takeaways? What do listeners really need to understand about the state of CRE today? I think the big picture is that the CRE sector is at this crossroads. Okay. There are some big challenges interest rates Right.

But there are also some really exciting opportunities emerging. That’s good. Yeah. Texas remains this hot spot. With multi family industrial and data centers showing strong momentum. Okay. But investors need to be aware of those challenges. Be smart. And approach the market with a healthy dose of caution.

So it’s a time for careful consideration. Yeah. And strategic decision making. Absolutely. A lot to digest for sure. It is. But understanding these trends and challenges is crucial. It is. For anyone involved in CRE or even just interested in the forces shaping our communities. Right. And our economy. It’s about more than just buildings and deals.

It’s the bigger picture. Exactly. Awesome. Well, I think it’s time for that thought provoking question that you mentioned earlier. Something to leave our listeners pondering as we wrap up this deep dive into commercial real estate. Okay. What’s the big question we should all be asking ourselves? So, given all these evolving economic and geopolitical factors, the question that comes to mind is this.

Okay. What strategies can CRE investors and developers adopt to navigate both the challenges and the opportunities? Yeah, it’s like we’re standing at a crossroads trying to figure out which path to take. Exactly. And there’s no single right answer, no magic formula. Right. It’s about being adaptable. Okay.

Strategic and maybe even a little bold. Right. So what did that actually look like in practice? Well, one approach that’s becoming more and more common is diversification. Instead of putting all their eggs in one basket, yeah, investors are spreading their bets across different asset classes, geographic markets, and even strategies.

So don’t just bet on Texas, bet on the whole Sunbelt. That’s the idea. Recognize that different markets will perform differently at different times. Okay. And within those markets, different sectors will have their own unique dynamics. So diversification is key. It’s a big one. What else? Another important strategy is focusing on what they call value add opportunities.

Value add. Yeah. So taking those existing properties that might be underperforming or outdated and finding ways to improve them. Like renovations and upgrades. Exactly. Renovations, upgrades, repositioning. Interesting. It’s about finding those hidden gems and unlocking their potential. So it’s like taking something old and making it new again.

That’s a great way to put it. Breathing new life into these underutilized spaces. Exactly. And this can be especially relevant In retail. In the retail sector, yeah. Where we’re seeing so much change. Makes sense. Adaptive reuse is all about transforming those spaces to meet the needs of today’s consumers.

Okay, so we’re talking about challenges, we’re talking about strategies, but I’m also curious about Yeah. Where are those potential bright spots that investors should have their eye on? Well, one area that’s really interesting is the rise of what they’re calling niche sectors. Niche sectors. Okay. Things like senior housing, student housing, self storage facilities.

Interesting. These sectors are often driven by demographic trends. And cater to very specific needs that aren’t as impacted by those broader economic swings. They offer a little bit more stability and predictability in uncertain times. So it’s like finding those pockets of resilience. Exactly. Within the market.

Yeah, it’s about recognizing. That there are always opportunities out there. That’s good. Even when the overall market is facing some headwinds, it just requires a little bit more digging. And creativity. And a willingness to think differently. Well, I think we’ve given our listeners a lot to think about today.

I hope so. It’s clear that the CRE landscape is constantly evolving. It is. Navigating it successfully requires knowledge, adaptability, and a bit of strategic vision. Absolutely. And I think The key takeaway here is that understanding the forces that are shaping the CRE market, those economic trends, demographic shifts, technological advancements, that’s crucial for making informed decisions.

It is. Whether you’re an investor, a developer, or just someone interested in the world around us. Right. These trends matter. They do. Awesome. Well, that’s a great point to end on. So, to our listeners out there, we encourage you to keep exploring, keep asking questions, keep learning. Yeah. About this crazy world of commercial real estate.

Absolutely. There’s always something new to discover, a new opportunity waiting to be unlocked. So true. The future of CRE is full of surprises. Full of possibilities for those who are ready to embrace the challenge of that. Well said. Thank you so much for joining us on this deep dive. Yeah, this was fun into commercial real estate.

Thanks for having me. Of course, we’ll be back soon with another deep dive into a new topic. So stay tuned. Sounds good.

 Hey everyone, ready to peek into the future. Today, we’re diving deep into the future of retail. The future of retail, exciting stuff. Yeah. And we’ve got a fantastic guide, this super in depth JLL report on global retail trends, hot off the press for January, 2025. It’s a really forward looking report. It is.

We’re talking about the forces that are shaping how we shop, where we shop. All of it. And the best part, we’re going to see how these predictions are already playing out in the real world. Real world examples, that’s key. Absolutely. So get ready for some serious ah ha moments. Because we’re going to tackle some big questions today.

Like what? Well, like, will robots be our personal stylists? Are we saying goodbye to physical stores forever? And how does sustainability fit into this whole retail evolution? Lost to unpack. There is, this JLL report is packed with insights about how technology, sustainability, and you know, what shoppers like you and me want, how it’s impacting what we buy and where we buy it.

Everything from groceries to clothes, gadgets, the whole nine yards. Exactly. Now one of the most surprising findings in this report, and I have to admit it’s surprised me. Yeah. Is that. Even with the massive growth of online shopping. I mean, everybody shops online these days. Right, but even with that, a whopping 67 percent of global shoppers still prefer to shop in person.

Wow, that’s a lot. I know, right? That’s from the JL Experience Matters 2024 survey. So those predictions about physical stores dying out might have been a little premature. Yeah, it seems like they were. So the question is, what’s driving this? Why are people still drawn to those brick and mortar stores? I think it shows that while convenience is a huge factor, people still value that sensory experience of shopping, you know?

Being able to see it. Touch it. Touching the fabric, seeing how things actually look in person, and let’s not forget that human interaction, there’s an emotional element to shopping that you just can’t fully replicate online. It’s true. Sometimes you just gotta see it to believe it. Especially with clothes.

You know? But speaking of convenience, this report dives into a future where drones are delivering everything. Even dinner and diapers. Can you imagine? Drones delivering diapers. Now that’s convenience. I know, right? Picture this, your smart fridge, it knows you’re out of milk, it orders it automatically, and boom, a drone silently delivers it in the middle of the night.

No more late night grocery runs, I’m sold. Right, it sounds like something out of a sci fi movie, but it’s actually happening now. Oh yeah, it’s already happening. Walmart is using drones for deliveries within a 10 mile radius of some stores in Dallas. And they’re planning to expand this to 75 percent of residents in that area.

It’s pretty amazing. And then there’s Starship Technologies. They’re using those six wheeled delivery robots. They’ve already made over 6 million deliveries in different countries, including the U. S. and the U. K. Wow, 6 million. So while we’re sleeping, there could be a whole fleet of drones and robots out there, quietly delivering everything we need.

It’s a pretty futuristic picture. It is. But with all these delivery robots zipping around, what does that mean for brick and mortar stores? Are we going to see fewer of them? It’s a good question. It’s possible that retailers might need smaller stores if they’re relying more on direct to consumer deliveries.

So smaller footprints. Exactly. They won’t need as much space for inventory. And then think about the infrastructure changes we’ll need. We’ll need drone landing zones and all sorts of new tech to manage these delivery networks. Grown landing zones. That’s wild. It is. It’s going to require some serious partnerships between retailers and tech companies.

It’s a whole new world, but it also makes you wonder about access. Will everyone benefit from this super convenient future? Or will we see drone deliveries primarily in wealthier neighborhoods? That’s a crucial point. And the report acknowledges that, you know, the potential disparities. Yeah. If we’re not careful, those who can afford it will be the first to experience this drone powered future while others lag behind.

And that’s something retailers and policy makers need to consider. Absolutely. We can’t leave anyone behind in this retail revolution. Now get ready because we’re about to step into a world that sounds like pure science fiction. We’re talking about the rise of digital twins and augmented reality.

Digital twins, that sounds intense. It is. Imagine a virtual version of yourself trying on clothes. Wait, a virtual me trying on clothes? Yeah, that’s your digital twin. A virtual replica of your body. And it can be used to suggest outfits. You can actually try on clothes virtually with AR glasses. You can see how they look, how they feel.

fit without even leaving your house. Wow, that would be a game changer, especially for someone like me who hates trying on clothes in stores. I hear you, but how close is all of this to reality? Is this technology actually available now? It’s closer than you might think. We already have virtual try ons on mobile devices and VR headsets.

That’s so cool. Some retailers are even using AI to give you style advice based on your style. selfies or pictures of your clothes. It’s like having a personal stylist right in your pocket. That’s amazing. But with all this high tech personalization, What about the human touch? Are robots going to take over all the jobs in retail?

Not necessarily. The report actually suggests that the role of the store associate is going to evolve. In what way? They’ll become less about ringing up sales and more about being expert advisors, offering personalized recommendations, and creating those memorable shopping experiences. So it’s not just about checking people out, it’s about creating a connection.

Exactly. They’ll be like retail superstars. I love that. Retail superstars. So instead of just folding sweaters and stocking shelves. Which, let’s be honest, can get a little boring. It can. Imagine a bookstore clerk, their live stream book review goes viral, or a clothing associate hosting an online unboxing event that drives tons of digital twin purchases.

Now that’s innovative. Right. They become content creators, influencers, brand ambassadors. That’s a cool way to think about it. Think about a cookware store associate live streaming a cooking demo. They could create a whole community around their expertise. It’s about adding value beyond just a transaction.

It’s about creating an experience. Exactly, and that’s what shoppers are looking for. Absolutely, experiences matter. They do, but with all this talk about tech savviness and online presence, what about the people who aren’t as comfortable with technology? Will they be left behind? That’s a real concern.

This shift could create a digital divide in the workforce. It’s crucial that retailers provide training and support to help associates adapt to these new roles and technologies. So upskilling is key. It is. It’s also important to ensure access to technology and training for everyone. Digital equity. We have to strive for that.

Absolutely. We can’t leave anyone behind. Right. So we’ve got drones delivering diapers, digital twins trying on clothes, retail superstars creating online communities. It’s a lot to take in. It is. And the report doesn’t stop there. It also talks about how retail spaces themselves are transforming is not just what’s happening inside the stores, but the entire retail landscape.

So like the malls, the shopping centers, all of it. All of it. So instead of those giant malls or big box stores, are we talking about. more integrated retail experiences. Like, what if those old retail parks were turned into mixed use communities with apartments, offices, maybe even medical clinics, all within walking distance of shops and restaurants.

So everything you need right there in your neighborhood. Exactly. It’s all about convenience and creating a more holistic living experience. And it’s not just a futuristic concept. It’s happening now. It is. We’re already seeing examples of this. IKEA. Known for their massive stores, they’re opening smaller locations in cities to be closer to their customers and supermarkets are testing out mini market concepts.

Even malls are being redeveloped to include apartments and other uses. It’s like retail is weaving itself into the fabric of our daily lives. It’s becoming more integrated, more accessible. Absolutely. And here’s another interesting twist. The report suggests that as the digital world expands, the value of real world, human centered experiences in physical spaces will actually increase.

That’s interesting. So it’s not one or the other, it’s both. It seems that way. It’s like a pendulum swing. We love the convenience of online shopping, but we also crave those real world connections and experiences. It’s like we need both to feel balanced. Right, and the report highlights trends we’re already seeing.

Think about the popularity of those fancy coffee shops, those restaurants with waiters, and just that basic desire to touch and feel products before we buy them. It’s a reminder that even in a digital world, we’re still human. We still crave. Those tangible experiences make sense. We’re social creatures at heart.

We are. But hold on. Didn’t the report also talk about increased automation, especially in restaurants? How does that fit in with this whole craving for human connection? It’s a good question. The report does predict more automation in those quick service and fast, casual restaurants. Robots will likely be handling those behind the scenes tasks like cooking and food prep to robot chefs.

You got it. So you might still have a waiter taking your order, but a robot could be whipping up your meal. It’s a wild world we’re heading into. So we could be looking at a future with both high tech and high touch experiences existing side by side. It’s like a balancing act. It is. It’s about finding that sweet spot between convenience and connection, efficiency and experience.

And this all ties into what the report calls retail science. It’s about using data and AI to create a more personalized shopping experience. Data driven retail. That’s the future. It seems that way. So are we talking about stores that are designed to cater to the specific needs of each community? Even more granular than that, retailers are using data to become retail scientists.

They’re analyzing things like shopper lifestyles, walking habits, even psychographics, which is the study of people’s attitudes and aspirations. It’s about really understanding their customers and creating experiences that resonate with them on a personal level. So each store location of a chain could feel unique, offering different products and services tailored to the local community.

Exactly. It’s about personalization at scale. And imagine retailers. Using digital twin replicas of their stores to optimize everything from the layout to the merchandise. It’s like taking the guesswork out of retail. Data driven decision making, it’s a game changer. And loyalty programs, they’re getting a major upgrade too.

Instead of those generic rewards programs. Imagine personalized deals based on each shopper’s preferences and perceived value. Yeah. It’s about building deeper relationships by understanding what people truly want and offering them something valuable. It’s about making loyalty programs actually feel rewarding.

Exactly. So we’ve got drones, robots, AI, data galore, but what about the bigger picture? What role will retail play in creating a more sustainable and inclusive future? That’s the million dollar question, and the report definitely addresses it. It highlights the growing importance of sustainability and inclusion, emphasizing that businesses need to contribute positively to their communities.

It’s not just about profits anymore. It’s about purpose. Exactly. And the JLL Global People Experience Survey actually found that 79 percent of respondents believe that businesses should have a positive impact on their communities. So consumers are looking for brands that align with their values. They are.

They want to feel good about where they spend their money. And the report stresses the role of retail in promoting a circular economy. Reducing waste, encouraging recycling, and incorporating sustainable practices throughout the supply chain. It’s about making sustainability a core part of the business model.

And we’re already seeing some great examples of this. H& M has a clothing recycling program. And in Sweden, there’s Ratuna. An entire shopping mall made from recycled materials. It’s pretty incredible. It is, and the report also talks about inclusive design, creating retail spaces that are accessible and welcoming to people of all abilities, ages, and backgrounds.

It’s about making sure everyone feels welcome and included. Absolutely. So the future of retail isn’t just about cool tech and fancy gadgets. It’s about using those things to create a more human centered, sustainable, and inclusive experience for everyone. It’s about using technology to enhance the human experience, not replace it.

Exactly. And that’s what we’ll continue to explore as we dive deeper into this JLL report. So stay tuned for more insights into the future of retail. You know, it’s amazing how retail is becoming about so much more than just buying stuff. It’s true. It’s about experiences, values, what people actually want out of life, you know?

Absolutely. And we’ve already explored so much. I mean, drone deliveries, digital twins, those retail superstars, sustainable shopping malls. It’s mind blowing how fast the retail world is changing. It’s moving at warp speed. It is. But here’s the thing. This change isn’t just about technology, right? No, it’s not.

It’s about understanding. How shoppers like you are changing, what you’re looking for, what’s important to you. It makes you tick. Exactly. So, before we jump back into this JLL report, I want to leave you with a question and I want you to really think about this. Alright, camera ready. In a world where you can order almost anything online and have it delivered right to your door, what would make you actually choose to go shopping in person?

That’s a good question. Right. What would make you get off the couch, leave the house, go to a store, interact with products, talk to people, maybe discover something new? It would have to be something special. It would, wouldn’t it? Yeah. And it’s a question worth pondering because the future of retail, it’s not set in stone.

No, it’s not. It’s shaped by the choices we make as shoppers. Every single day. So we have the power. We do. So as you navigate this ever evolving retail landscape, be mindful of what you’re drawn to support the brands that align with your values and seek out those experiences that bring you joy because those are the experiences that will shape the future of retail.

It’s about voting with your wallet, you know? Absolutely. And speaking of shaping the future, let’s dive back into this JLL report. There’s so much more to uncover. Now, this report paints a fascinating picture of a future where retail isn’t just confined to malls or shopping centers. It’s integrated into every aspect of our lives.

Integrated retail, I like the sound of that. Right, they call it retail everywhere. Imagine a world where retail spaces are seamlessly blended with our living spaces, our workplaces, our communities. So it’s not just a place you go to shop. It’s part of your everyday life. Exactly. Imagine living in a mixed use community where everything you need is right there within walking distance.

Apartments, offices, medical clinics, restaurants, shops, all in one place. That sounds delicious. Incredibly convenient. It does, doesn’t it? Yeah. And it’s not just about convenience. It’s about creating a sense of community, a more holistic lifestyle. And it’s already happening in some places. It is. Zoning laws and market demands are actually pushing this trend in many countries.

So it’s not just a pipe dream. It’s becoming a reality. It is. And we’re already seeing examples of this. IKEA, known for their massive stores, they’re starting to open smaller locations in cities to be closer to their customers. That makes sense. It is. Supermarkets are testing out mini market concepts, and even malls are being redeveloped to include apartments and other uses.

It’s like retail is becoming part of the fabric of our daily lives. It’s becoming more accessible, more integrated. Absolutely. And here’s where things get really interesting. The report suggests that as our lives become more and more digital, the value of those authentications

So it’s not a zero sum game. It’s not digital versus physical. It’s not. It’s like a pendulum swing. We love the convenience of online shopping, but we also crave those real world connections, those tangible experiences. We need that balance. We do. And the report highlights trends that are already happening.

Think about the popularity of those high end coffee shops, those restaurants with real waiters, and just the desire to touch and feel products before we buy them. To experience them with all your senses. Exactly. It’s a reminder that even in the digital world, we’re still human. We still crave that human connection.

We’re social creatures by nature. We are. But here’s the question. The report also talks about increased automation, particularly in restaurants. So how does that fit in with this desire for human interaction? It’s a good question. And. The report does predict we’ll see more automation in those quick service and fast casual restaurants.

So like, fast food places. Exactly. And robots will likely be handling a lot of those behind the scenes tasks, like cooking and food prep. So robot chefs? Exactly. You might still have a human server taking your order. But a robot could be preparing your meal. It’s a brave new world we’re entering. It is, but I think it’s about finding the right balance, you know?

Agreed. Integrating technology to improve efficiency and explore new possibilities, while still preserving those human elements that we value. That human touch. Exactly. It’s not about robots replacing humans entirely, it’s about finding ways to work together. To create a better experience for everyone.

Exactly. And the report doesn’t stop there. It goes even further. Talking about the potential for mixed reality experiences. Mixed reality. What’s that? Imagine amusement parks that combine physical activities with augmented reality adventures, or those incredible immersive cinematic experiences offered by companies like Sandbox VR.

It sounds amazing. It is. It’s about blurring the lines between the real and virtual worlds to create something truly unique and engaging. It’s like taking entertainment to a whole new level. Exactly, and this all ties into what the report calls retail science, using data and AI to create a more personalized shopping experience.

So data driven retail, we talked about that earlier. We did, but this is about taking it to the next level. How so? Imagine retailers becoming retail scientists, using data to analyze things like shopper lifestyles, walking habits, even psychographics, which is the study of people’s attitudes and aspirations.

So they’re really getting to know their customers. They are. It’s about understanding their customers on a much deeper level and creating experiences that resonate with them. So each store location of a chain could offer different products and services based on the preferences of the local community.

Exactly. It’s like creating a unique shopping experience for each neighborhood. That’s personalization at its finest. And loyalty programs are getting a major upgrade, too. Imagine personalized deals and incentives based on each shopper’s preferences and perceived value. So it’s not just about earning points.

It’s about getting rewards that you actually want. Exactly. Building deeper relationships by understanding what people truly need and offering them something genuinely valuable. So we’ve got drones, robots, AI, data galore. Microsoft Mechanics But what about the bigger picture? What role will retail play in creating a more sustainable and inclusive future?

That’s a crucial question, and the report definitely addresses it. Good, because it’s important. It highlights the growing importance of sustainability and inclusion, emphasizing that businesses need to contribute positively to their communities. It’s not just about profits anymore. It’s about making a difference.

Exactly. And the JLL Global People Experience Survey actually found that a significant 79 percent of respondents believe businesses should contribute positively to their communities. So consumers are looking for brands that align with their values, brands that are doing good in the world. They are. They want to feel good about where they spend their money.

And the report stresses the role of retail. In promoting a circular economy, reducing waste, encouraging recycling, and incorporating sustainable practices throughout the supply chain. It’s about making sustainability a core part of the business model. And we’re already seeing some encouraging examples of this, like H& M with their clothing recycling program.

Right, and in Sweden there’s Retuna, an entire shopping mall made from recycled materials. That’s incredible. It is. And the report also emphasizes the need for inclusive design, creating retail spaces that are accessible and welcoming to people of all abilities, ages, and backgrounds. So everyone feels welcome.

Exactly. It’s about making sure that everyone has a positive and enjoyable shopping experience, no matter who they are or what their needs may be. Absolutely. So the future of retail, it’s not just about cool technology and fancy gadgets. It’s about using those things to create a more human centered, sustainable and inclusive experience for everyone.

It’s about creating a better future for retail. And for the world. Exactly. And that’s what we’ll continue to explore as we dive deeper into this GLL report. So stay tuned for more insights into the future of retail. This deep dive into the future of retail has been quite the eye opener. It really has.

We’ve explored so much. Drone deliveries, those drones. Digital twins, retail superstars, sustainable shopping malls, AI powered everything. It’s clear that we’re in the midst of a retail revolution. A retail revolution. It is. And it’s happening faster than ever before. But here’s the key takeaway. This evolution isn’t just about adopting the latest technology.

It’s about understanding what shoppers like you truly value. What matters to people. Exactly. And creating experiences that are not only convenient and personalized, but also meaningful to people. You know, experiences that align with your values. Experiences that resonate. Exactly. So as we wrap up this deep dive, I want to leave you with one final thought provoking question.

Okay, hit me. In a world where you can have almost anything delivered right to your doorstep with a click, what would make you choose to go shopping in person? That’s the question, isn’t it? It is. What kind of experience would be so compelling, so enticing, that you’d actually choose to venture out into the real world, interact with products, connect with people, maybe discover something new?

It would have to be something special. It would, wouldn’t it? And it’s a question worth thinking about because the future of retail, it’s not predetermined. It’s being shaped right now by the choices that we make as consumers and consumers. Every single day. So we have a say in this. We do. We have the power to shape the future of retail.

So as you navigate this ever evolving landscape, be mindful of your choices, support brands that align with your values, and embrace those experiences that bring you joy. Because those are the experiences that will ultimately define the future of retail. They are. And remember, this conversation is far from over.

We’d love to hear your thoughts, your predictions about the future of retail, what excites you, what concerns you, share your ideas, because this is a future that we’re creating together. One purchase, one experience, one conversation at a time. It’s an exciting time to be a shopper. It is, so until next time, happy shopping everyone.

 Welcome back to the deep dive today. We’re going to be diving deep into commercial real estate trends, shaping the industry in 2025, looking forward to it. Yeah, me too. And we’ve got some really cool articles from Bizno and the local profile to kind of help us guide the conversation. Great sources. So yeah, by the end of this deep dive you should have a really clear picture of what’s hot, what’s not, and what to watch out for in the coming year.

Absolutely. Yeah. It’s really interesting to see all the changes happening right now and kind of how dynamic this landscape has become. For sure. So let’s just jump right in. Let’s do it. Amazon. Yeah. Normally we think of them as like gobbling up real estate, you know, for all their, you know, warehouses and distribution centers.

Yeah. Makes sense. But it seems like they’re shifting gears a little bit. Yeah they’re definitely, moving away from warehouses and focusing more on data centers, which yeah, on the surface seems a little counterintuitive, but you know, when you look at the bigger picture, it starts to make a lot of sense.

So break it down for us. What’s driving this shift? Well, you know, a couple of things e commerce growth has, you know, kind of slowed down a little bit for Amazon. They’re sitting on a lot of cash. And at the same time, you have this huge demand for Cloud computing, you know, all fueled by, you know, AI and all these data heavy technologies we’re using and data centers are absolutely essential for that.

You know, they’re really putting a lot of their, you know, resources into, you know, building out these data centers. In fact, they acquired over 3000 acres. Wow. Across 14 states in 2024, primarily for data centers. That’s a lot of land. It is. What does that mean? I mean, for just the overall, you know, data center market, you know, the Amazon, like getting into it in such a big way.

Well, you know, you got to think it’s likely to increase competition. Potentially drive down prices, you know, with them kind of coming in and being such a big player, other data center providers, they’re gonna have to, you know, really step up their game to stay competitive. Yeah. And this could be really good for businesses that rely on cloud computing because it could lead to more innovation and better services.

Interesting. Okay. So it sounds like even though this might seem like a little bit of a departure for Amazon from their traditional real estate strategy, it’s actually, You know, a pretty smart move. Yeah, I think so. In a rapidly growing market. But this begs the question, you know, if Amazon is moving away from warehouses, does that mean the future of retail is completely online?

Well, not necessarily. Okay. In fact, we’re actually seeing a resurgence of a retail format that a lot of people thought was on the decline, strip malls. Strip malls? Really? Yeah. I thought those were like going away at the dinosaurs. Yeah, I know a lot of people did. Yeah. Yeah. But. You know, they’re actually outperforming indoor shopping malls in terms of occupancy and investor interest.

You know, there’s a few reasons for this. The pandemic kind of, you know, spurred this renewed interest in, you know, shopping local, supporting local businesses. Right. And strip malls, you know, they house a lot of those types of businesses. And then, you know, strip malls also offer more affordable rents.

Compared to enclosed malls, which is really attractive to smaller businesses, startups. Yeah, that makes sense. And they offer that kind of convenience factor too. Absolutely. Usually there’s like a good mix of businesses in there, like restaurants and salons, dry cleaners, gyms. Yeah, he got it. You know, you can kind of get everything you need in one place.

It’s that convenience factor and accessibility that you don’t always find in those bigger malls. For sure. And a lot of the businesses you find in strip malls are kind of Amazon proof. Right. Like you can’t, you know, Amazon can’t give you a haircut. Exactly. So fix your phone. Amazon doesn’t do manicures yet, there you go. You know. Yeah. So it seems like there’s still a place for You know, those brick and mortar stores. For sure. You know, especially the ones that cater to local needs. Yeah. Definitely. All right. So let’s shift gears a little bit and talk about a region that’s been seeing a lot of growth.

Texas. Oh yeah. Texas is a hotbed of activity right now. Lots of population growth and a lot of commercial real estate development. Right. One city that’s really standing out is Fort Worth. Interesting. They’re actually outpacing even Austin in population and job growth. Really? Fort Worth? What’s driving that?

Well, a lot of factors they’ve got a really diverse economy, strong job growth in industries like healthcare manufacturing logistics. Okay. And you know, they also have a relatively affordable cost of living compared to other major Texas cities. So it’s attractive to both businesses and residents.

Right. So it sounds like Fort Worth is doing pretty well. Yeah, they are. But we’ve also been hearing about some challenges in the Texas office market, you know, with those record high CMBS delinquencies. That’s right. CMBS loans. Those are commercial mortgage backed securities. Right. Right. They’re often used to finance, you know, these large commercial properties, including office buildings.

Right. And when these loans become delinquent, it can be a sign of trouble in the market. Yeah. And in Texas, roughly 11 percent of office buildings tied to CMBS loans were delinquent in December 2024. Wow. That’s the highest level ever recorded. Really? Even surpasses the peak of the Great Recession. That’s concerning.

It is. What’s behind those rising delinquencies? Well, it’s a combination of factors. Rising interest rates are putting a lot of pressure on borrowers. Right. And a lot of office buildings are really struggling to maintain occupancy as more companies embrace remote or hybrid work models. So it’s creating this kind of perfect storm for the office sector.

So you have these two things happening in Texas, you know, booming population growth and you know, all this development. And then you have this kind of struggling office market. So how did those two trends connect? Well, you know, it’s a complex situation. Yeah. While Fort Worth’s overall economy is strong, the future of office space in the state remains uncertain.

Right. How companies adapt to, you know, these changing work patterns and rising interest rates, that’s going to play a crucial role in shaping the, you know, long term health of the office market. Right. It sounds like we need to pay close attention to how these trends unfold. We do. On the one hand, you have these thriving cities like Fort Worth.

Yeah. Attracting all these new residents and businesses. Yeah. And on the other. You have this potential for a pretty significant shift in the office market as companies are rethinking their real estate needs. Absolutely. And this is where technology is really starting to play an interesting role. Okay.

One area where we’re seeing this is in the use of artificial intelligence for apartment rent collection. AI for rent collection. Tell me more. Yeah. So companies like Alisa AI are developing platforms that automate communication with tenants. Okay. You know, they streamline the rent collection process, which could potentially increase efficiency and reduce bias.

Okay. That sounds promising in terms of efficiency, but what about the human element? You know, could this lead to a more Impersonal or even dehumanizing experience for tenants. That’s a valid concern for sure. You know, there are some ethical implications we need to consider when we start automating these sensitive processes, especially when you’re dealing with people’s homes and their livelihoods.

Are there any like legal or regulatory discussions happening around this? Yeah, absolutely. Legal experts and tenant advocacy groups are raising concerns about the potential for bias in AI algorithms and the need for transparency in how these systems make decisions. So while it could, you know, potentially make things easier, there are some, definitely some things to consider.

There are. As this trend evolves. It’s definitely something to watch closely. Okay, well, let’s move on to something a little bit more positive. Okay. Okay. There’s a really cool development happening in Los Angeles that I think is worth highlighting. Oh, yeah. Tell me about it. So there’s a company Thrive Living.

Okay. And they’re planning to build this 800 unit apartment complex on top of a Costco. Wow. In Baldwin Village. Okay. And it’s a mixed use development, so it’s going to feature a rooftop pool. Wow. And other amenities. And they’re really aiming to reduce reliance on government subsidies. Wow, that’s really interesting, an apartment complex on top of a Costco.

Wow. Yeah, I know, right? That’s thinking outside the box. It is, at a rooftop pool, too. You know, this project really tackles a lot of challenges at once. You know, it addresses affordability, you know, density, community integration. For sure. And they’re using offsite modular construction to speed up the building process, which is also pretty innovative.

Yeah, I think it’s incredible to see, you know, these creative solutions coming out to address affordable housing challenges. Right. You know, I think this model could be replicated in other areas. Yeah, what are the possibilities? You know, imagine, you know, building these complexes on top of shopping centers, parking garages, even schools.

Absolutely. You know. It’s all about maximizing land use and creating these vibrant mixed income communities. I love it. All right, before we wrap up this part of our deep dive, I have to ask you about someone who’s been making a lot of waves in the Texas real estate market. Elon Musk. Oh, yeah. Elon Musk.

You can’t talk about Texas real estate without mentioning him. No, you can’t. So his Texas real estate portfolio is valued at 1. 6 billion. Staggering 3. 4 billion. It’s unbelievable. Yeah, he’s got everything from futuristic communities like Snail Brook and Starbase. Yeah. To industrial projects. Yeah.

Personal residences. I mean, he’s really shaping the Texas landscape with his ambitious projects. For sure. But his ventures aren’t without controversy. No, they’re not. So what are some of the concerns? Surrounding his projects, well, there are environmental concerns, you know, with his rapid development and focus on industrialization.

Some people are raising questions about sustainability and the impact on local ecosystems. So while his presence is undoubtedly a driving force. Yeah, you know, it’s important to consider. You know, the potential downsides as well, right? All right. Well, it seems like Texas is like this microcosm of all the broader trends that we’re seeing in commercial real estate.

Yeah. You know, explosive growth, shifting work patterns, the growing influence of technology, definitely all against this backdrop of economic uncertainty. Absolutely. It’s creating a lot of challenges and a lot of opportunities for, you know, investors, developers, and communities. Yeah, for sure. We’ve covered a lot of ground in this first part of our deep dive.

We talked about Amazon’s shift to data centers, the surprising resurgence of strip malls, the booming But complex Texas market, right? The ethical considerations of AI and rent collection and a glimpse into Elon Musk’s impact on the Texas landscape. We also saw some really innovative approaches to affordable housing.

Yeah, like that project in Los Angeles where they’re building apartments on top of a Costco. Yeah, it’s amazing. It’s a good reminder that there are some really creative solutions out there. For sure. If we’re willing to Think outside the box. I love that. All right. So before we move on to the next part of our deep dive, what stood out to you the most from what we talked about so far?

Well, you know, what really struck me is just the sheer variety of forces shaping the commercial real estate landscape right now. Yeah. You know, we have these tech giants like Amazon making these strategic moves, right? You have evolving consumer preferences, driving trends like the comeback of strip malls, and then these innovative solutions are merging to tackle issues like affordable housing.

Sure. Sure. It’s a dynamic and complex industry. Yeah, it is. And I’m eager to delve a little deeper into the retail sector in our next segment. Me too. We’ll be back soon to explore what’s happening in retail, including the surprising comeback of a beloved bookstore chain and major developments in the Dallas Fort Worth area.

Yeah, it really is amazing how much the retail sector has had to, like, adapt. You know, to today’s environment, we were just talking about how, you know, strip malls are attracting investors. And now we’re going to talk about a bookstore chain that a lot of people had totally counted out. You’re talking about Barnes and Noble.

Yeah. I love it. I was one of those people. Yeah. I thought their days were numbered. Yeah. Everyone buys books online. It’s true. You know, the rise of online retailers like Amazon had a huge impact on traditional bookstores. Right. But Barnes and Noble, they’ve managed to stage like a remarkable comeback.

Their CEO, James Daunt, he implemented this strategy that focused on quality over quantity. Okay, so what exactly did they do? Well, instead of trying to be everything to everyone, they kind of curated a more selective inventory. Oh, okay. Focusing on, you know, books that appeal to their core customer base.

Right. They also embraced smaller store formats. Okay. And they returned to some of those remote markets that they had previously abandoned. So they basically downsized and, like, went back to their roots. It sounds like they were able to capitalize on, like, you know, that charm and experience of a physical bookstore.

Exactly. And it seems to be resonating with customers. Don recently said he felt pretty confident about the holiday season. Oh, wow! Which is typically make or break for the bookselling industry. It’s a good reminder that sometimes, you know, going back to basics and focusing on what you do best can be a winning strategy.

It is. It reminds me of those strip malls, you know, focusing on the things that Amazon can’t do instead of trying to compete head on. It’s a similar concept. You find your niche and you cater to a specific audience. But speaking of successful retail, let’s move from a national chain to a specific region.

That’s seen a lot of retail developments in the Dallas Fort Worth area. Yeah, DFW always seems to be booming. It does. It’s currently experiencing a surge in development activity. Okay. Particularly in Frisco. Frisco. We have these reports detailing six major projects that are shaping the city’s future.

Six. That’s a lot. It is. What kind of developments are we talking about? Well, one that really stands out is called FIELDS. FIELDS. It’s a massive 2, 500 acre master plan development. Wow. It’s going to include residential units, retail spaces, entertainment venues, restaurants, basically a mini city within a city.

2, 500 acres, that’s enormous. It is. It sounds like they’re building a whole new community from scratch. They are, and within Fields, there’s a section called Fields West, which is being designed with a more urban feel. The goal is to create a walkable environment that fosters a sense of community and caters to the needs of residents and visitors alike.

It sounds like they’re going for that, like, live work and play environment. Exactly. And speaking of play, they’re also building a universal kids resort in Frisco, which is expected to be a huge draw for families and tourists. A universal kids resort. That’s a game changer. It is. It’s projected to generate a lot of tourism revenue, create thousands of jobs.

Wow. And give local businesses a boost. It’s scheduled to open in mid 2026. Okay, so something to look forward to. It is. It’s incredible how one project can have such a ripple effect on like the entire region. Right. What other notable developments are happening in Frisco? Well, they’re revitalizing their downtown area with a 69 million project.

The focus is on making it more pedestrian friendly and creating those public gathering spaces. They’re also investing heavily in infrastructure with a major project to expand the Dallas North Tollway. So they’re not just building new things, they’re also improving the existing infrastructure and public spaces.

Exactly. It’s a very comprehensive approach to development. Yeah. They’re really Planning for the future and ensuring that Frisco remains attractive to businesses and residents. But it’s not just Frisco that’s attracting attention. McKinney, another suburb in the DFW area, is also experiencing a surge in development.

Yeah, McKinney just broke ground on a new 27 million shopping center. Wow. It’s a direct response to the city’s population boom and the increasing demand for retail and entertainment options. Development often follows population growth. It does. Are there any concerns about affordability as these areas grow so rapidly?

That’s a really good point. It’s crucial to make sure that this growth benefits everyone and doesn’t, you know, price people out of their communities. Right. We were just talking about those innovative affordable housing projects in Los Angeles. Right. DFW. Yeah. Speaking of affordable housing. We have some information here about manufactured housing communities.

MHCs? MHCs, yeah. Seems like they’re facing some challenges. Yeah, they have traditionally been an important source of affordable housing. Right. But recently there’s been this trend of private equity firms buying up these communities. Okay. Which is raising concerns about, you know, potential rent increases and displacement of residents.

That’s a tough situation because on one hand, institutional investment could bring much needed capital. Right. For improvement. For sure. But then on the other hand, you had this risk that, you know, investors might prioritize profits over the needs of the residents. Exactly. It’s a double edged sword. And this issue has become so contentious that some states are actually considering rent control measures.

Rent control. Specifically for MHCs. Wow. Okay. Which what? Well, politicians in states like New Jersey and Pennsylvania are pushing for legislation that would limit annual rent increases in MHCs. So it sounds like they’re trying to find a way to protect residents without discouraging investment in these communities.

Right. It’s a delicate balance. It’ll be interesting to see how this plays out. It will. Speaking of things to watch, earlier we talked about Amazon’s move into the data center market. Right. Are they alone in this? They are not. Data centers are a growing trend in commercial real estate. Okay, so why is that?

Well, the demand for data storage and processing power is exploding, driven by everything from cloud computing to artificial intelligence, and that means we need more data centers. So what are the implications of this trend for the real estate market? Well, data centers require massive amounts of space and power.

Yeah. Developers are scrambling to find suitable locations. Okay. That can accommodate these specialized facilities. They need to be in areas with reliable access to high speed internet infrastructure. Right. And robust power grids. It’s amazing how, you know, these technological advancements in one sector can have, you know, ripple effects in another.

It really highlights how interconnected our world is. It does. And speaking of interconnectedness, let’s bring our conversation back to the office market and those concerning CMBS delinquencies we were talking about earlier. Yeah. Are we seeing like a fundamental shift in how and where people work?

That’s the million dollar question. It is. You know, we talked about those challenges facing the office sector. Right. Especially with the rise of remote work. Yeah. Where do we go from here? Well, it’s clear that the traditional office model is evolving. We’re seeing a shift towards more flexible work arrangements.

Companies are embracing remote work hybrid models and co working spaces. So is the office market doomed? I don’t think so. Okay. I think we’ll see a more nuanced approach. Okay. Some office buildings will likely be repurposed. Okay. For other uses like residential or mixed use developments. Right. Others will be renovated to better accommodate the needs of modern workplaces.

So what kind of renovations are we talking about? Well think about things like open floor plans that encourage collaboration. Okay. Flexible workspaces that can be easily reconfigured. Right. And amenities that prioritize employee well being like fitness centers, outdoor spaces, and on site childcare. It sounds like the Office of the Future is going to be a lot different than the Office of the Past.

Yeah, it’s going to be more focused on creating a positive and productive environment for employees rather than just providing a desk and a chair. But what about those office buildings that can’t be easily adapted? That’s a good question. We might see a rise in the popularity of suburban office parks.

They often have more space and flexibility for adaptation. They also offer a less congested environment, which can be appealing to employees who are tired of long commutes. So the office market isn’t dead. No. It’s just undergoing a transformation. Exactly. And the key for investors and developers is going to be to adapt to these changing dynamics.

Right. And find those creative solutions that meet the needs of the modern workforce. Okay, so let’s shift our attention now to some specific examples of how these trends are playing out. Okay. In real world markets. We’ve got some interesting case studies to dive into. Oh. Alright, so we’ve talked about a lot of really fascinating trends.

You know, everything from the surprising comeback of strip malls and Barnes and Noble to the rise of data centers and Elon Musk’s Texas Empire. A lot. But before we wrap up this deep dive, I think it’s time to kind of, you know, address the elephant in the room, those record high CMBS delinquencies.

Yeah, you’re right. We touched on this earlier, but it’s definitely worth, you know, digging a little deeper. Okay. Just as a reminder for our listener. Yeah. CMBS loans are a type of commercial mortgage that’s often used to finance, you know, large properties like office buildings. Right. And the fact that, you know, delinquencies on these loans have surpassed even the peak of the Great Recession is definitely, you know, a cause for concern.

So are we talking about like a potential crisis in the office market? Like how bad is it really? Well, crisis might be a strong word, but the numbers are definitely alarming. As of December 2024, roughly 11 percent of office buildings tied to CMBS loans were delinquent. That’s significantly higher than the 10.

7 percent peak we saw during the Great Recession back in 2012. So what’s driving this? I mean, is it solely due to the rise of remote work or are there other factors at play? Well, remote work is definitely a major factor, but it’s not the whole story. You know, rising interest rates are also putting pressure on borrowers, making it more expensive to service those loans.

And then you have this overall, you know, economic uncertainty that’s making businesses hesitant to commit to long term leases. Right, so it’s like this combination of factors that’s creating this perfect storm. What does this mean for the future of office space? Are we all just going to be working from home?

You know, I don’t think it’s quite that simple. The office isn’t going away entirely, but it’s definitely undergoing a transformation. Okay. This traditional model of everyone working in a central office five days a week, you know, it’s becoming less and less common. So what’s replacing it? Well, we’re seeing a rise in these hybrid work model where employees are splitting their time between the office and home.

Right. And then, you know, co working spaces are becoming increasingly popular. You know, they offer that flexibility in a sense of community for. Freelancers and remote workers. So the office is becoming more of a destination, like a place for collaboration and connection rather than just a place to, you know, sit at a desk.

Exactly. And that means, you know, office buildings need to adapt. We’re already seeing this trend, you know, towards more flexible and amenity rich workspaces. Right. Think open floor plans, collaborative areas. Fitness centers, outdoor spaces, you know, things that make the office a more attractive and engaging place to be.

So if you’re going to ask people to come into the office. Right. You got to give them a reason to get out of their, you know, comfortable home offices. Yeah, for sure. But what about all the existing office buildings that weren’t designed with this new reality in mind? Wha? What happens to them? That’s a big question.

Yeah. Some will be renovated and adapted. You know, to meet the needs of the modern workforce. Okay. Others might be repurposed for different uses altogether. Okay. We might see office buildings converted into residential units. Thanks. Hotels or even data centers. Oh, wow. Okay. Like we were talking about earlier.

It sounds like the office market’s kind of in a state of flux right now. It is. Lots of uncertainty about what the future holds. Yeah. There’s definitely a lot of change happening. Yeah. But, you know, I think it’s a really exciting time to be in commercial real estate. Okay. It’s an opportunity to rethink how we work, how we live.

Yeah. Yeah. How we design the spaces that bring us together. I like that it’s not just about doom and gloom. It’s about adaptation and innovation. Exactly. Finding those new solutions. And remember, real estate is all about location. Right. The areas that can adapt to these changes and create, you know, these attractive, vibrant, and functional spaces.

Yeah. Those are going to be the ones that thrive in the long run. Well said. All right. So we’ve covered a lot of ground today. We started with Amazon’s shift to data centers. Right. Explored the surprising resilience of strip malls and Barnes Noble. Right. Took a deep dive into the booming but complex Texas market.

For sure. And grappled with this evolving nature of the office. Yeah. And we even touched on, you know, the rise of AI and rent collection and the challenges facing manufactured housing communities. It’s been quite a journey. What’s the key takeaway for our listener? You know, I think it’s that the commercial real estate landscape is dynamic and constantly changing.

Yeah. It’s not a static industry. You have to stay informed, be adaptable, and think outside the box to succeed. Exactly. And who knows what new trends and challenges are going to emerge in the years to come. Right. It’s an exciting time to be watching this industry evolve. Well, on that note, I think it’s time to wrap up this deep dive.

Thank you so much for joining me today and sharing your insights. It’s been my pleasure. And to our listener, thank you for tuning in to The Deep Dive. We hope you found this exploration of commercial real estate trends informative and thought provoking, and until next time, stay curious.

 All right. Get ready. Cause we’re going deep into retail this week. Yeah. The week of December 27th, 2024. And while you’ve given me a really fascinating mix of sources for this one. Oh yeah. Yeah. We’ve got real estate reports, articles about specific companies. We’ve even got some consumer behavior analysis.

Seems like we’ve got a pretty good snapshot of where retail is right now. You’re right. With all its complexities. Definitely. Lots of contradictions too. Exactly. So what we’re going to try to do in this deep dive is help you make sense of it all. Right? Mm hmm. What are the forces shaping the future of retail?

Should you be paying attention to? And where are the surprises hiding? I think you’re right. There are definitely some surprises in this data. For sure. And I think a good place to start might be with the surprisingly resilient economy you mentioned. Yeah, okay. The U. S. economy, you know, projected to grow 2 to 4 percent in 2025.

Wow. Which makes it a global bright spot, really. Really good news for retail, right? Absolutely. Absolutely. Strong economy usually means more people spending. Yeah, more consumer spending. Exactly. Exactly. But here’s where things get interesting. Okay. The commercial real estate market is also seeing, um, really low supply levels.

Oh, wow. Which is pushing up those rental prices. So it’s a landlord’s market. It is. Across the board. Residential. Industrial. Yeah. And, yep, retail. All of them. So even before we get to specific stores. Right. Or trends even. Yes. It’s important to understand this backdrop, you know? It is. It’s crucial. It is crucial because it means retailers are operating in an environment where Costs are high.

Costs are high. But But the potential for profit is high. Yeah. If they can attract If they can attract those All those spending dollars. Yeah. Precisely. Okay. Now, there’s one sector that’s not quite as rosy, though. Office space. Okay. High vacancy rates. Yeah. And we’ve got those rising interest rates.

They’re really creating Refinancing pressures. Yeah. Refinancing pressures for a lot of companies. Yeah. Some developers are even looking at, uh, this is interesting, office to residential conversions as a way to adapt. Makes you wonder, if those conversions happen, will they create new retail opportunities in those transformed neighborhoods?

It’s a good question. It is, yeah. It’s something to think about. But for now, let’s get back to those retail hotspots. Okay. And all the data’s pointing south. Way south. Measly. Way south. The Sunbelt’s dominance in retail is undeniable. I mean, it really is. Cities like, you know. Oh yeah, hit me with them.

Phoenix, Las Vegas, Atlanta, Orlando. Huge. They’re topping the charts in terms of performance. Yeah. Strong population growth. Uh huh. Business friendly policies. For sure. And that, uh, that desirable lifestyle that everyone wants. Yeah. Drawing people in. Drawing people in. Exactly. But there was one surprise in the top 10 best performing retail markets.

Oh. What’s that? Columbus, Ohio. Interesting. The only non sunbelt city to make the cut. Hmm. Columbus seems to be benefiting from a few key factors, though. Like, well, we’ve got the growth of Ohio State University, and then also major investments from, uh, you know, big tech giants like Intel and Amgen. Meta.

Meta. Meta. Yeah. So it’s not just the sunbelt, but it is hot. It’s hot. Okay. Ready for a blast from the past. Okay. Strip malls are making a comeback. Ah, the humble strip mall. Remember those? I do. They’re experiencing a resurgence, big time, strong leasing activity and vacancy rates even lower than indoor malls.

That’s interesting. That one surprised me. Yeah, me too. So what’s driving this strip mall revival? Well, a few things. Okay. Um, first, They’re largely Amazon proof. What do you mean by that? Meaning they’re anchored by those businesses that people just need to visit in person. Okay. You know, like grocery stores or pharmacies.

Makes sense. Those everyday errands, you know? Yeah. Bring in the foot traffic, which benefits the whole center. Right. Exactly. Okay. They also tend to have a lot of, uh, local Service oriented businesses. Like, give you some examples. Mail salons, dry cleaners, restaurants. All that good stuff. Yeah. All those things that are harder to replace with online shopping.

Right. Right. And then also, from a business owner’s perspective, the rents are often more affordable in strip malls. Makes them attractive. Very attractive to both tenants. And investors. And investors, yeah. Yeah. Some are even seeing them as, um, what they call value add opportunities. What does that mean?

Meaning they can buy the property, improve it, and then increase its value. So maybe the next time I’m, you know, driving through my local strip mall, I should be thinking of it as a potential investment opportunity. It’s a great example of how what’s old can become new again. Yeah, it really is. Especially when it meets the needs of today’s consumers and businesses.

Absolutely. But strip malls aren’t the only format showing resilience, are they? No, they’re not. We’re also seeing the power of those, uh, what do they call them, dense retail clusters. Yes. Whether it’s a bustling high street in a city. Yep. Or a vibrant, you know, suburban town center. Right. People just crave that sense of place.

You know, a destination, a shopping destination. With energy. With energy, variety, that’s something you just can’t replicate online. It’s the experience. Yeah. And these dense retail areas are seeing high foot traffic. Definitely. Which is driving up those rents and attracting those investors. For sure. So, whether it’s a revitalized strip mall or a buzzing city street, you know.

Right. The takeaway is clear. What’s that? People still value those physical shopping experiences. They do. Especially when they offer something unique and engaging. For sure. Okay. You’re welcome. But, as we know, you know, consumer behavior is constantly evolving. Always changing. It is, yeah. Yep. Even with some economic uncertainty, November retail sales actually exceeded expectations.

Wow. Yeah. So that tells us that The American consumer is Is still willing to spend. Especially heading into the holidays. Yeah. Right. Exactly. It’s like a vote of confidence for the retail sector. It is. Yeah. Exactly. Okay. And speaking of things people are spending money on Yes. Let’s talk about a trend that I think is going to make everyone’s mouth water.

Okay. Fried chicken. Oh, I love fried chicken. Visits to fried chicken restaurants are through the roof. Really? Yeah, and it’s not just those big chains. Eh. Even smaller brands are seeing strong growth. Like what? So you’ve got those established players like Raising Cane’s, Dave’s Hot Chicken, Church’s Chicken.

They’re all expanding. Right. But then you’ve also got up and comers like Urban Bird Chicken and Lane’s Chicken Fingers attracting, like, these loyal followings. That’s interesting. It is interesting. So what’s driving this fried chicken frenzy? I don’t know, is it comfort food in uncertain times? Desire for indulgence?

Maybe. It’s probably a combination of factors, you know? Yeah. But I think it also speaks to that desire for experiences we were just talking about. You could easily order delivery, but people are choosing to go to these restaurants. They are. You know, it’s about the atmosphere, the social aspect, maybe even a bit of nostalgia.

Yeah, maybe those long lines are part of the appeal. Could be. But it’s not all about comfort food. Some more traditional retail categories are making a comeback too. Oh really? Like what? Remember bookstores? Oh yeah, I love the bookstores. Well Barnes Noble is seeing a resurgence. Interesting. More customers making dedicated trips to their stores.

Wow. Showing that renewed appreciation for that, you know. That physical bookstore experience. Yeah, that physical bookstore experience. It aligns with this broader trend of the return to experiences. I love that. You know, after years of being cooped up at home, people are eager to get out, connect with others, engage with their communities.

Yeah. Whether it’s dining at a favorite restaurant or browsing through a bookstore, these experiences offer something that online shopping just can’t replace. It’s a really powerful reminder that retail is about more than just transactions. Absolutely. It’s about creating a sense of place, fostering connections, offering experiences that resonate with consumers.

Couldn’t have said it better myself. However, not all retail stories have a happy ending, right? Unfortunately not, no. We also came across a company that’s struggling, even in this relatively healthy economic environment. Yeah, the Container Store. The Container Store, oh wow. Yeah, the home organization retailer.

Filed for Chapter 11. Chapter 11, Bankruptcy Protection. Wow. They’ve been hit by, well, a combination of things. Increased competition, higher expenses. Makes sense. And, interestingly, a sluggish housing market. The housing market connection surprised me. Yeah, it’s interesting, right. So when people aren’t moving as frequently, they’re less likely to invest in Home organization products.

Home organization products, yeah. It seems intuitive, but In hindsight! Yeah, in hindsight. Yeah, but it highlights how interconnected these various sectors of the economy really are. It’s like a domino effect. It is, yeah. And In the container stores case, it’s led to some difficult decisions. Unfortunately, yeah.

What’s the plan? Well, they plan to keep their stores open, at least for now. Okay. And emerge as a private company within the next two months. Wow. This situation raises some important questions about the challenges these businesses face. Specific retailers face, even in a relatively healthy economic environment, you know.

It’s a good reminder that even in a growing economy. Yeah. Not all businesses. Are guaranteed to succeed. Yeah. Adaptability and innovation are crucial. Crucial. Yeah. Especially in a rapidly changing retail landscape. Okay. Speaking of adaptability and innovation, let’s move on to a rivalry that’s heating up.

Okay. And could have some major implications for the future of retail. All right. Me with it. Amazon versus Walmart. The battle of the Titans. It is. It really is. Here’s where it gets really interesting. I’m ready. Amazon is diving head first into online auto sales. No way. Would this be the next big disruption?

That’s the million dollar question. It is. Amazon is definitely leveraging its vast ecosystem and brand power. I mean, how could they not? Right. And they’re partnering with Hyundai to build this, uh, direct to consumer approach. That’s a key difference from Walmart’s strategy. Yeah. How so? Well, Walmart is relying on its existing infrastructure.

Okay. And that physical presence to offer those auto services through partnerships with companies like CarSaver. Yeah. So Walmart is playing to its strengths. They are. Utilizing its vast network of stores. Uh huh. And it’s already established customer base. Huge. Yeah. So what do the experts think about this developing competition?

Well, Michael Zakor from 5 New Digitals Okay. Believes that Amazon’s strategy is all about building trust and familiarity. It makes sense. He points to the fact that Amazon’s starting with, uh, A smaller selection vehicles and focusing on those customer ratings and reviews just like they do with other products on their platform.

Classic Amazon tactic. It is, yeah. Start small, build trust, and then scale rapidly. Exactly. What about Walmart’s approach? Well, Arius Webster Berry from Webster Berry Marketing. Okay. He emphasizes the power of convenience. Yeah. And that existing infrastructure. Okay. He believes that Walmart’s ability to offer, um, a more seamless integration of online and offline services like, Like what?

Financing, maintenance. Okay. Will appeal to, uh, a broad range of customers. It seems like both companies have a solid chance of success. They do. But they’re approaching the market from very different angles. Exactly. And that’s what makes this rivalry so fascinating to watch. It is. It’s this classic battle of e commerce giant versus brick and mortar behemoth.

Each with their own Their own set of advantages. Yeah. This raises an important question, though. Oh, what’s that? What does the future hold for those traditional car dealerships? That’s a good question. Will they be able to compete Yeah. with these giants, or will they become relics of the past? Only time will tell.

I think only time will tell. But one thing’s for sure. What’s that? This competition is gonna be a game changer. It is, and it’s just one example of how the retail landscape is constantly Evolving. Yeah, you’ve gotta stay nimble, adapt to changing consumer preferences, and embrace those new technologies if you want to survive.

Survive. Could not agree more. Yeah, it’s an exciting time to be following retail. It is, it really is. Yeah, it’s like, it’s almost like watching this expert speaker. Giant game of chess, you know, with, with Amazon and Walmart making their moves. Strategic moves. Yeah, strategic moves and counter moves. But while they’re battling it out for market share.

Right. There are also some broader trends at play. Oh, absolutely. That are shaping the whole retail landscape. For sure, and one of the most interesting ones. Okay. Is this shift toward. What some people are calling the calling it experiential retail. Okay, it’s this idea that people are seeking out more than just products more than just Yeah, stuff, right?

They want they want an experience. They want a sense of community. Okay, a connection with the brands. The brands they support. The brands they support, exactly. So how are we seeing this play out? Well, take the, the resurgence of bookstores, for example. Okay. People could easily buy books online. Oh, yeah, for sure.

They’re choosing to go to physical stores. They’re going to Barnes Noble. They are, they’re going to Barnes Noble. And it’s not just about buying a book. It’s about the atmosphere, the, the discovery process. Right. The joy of just browsing. Browsing the shelves. Browsing the shelves. And maybe you find something unexpected.

It’s like a treasure hunt. It is, it is. It’s an experience that online retailers just can’t replicate. And bookstores aren’t the only one. No, not at all. We’re seeing this in the food and beverage industry too. Remember that fried chicken frenzy we were talking about? Oh yeah, how could I forget? People are choosing to dine in.

Yeah. At those restaurants. Even when they could order delivery. They could order delivery, stay home, put on their comfy pants. Exactly. But they’re not. They’re not. They’re going out. They are. They’re going out. They’re waiting in line. Yeah. It’s about the social aspect. The ambiance. The feeling of being part of something.

Yeah. Bigger than yourself. Like, those lines are a part of the experience. I think you might be right. And it speaks to this deeper human need. For connection. For connection and community. Yeah. Something that’s been so important. Absolutely. After years of, of social distancing, isolation, people are craving those real world interactions.

Yeah, they want to, they want to gather with friends, share meals, share meals, experience things together. And retailers are noticing. They are. They’re designing spaces that encourage interaction. Okay. Creating those events. Experiences that draw people in and focusing on that sense of community around their brands.

It’s a smart strategy. It is. Because at the end of the day. Yeah. It’s not just about selling products. It’s about It’s about building those relationships. Yeah. And creating those lasting connections. And customers. Exactly. Which are so valuable. They are. Especially now. Yeah. In a world where consumers have more choices than ever.

More choices than ever before. But speaking of choice. Yes. Let’s circle back to e commerce. Okay. Brick and mortar retail’s evolving. Mm hmm. But online shopping. Yeah. It’s still growing. It’s not going anywhere. At a rapid pace. It’s not going anywhere anytime soon. So what’s interesting to me is. Yeah. We’re seeing this convergence.

Oh interesting. Between the online and offline world. It’s like the lines are blurring. The lines are blurring. That’s a good way to put it. So retailers are using technology to enhance that in store experience. Yeah. And then those online platforms are trying to create those more personalized. Uh huh.

engaging shopping experiences. And consumers are benefiting from this. They are. Absolutely. They have more options. Right. More convenience and more control over how they shop. Think about the strip malls we were talking about. Good. They’re benefiting from the fact that they offer that mix of, um, you know, essential services.

Groceries. Yeah. Groceries, prescriptions. Things that are hard to buy online. Things that are hard to buy online, but they’re also adapting to the digital age. How so? By offering online ordering. Okay. Curbside pickup. All those other convenient services. It’s about meeting the consumer where they are.

Exactly. Whether that’s online. Yeah. Offline. Or somewhere in between. I like that. And that’s a key takeaway for anyone who’s involved in retail. Whether you’re Whether you’re a business owner, a business owner, investor, an investor, or just a consumer. The future of retail is really about creating those seamless and engaging experiences that blend the best of both worlds.

I love that. Blending the best of both worlds. Now, speaking of blending the best of both worlds, okay, let’s talk about another trend that’s a really reshaping retail, right? The rise of the omni channel consumer. Omni channel? What is that? So the omni channel consumer is someone who seamlessly moves between online and offline channels when they shop.

So like, give me an example. So they might. Browse products online. Then go visit a store to see the product in person. Uh. And then make the purchase using their phone. Oh, okay. So they’re using all the tools. All the tools at their disposal. Exactly. To create that personalized experience. And retailers are having to adapt this.

It seems like it would be hard to keep up. It is. It is. They need to create a consistent brand experience across all channels. That’s absolutely. Throughout the website. Social media. Social media, yeah. Physical stores. It’s a tall order. It is. But the retailers who can successfully navigate this, this omni channel landscape, Yeah.

They’re the ones who are going to win over the hearts and wallets. These savvy consumers. But these savvy consumers, exactly. So it’s not just about having a presence on multiple channels. Right. It’s about creating an integrated experience. A seamless experience. Where consumers can move between those channels easily.

Without having to, you know, repeat information. Start the journey over. Right, exactly. It’s about removing those. Those friction points and making the shopping experience as smooth and enjoyable as possible. So this requires retailers to invest in technology, technology, data analytics, customer relationship management tool.

Yeah. All of that. It’s a big investment. It is. But it’s one that’s probably going to pay off in the long run. Yeah, because consumers are looking for brands that, that understand their needs. Understand their needs and make their lives. Easier. Yeah. Easier. And those brands are the ones that are going to thrive.

In the years to come. Before we move on, I want to touch on something we mentioned earlier. Yeah. The role of technology in retail. Oh yeah. Yeah. Technology seems to be playing a bigger and bigger role. It really is. In every aspect. In every aspect of retail. From managing inventory. Uh. To customer service.

Uh, trucketing. To marketing. It’s everywhere. And we’re seeing some really innovative applications of technology emerging. Oh, like what? Well, some retailers are using AI, Okay. Artificial intelligence, To do what? To personalize product recommendations, Okay. Optimize pricing, Uh huh. Even create these virtual shopping assistants.

That sounds like something straight out of a sci fi movie. I know, it’s amazing how far technology has come. And it’s only gonna get, More sophisticated. More sophisticated. So, retailers who embrace these advancements, Yeah. Yeah. Yeah. They’re going to be able to create these truly personalized and engaging shopping experiences for their customers.

Like they’ll be able to anticipate our needs before we even know what they are. Exactly. And that level of personalization is incredibly powerful. It is. It can build loyalty, drive sales, and create a truly differentiated brand experience. So technology. While it’s often seen as a disruptor, in retail, it’s also an enabler.

It is. It’s giving retailers new tools and insights. Absolutely. To better understand their customers. And create more compelling. Shopping experiences. And this is especially important in today’s competitive landscape. Consumers again have more choices than ever before, more choices than ever before. Now, speaking of competition, okay, let’s circle back to that epic battle between Amazon and Walmart.

Oh yeah. The battle of the Titans. We talked about their move into auto sales, but they’re also competing fiercely in other areas like what? Like, grocery delivery, online marketplaces. It’s a rivalry for the ages. It is, it really is. And it’s impacting the whole retail landscape. It is, they’re constantly pushing each other to innovate.

To innovate. Lower prices. And improve that customer experience. It’s like they’re raising the bar. For everyone else. For everyone else. Which, you know, can be frustrating. It can be. For a competitor. But ultimately, it’s good for us. It’s good for the consumer. It is. We get more choices. More choices. Lower prices.

Lower. More convenient services. And this constant stream of innovation. So as we move into the final part of our deep dive. Okay. What’s the one takeaway you want our listeners to remember? I want them to, I want them to be an active participant. Okay. Don’t just shop. Observe. Observe, okay. Notice what’s working.

Uh huh. What’s falling behind. What excites you as a consumer. Okay. Because those are the clues. To where retail is heading. To where retail is heading next. Ooh. I like that. Are we talking about becoming like more conscious consumers? Yeah, yeah. Maybe even spotting those retail trends? Absolutely. Before they hit the mainstream.

Exactly. It’s about, you know, being aware of the forces at play, understanding your own needs and preferences. As a shopper, and maybe even asking yourself, what’s, what’s missing? What could make my experience better? Because maybe that’s the seed of the next big retail innovation. It could be. But before we get too far ahead of ourselves, right, let’s bring it back to the concrete takeaways.

Yeah. Good ideas from all these sources. We’ve covered a lot, a lot of ground. Let’s distill it down to what’s most important. All right. First off. Those macro trends. Right. They matter. They do. That strong U. S. economy. It’s a tailwind for retail. Yeah, it is. But so, are those high commercial real estate costs?

No, they are. You as a consumer might not see those directly. Right. But they influence everything. Oh, yeah. From store locations to pricing. They do. And it’s worth noting. How’s that? Those real estate trends are playing out differently across different sectors. Oh, interesting. Office markets facing challenges.

Right. Industrial and residential are strong. Uh huh. Retail sits somewhere in the middle. With certain formats, like those strip malls. Yeah. And dense clusters outperforming others. So for investors. Yeah. Those nuances are really important. They are. It’s not just about retail is good or bad. Right. It’s about understanding which segments are poised for growth.

Okay. So you’ve got those macro forces. Right. And then layered on top of that, you’ve got. That’s Sumer behavior. That ever changing landscape of consumer behavior. It’s always changing. And one thing that stood out to me. Yeah. Is this, uh, Yeah. Yeah. This return to experiences. Oh, yeah. It explains that fried chicken frenzy, the bookstore resurgence, even the appeal of those vibrant high streets and town centers.

People are craving that connection. They are. That authenticity, that sense of community that you just can’t find online. And those smart retailers, they’re tapping into that. They are. By creating those spaces and experiences that foster connections. So think about what that means for you as a consumer.

Maybe it’s not just about finding the cheapest price. Right. Maybe it’s about supporting those businesses that align with your values. Yeah. That offer an experience that you actually enjoy. That make you feel like you’re part of something. Part of a community. Part of a community. It’s about voting with your dollars.

I like that. You’re supporting the kind of retail landscape that you want to see thrive. Okay, we can’t talk about retail without talking Oh, I know what you’re going to say. The elephant in the room. E commerce. E commerce. It’s this force that continues to reshape the industry. It does. But what’s so fascinating to me is how it’s blending It really is.

With the physical world. We talked about the omni channel consumer. Right. Who’s shopping seamlessly across All those online and offline channels. And that’s putting pressure on retailers. It is. To create these really integrated experiences. Okay. It’s not enough to just have a website. And a store. And a store.

They need to work together. Which means investing. In technology. Technology, yeah. Data. You doubt. Personalized recommendations. All those things that make shopping smoother and more tailored. To your needs. Exactly. And as technology keeps evolving. Yeah. We can expect to see even more innovation. No.

Absolutely. In this space. Think AI powered shopping assistants. Okay. Virtual reality experiences. Wow. Personalized promotions delivered right to your phone as you walk past the store. It’s, it’s mind blowing. It is. The possibilities are endless. But amidst all this change. Right. One thing remains constant.

What’s that? The battle between Amazon and Walmart. Oh, of course. Their rivalry is shaping the entire industry. It really is, in such profound ways. They’re moving to auto sales. Yeah. Just one example of how they’re constantly pushing those boundaries. They’re forcing everyone to keep up. It’s like a game of one upmanship.

It is. Which can be frustrating for their competitors. For sure. But it benefits the consumer. It does. We get more choices. More choices, lower prices. Lower prices, more convenient services. That constant stream of innovation. So, As we wrap up this deep dive into the world of retail, what’s that one key takeaway?

Be an active participant. Okay. Don’t just shop. Don’t just shop. Observe. Observe. Notice what’s working, what’s falling behind, what excites you. What excites me. As a consumer. Yeah, yeah. Because those are the clues to where retail is heading next. I love that. And maybe, just maybe, you’ll spot the next big opportunity.

Before anyone else does. It’s an exciting time to be following retail. It really is. It’s a reminder that the future of retail isn’t predetermined. It’s not. No, it’s being shaped right now. It is by the choices we make as consumers, as investors, investors, business owners. So stay curious, stay curious, stay engaged and keep your eyes peeled.

Keep my eyes peeled for that next big thing. Until next time. See you later.

 Welcome to our deep dive. We’re looking at commercial real estate trends today. You’ve given us a lot to work with news articles, economic analyses, even some interesting retail developments. Yeah, quite the mix. We’re going to break it all down, help you understand where commercial real estate is headed, especially as we get closer to 2025.

Right. A big question is this whole. Extend and pretend thing, is it really coming to an end? It’s a big question. A lot of folks are wondering. Your sources actually give us a lot to consider. We see stuff about loan modifications, delinquency rates, and even some political and economic factors at play.

Yeah, it’s all connected. Plus, we’ve got those specific examples, like the McKinney National Airport expansion and Bloomingdale strategy in Texas. Always good to have those real world examples. Makes it more tangible. Absolutely. Let’s start with McKinney, actually. That airport story is fascinating. They’re moving forward with a commercial terminal, but it’s smaller than what they originally proposed.

Voters rejected a bigger bond measure last year. Yeah, back in 2023, residents voted down a 200 million bond. Now the city council is moving forward with a 70 million plan. So, smaller scale. Yeah, it’ll be smaller. Three gates, five parking positions for the planes. But still a big addition. Significant. And they got federal funding for it, right?

That’s right. They secured some federal funding, low interest infrastructure loans and grants. Interesting. It seems like there’s a lot of faith in the airport’s potential. Definitely. The airport already brings in 29 million a year for the region. And with commercial flights on the horizon That number’s only going up.

Exactly. Plus, they’re working on a separate runway expansion. Another 24 million going into that. McKinney’s really investing in their future. It’s a great example of how things can work out, even when the first plan hits a roadblock. They adapted, found another way. But let’s step back a bit. Look at the bigger picture of lending in commercial real estate.

Your sources point to a lot of loan modifications happening, especially for those non owner occupied borrowers. Yeah, that’s a trend we’re watching closely. In the first 9 months of 24, the median percentage of those modifications jumped 65 basis points. That’s significant. It is. Any idea what’s behind that?

Well, one thing that really sticks out is what’s happening with the smaller banks. They’ve seen a huge increase in modifications. A 217 percent jump. 217%? Wow, that’s a massive increase. What’s driving that, do you think? It seems like those smaller banks are feeling the heat. They’ve got all these underperforming commercial real estate loans.

The modifications are a way to buy time, hoping things turn around, they’re trying to avoid foreclosures if they can. So it’s kind of a temporary fix, kicking the can down the road a bit. You could say that, yeah. It delays things. For some properties, though, it’s just delaying the inevitable, and we see this happening in the office CMBS market, too.

Only 11 percent of the loans maturing in September were actually paid off in full. Almost half got short term extensions. It’s a big difference from what we used to see. So, lenders are getting less and less patient with just extending things. Seems like it. Does this tie into that extend and pretend question?

Definitely. It’s all connected. These short term extensions have helped prevent a total market meltdown. But for how long? The clock’s ticking, lenders are starting to get picky, especially about assets that aren’t performing well. Makes sense. They can’t just keep extending forever. So what’s the timeline here?

When do we think things might hit a breaking point? Well, from what the sources suggest, 2025 could be a turning point. We’ll likely see more properties in distress hitting the market. That often leads to prices going down. Which can create opportunities for some. But challenges for others. Exactly.

Especially when it comes to financing. That’s a crucial point. We’ve been talking about these big market trends. But how does all this affect someone like you who’s actually making decisions about commercial real estate right now? Well, you gotta understand the current situation. But you also have to look ahead.

Anticipate these potential shifts. Lenders might get stricter. Certain sectors like office headwinds. All of that has to factor into your strategy. It’s not just about finding a good deal. It’s about finding a deal that makes sense in this changing environment. Okay, before we go too deep there, I want to touch on something else that popped up in your sources.

These smaller stores popping up everywhere. Ah, yes. That’s an interesting trend, isn’t it? It is. Starbucks, Tim Hortons, even Bloomingdale’s are getting in on the act. Everyone seems to be embracing smaller spaces. It seems counterintuitive though, right? Why make your store smaller when you could have more space for merchandise or customers?

It’s not just about size. It’s about efficiency and adapting to how people shop these days. These smaller formats often help retailers cut costs, streamline their operations, and cater to customers who want things fast and easy. So it’s about keeping up with the times. Exactly. And we’re seeing this with Bloomingdale’s, right?

They’ve got their Bloomy’s concept. Smaller stores, a more curated selection, a focus on the in person experience. Right on. And they’re opening one of those Bloomy’s stores in Frisco, Texas. Part of a bigger mixed use development. Bye. And speaking of Texas, it’s booming with new retail space, especially what they call first generation space.

Brand new construction, never been occupied. Houston alone has added almost 25 million square feet of it since 2020. That’s incredible. Seems like developers are pretty optimistic about Texas. They are. A lot of activity there, a lot of growth. But even within Texas, you see different trends playing out depending on the sector.

Retail might be thriving, but the Dallas Fort Worth multifamily market tells a different story. Yeah, your sources show rents actually going down in Dallas Fort Worth. Yeah. For the second year in a row, that’s kind of surprising given how strong the Texas economy is overall. It is. And these declines are across the board.

All property classes, even those fancy four and five star rentals, they’ve dropped by 2. 1 percent over the past year. So what’s causing those rent declines? The main thing seems to be a mismatch between supply and demand. They’re building more units than the market can absorb. That puts downward pressure on rents.

So Advantage Renters in Dallas Fort Worth right now. For now, yeah. But the predictions say rents could stabilize in 2025, maybe even start going up again in 2026. Of course, that’s just a prediction. Things change. They do. Speaking of changing trends, there’s that story about data centers taking off in Irving, Texas.

Oh yeah. Microsoft and QTS Realty Trust, they’re planning seven data centers there. Seven. And the city council is giving them some pretty sweet deals to make it happen. Like cutting their property taxes in half for the next decade. That’s right. A 50 percent reduction for 10 years. That’s a big commitment.

But cities are really fighting to attract those tech giants. Data centers bring jobs, investments, you know, a certain prestige. It’s all part of Irving’s bigger plan to grow their economy. It reminds us that real estate isn’t just about buildings. It’s about the economic forces that shape those buildings.

The communities around them. And while we’re on the topic of transformation, there’s that interesting story about the old Raytheon manufacturing plant in Dallas, the one that’s becoming a Porsche dealership. That’s the one park place dealerships bought the 15 acre site planning a big redevelopment, A great example of how old industrial spaces can find new life.

Could be retail, entertainment, even housing. Absolutely. It shows how adaptable real estate is. Needs change. Markets change. We’re seeing this across the country. Old factories are becoming all sorts of things. It’s fascinating. And in this case, it really highlights how strong the luxury car market is in Dallas.

An aerospace factory becomes prime real estate for a high end car dealership. But now, let’s zoom out again. Consider the bigger economic and political picture. Okay. Because your sources had some insights there as well. Yeah, there’s a lot going on. The Fed’s been cutting interest rates. But they’re also hinting that they might slow down those cuts in 2025.

Right. They just lowered the benchmark rate by 25 basis points. Right. But their message is clear. They’re going to be more careful moving forward and that combined with some uncertainty about the new Trump administration’s policies. Yeah. Well, it’s making the stock market a bit jittery. Yeah, there’s definitely some anxiety.

Investors are trying to figure out how those policies will play out, especially when it comes to taxes and tariffs could have good and bad effects. depending on the sector. It’s a lot to take in. Hard to predict what will happen, but it’s important to stay informed. Understand how these big economic and political trends might affect the commercial real estate market.

Absolutely. Everything’s connected. Creates both opportunities and challenges. Okay, so we’ve covered a lot in this first part of our deep dive. We talked about specific developments like the airport and that Raytheon plant. We looked at broader trends in lending and retail. We even touched on the economic and political landscape.

We did. A lot to digest. It is. But the key question is, what does all this mean for you, the listener? How do you make sense of it all? How do you apply it to your own decisions? That’s what we’ll dive into in the next part of our deep dive. We’ll connect these dots, explore what it all means for someone navigating commercial real estate in 2025 and beyond.

Okay, so we’ve laid out some pretty big trends that are shaping commercial real estate, but let’s get more specific now. What does this all mean for someone who’s actually out there trying to navigate this market in 2025? Right, let’s try to connect these dots. We were talking about the potential end of extend and pretend, which could mean, More distressed assets hitting the market.

That’s sounds kind of scary, but it could also be a good thing, right? Exactly. Could this be a chance to pick up some properties at a discount? I mean, that would be pretty appealing for someone who’s looking to get into the market or maybe expand their portfolio. It could be, but there’s a trade off.

Remember those alternative capital sources we discussed, the private equity firms, credit funds, they’re stepping in to fill the gap left by the traditional banks. But they’re not doing it out of the goodness of their hearts, right? They want higher returns, stricter terms, that kind of thing. Exactly. So it’s not just about finding a good deal It’s about finding a deal that works with this new Piter financing environment You might need to get a little creative a little more resourceful to make things happen.

So opportunities Yes, but with some added challenges What else should someone be thinking about as they’re looking at commercial real estate in 2025? One thing to remember is that not all property types are created equal We talked about the challenges in the office sector, and even some weakness in the multifamily market, at least in certain areas like Dallas Fort Worth, those trends don’t just disappear overnight.

Right, all those empty office buildings aren’t suddenly going to fill up, even if extend and pretend does fade away. The multifamily market, well, maybe it’s stabilizing, but it’s still very much a renter’s market in a lot of places. Exactly. So, you need to be really careful about what type of property you’re investing in, and where, on the other hand, we’ve seen how strong industrial properties can be, particularly in markets like Texas, where the data center boom is driving a lot of demand.

And let’s not forget about retail. It feels like things have shifted away from that retail apocalypse, doom and gloom we were hearing a few years ago. It has. The retail landscape is definitely changing, but it’s not dying. The success of these smaller format stores, the continued demand for first generation space, especially in Texas, Those are all good signs.

It’s all about adaptation, right? Both for the retailers themselves and for anyone looking to invest in retail properties. Absolutely. Understanding the specifics of each market and property type is essential. What works in Houston might not work in New York City. The key is to look beyond the headlines.

Really dig into the data, talk to local experts, and develop a deep understanding of the market you’re interested in. So due diligence is more crucial than ever. Don’t just jump into something based on a gut feeling. Take the time to really vet the opportunity, and speaking of the bigger picture, we can’t ignore those economic and political uncertainties looming out there.

Right, those play a role too. The Fed’s rate cuts give borrowers some breathing room, but they also raise concerns about inflation down the road, and then there’s the wild card of the incoming Trump administration, and how their policies might impact everything from taxes to trade. It’s a lot to keep track of and honestly it can feel a bit overwhelming.

How does someone even begin to make sense of all this and translate it into something actionable? That’s a great question. I think the main takeaway is that the commercial real estate market is in a state of change. The old rules might not apply anymore. Those who can adapt, innovate, and be proactive will be the ones who come out on top.

It’s not about riding the waves. It’s about learning how to surf, so to speak. Okay, so we’ve talked about the need for adaptability, the importance of due diligence, and being aware of these broader economic and political forces. What are some concrete steps someone can take to prepare for 2025 and beyond?

Well, first and foremost, research. Don’t just rely on gut feelings or what you hear from your buddies. Immerse yourself in the data, analyze the trends, and connect with experts in the specific markets you’re interested in. So go beyond just reading a few articles, really dive deep and develop a solid understanding of what’s happening in the market.

Exactly. There are some great resources out there like CoStar that provide tons of data and analysis on the commercial real estate market industry, publications, research reports, networking events. Those can all be valuable sources of information. And don’t underestimate the power of networking. Building relationships with other professionals in the field can give you a real advantage.

Absolutely. Networking allows you to tap into the collective wisdom of the industry. Learn from other people’s mistakes and stay ahead of the curve. You can get insights that you won’t find in any report or database. Okay, so research, data analysis, and networking are key. What about the financial side of things, especially given that tighter lending environment we talked about?

That’s crucial. Having a strong financial foundation is essential. This means maintaining a good credit score, getting pre approved for financing if you’re planning to borrow, and being realistic about your investment goals and your risk tolerance. So don’t jump into a deal just because it seems like a good price.

Make sure you understand the financial implications and that you’re comfortable with the level of risk. Exactly. And remember, flexibility is key in this market. Be open to considering different types of properties, exploring alternative financing options, and adjusting your strategy if things change. Be adaptable.

Be responsive. Don’t get stuck with a rigid plan that might not work in this fluid environment. Right. And finally, I would add patience and discipline to that list. The commercial real estate market is cyclical. There will be ups and downs. Don’t let the short term noise distract you from your long term goals.

It’s about having a clear vision and sticking to it even when things get a little rough. Exactly. By combining thorough research, sound financial planning flexibility, and a patient approach, you can set yourself up for success in this ever changing world of commercial real estate. Great advice. So much to think about.

It really comes down to being proactive, informed, and adaptable. Now I have one final thought before we wrap up this part of our deep dive. We’ve talked about the rise of those smaller format retail stores, and the increasing demand for first generation retail space, especially in Texas, and we’ve also discussed the data center boom happening in certain markets.

Yes, two seemingly separate trends. Where are you going with this? What if those trends could converge? What if data centers became anchors for new retail development? Data centers as retail hubs. That’s an interesting idea. Think about it. These data centers create a lot of high paying jobs, which attracts people who need services, amenities, places to shop and eat.

What if developers started incorporating those smaller format retail stores, maybe even some drive through only concepts, into those data center campuses? That’s not something we saw in your sources, but it’s definitely food for thought. It could be a win win, right? Data centers get the convenience of having these amenities on site for their employees and retailers tap into a built in customer base with money to spend.

It would definitely require some out of the box thinking and collaboration between developers, retailers, and the data center operators themselves. Yeah. But if done right, it could be a really innovative approach to mixed use development. It’s just a thought, but it highlights how important it is to think differently and explore those unconventional opportunities, especially in a market that’s changing as rapidly as this one now, with that idea in mind.

Let’s move on to the final part of our deep dive, where we’ll tie everything together and consider the key takeaways for you, our listener. Sounds good. Let’s do it. Alright, we’ve covered so much in this deep dive. Airport expansions, loan modifications, the rise of the smaller format stores, data centers booming, even talked about data center retail hubs, it’s a lot.

You initially came to us with a pretty specific question though. Right. Is the extend and pretend era truly over in commercial real estate? Yeah, that was the big question. And based on everything we’ve seen, it’s looking like the answer might be yes. The sources really point to lenders getting tired of this game.

Especially when it comes to those office properties that are struggling. It seems those short term extensions, the ones that have been keeping things afloat, might be hitting their limit. Exactly. And even big institutional investors are starting to lose patience. We saw that quote from Glenn Grimaldi, the CEO of Navtel Credit Partners.

He didn’t mince words. He was pretty clear. So, heading into 2025, it looks like lenders will be more careful about those extensions, more scrutiny, more demands from borrowers. Right. And for you, the listener, this means you need to be ready for a market that could be a bit wilder. More ups and downs. Might be some great deals coming out of distressed sales.

Getting the financing. That might be a whole other story. So what can our listeners do to prepare for this shifting market? Any advice? Sharpen those due diligence skills. Don’t just skim the surface. Dig deep into those financials. Really understand the local market. Make sure you’re comfortable with the risk you’re taking on.

So it’s more than just finding a property with a good price tag. Way more. You have to understand all the details. Make sure it fits with your plan and your risk tolerance. Absolutely. Good due diligence isn’t just about avoiding the bad deals, it can help you find hidden potential. Maybe that old Raytheon plant isn’t just for a Korsha dealership.

Maybe it’s a chance to build something totally new, a mixed use development that brings the whole area back to life. It’s about seeing the possibilities that other people miss. Having that vision, that entrepreneurial spirit. And speaking of possibilities, we were just talking about the data center boom and the rise of those smaller retail stores.

Hmm. What if someone put those two things together? You’re thinking about data centers becoming like anchor tenants for retail. Exactly. Imagine it. A data center campus with a bunch of those smaller stores around it. Maybe some drive thrusts. Serving the people who work there and live nearby. A whole new model.

Now that’s interesting. It’s different. For sure. But I like it. Could be a win for everyone. Developers, retailers, the data center companies themselves. Exactly. It shows how thinking outside the box, adapting to the changes, can lead to some really cool opportunities. And I think that’s the main takeaway from all of this.

The commercial real estate world is constantly changing. You have to embrace the change, stay informed, and be proactive. That’s how you thrive. Couldn’t have said it better myself. So, to our listener, we say embrace the change, stay informed, and never stop exploring. The future of commercial real estate is yours to create.

Well said. And with that, I think we’ve successfully navigated this deep dive into commercial real estate trends. We covered a lot, from airport expansions to those data center retail hubs. Hopefully you’re leaving here feeling more informed and inspired. Knowledge is power, right? The more you understand about this market, the better decisions you’ll make.

Absolutely. Keep learning, keep exploring, keep pushing the boundaries. Until next time, happy investing, everyone.

 Welcome back. Today, we’re diving deep into commercial real estate. You know, you’ve given us a really fascinating mix of sources for this one, economic forecasts, some development news, even some articles on retail trends. We’ve gone through all of it to bring you the insights you need to know. And we noticed you’ve got a particular interest in the Dallas Fort Worth market.

Yeah. It’s a hot market. It is. And the DFW economy seems to be humming along nicely, which usually that’s a pretty good sign for CRE. Right. But we’ve got some economic headwinds nationally, so I’m curious to hear your perspective on how things might play out. Well, you know, it’s not always as straightforward as we’d like, so.

Let’s start with the labor market, nationally. We’ve added almost 2 million jobs this year, according to our commercial real estate news. Typically. That’s fantastic news for CRE. More jobs mean more demand for office space, retail space, industrial properties, the whole nine yards. Right. It makes sense. Yes.

But. We also know that interest rates are stubbornly high. One of the Investor’s Business Daily articles we’ve got even suggested the Fed might not cut rates as much as everyone thought next year. How does that factor into things? Yeah, that’s the million dollar question. Higher interest rates mean it gets more expensive to finance those property purchases.

And that makes investors a little bit hesitant. Especially when they don’t know where rates are headed. And, historically, rising interest rates have often led to a slowdown in CRE transactions. Deals take a lot longer to close. Projects might get put on hold. Investors get a lot more cautious. So, we’ve got these two forces at play here.

A strong labor market that’s pushing things forward, and high interest rates that seem to be, you know, pumping the brakes a little bit. What’s the historical interplay between these forces been like in CRE? It’s fascinating to see these forces play out against each other. The key is to find how they balance out that strong job growth.

We’ve got can drive demand for commercial properties, but those high interest rates can stifle investment. So what you’re going to want to watch for in the coming months is how those forces interact. Keep a close eye on job growth, but at the same time, you really want to pay attention to what the Fed is saying and doing with interest rates.

If job growth remains strong and interest rates stabilize or even start to come down a little bit, that could be a really positive signal for the CRE market. Okay, so a bit of a balancing act now. Let’s zero in on the DFW market for a second. CoStar reported that DFW added 74, 800 jobs in the year ending in October.

And here’s the kicker, that growth was across all sectors. Yeah, that kind of broad based job growth, it’s a strong indicator of a healthy, diverse economy. It’s just definitely something that attracts businesses and investors, looking at CRE opportunities. Absolutely. And speaking of attractive markets.

Office employment, which has been a little bit sluggish nationally. It’s showing signs of life and DFW. That’s definitely worth noting, especially considering the national trends, right? And coup star even highlighted some specific examples of this new office leases for companies like Goldman Sachs and Wells Fargo in the area.

Do you think this is a sign of recovery for the office sector? Or is this just a temporary blip? What do you make of it? I think It’s a little bit early to call it a full blown recovery while those new leases are encouraging. We do have to consider the bigger picture We’re still in a period of adjustment where companies are figuring out their office needs and those hybrid work models Are becoming more and more common.

The real question is whether this stabilization in DFW. Yeah is unique to this market Or, if it’s the beginning of a broader trend. Okay, I see your point. Now, let’s shift gears for a second. To a company that’s been making a lot of headlines in CRE lately, Amazon. And this time, it’s not about their online shopping dominance.

You’re talking about their push into same day prescription delivery. Exactly. Amazon is building a massive fulfillment center. In DFW specifically for this and they’re planning to roll out same day medication delivery to almost half the country by next year. They’re even incorporating robots and AI into these pharmacies.

It’s like something out of a sci fi movie. It’s a pretty build move. Yeah. That speaks to Amazon’s aggressive expansion strategy. Particularly in the healthcare sector, it’s pretty fascinating to see how they’re leveraging technology to disrupt traditional industries. It is. But I’m curious, beyond just the pharmacy aspect of things, what does this move tell us about Amazon’s broader strategy?

And how might it impact the CRE landscape, especially in DFW? This move signals a couple of things that are really important. First, Amazon’s need for logistics and distribution space is only going to grow as they continue to expand these same day delivery services require these massive, strategically located facilities.

Second, it really emphasizes their commitment to automation. And cutting edge technology. They’re pouring money into robotics and AI to optimize efficiency and speed, which has huge implications for the types of facilities they require. So if you think about DFW specifically, how could this move influence industrial real estate demand?

You can expect to see continued strong demand for warehouse and distribution centers in the region. But it’s not just about size anymore. These facilities need to be more and more sophisticated. Incorporating robotics, AI, all these advanced technologies, developers and investors who can meet those specific needs will be in a fantastic position to capitalize on this trend.

The innovations in DFW don’t stop there. We also have the brand new Texas Stock Exchange setting up its temporary headquarters in Dallas. Yeah, that is a total game changer. For the Dallas business scene, you. A new stock exchange has the potential to attract more financial firms to the area, boosting job growth and demand for office space.

It’s really exciting to think about all those ripple effects, but what about the long term implications of a new stock exchange? What should people be looking for to understand how this might all play out in Dallas? If we connect this to the bigger picture, the establishment of a brand new stock exchange.

It can signal a shift in the financial landscape. It could lead to increased competition and innovation in the industry. As for Dallas specifically, just keep an eye on the types of companies that are drawn to the area. Are we seeing a big influx of financial institutions, tech firms, startups, the mix of businesses that choose to locate near the exchange?

It’s going to be a strong indicator of its long term impact on the Dallas market. Alright, we’ve covered a lot of ground already. The labor market, interest rates, some major developments in DFW, and even Amazon’s foray into futuristic pharmacies. Now, let’s dive into another hot topic in CRE, retail. That’s a sector that’s been undergoing a lot of transformation over the past few years.

It has. One of our sources, Chain Storage, had a really interesting piece on the evolution of open air centers. You know, they’re moving away from those traditional anchor stores and embracing what they call experiential retail. We’re talking outdoor gathering spaces, restaurants, entertainment. It’s almost like mini town squares.

It’s fascinating to see how developers are adapting to those evolving consumer preferences. It’s an essential shift. In the past, those open air centers really relied. Uh huh. On those big anchor stores. Yeah. To draw shoppers in. But with the rise of online shopping and all those changing consumer habits, developers are realizing they need to create destinations that offer more than just shopping.

It’s about creating. Mm hmm. A sense of place. Yeah. And community. That’s all about the experience. Right. Right. You know, creating spaces where people, they want to hang out. They want to socialize, enjoy themselves. And, This trend toward experiential retail, it could create opportunities for local businesses as well.

These centers could actually drive demand for smaller, more specialized retail spaces, which would benefit independent retailers and restaurants. What are your thoughts on that? I completely agree. The rise of experiential retail really offers a unique opportunity for local businesses to thrive. They can differentiate themselves from those big national chains.

By offering unique products, personalized service, you know, that local touch that really resonates with people. It’s about creating that sense of community and fostering those personal connections. We’ve got a great example of this in action. Chain Storage, they highlighted a development project in Naperville, Illinois, where a developer is transforming what’s essentially a vacant corner into a restaurant destination they tapped into.

Yeah. The community’s desire. For more walkable, vibrant spaces, and they’re even incorporating a theater and an ice rink into the development. Talk about creating an experience. Yeah, that’s a fantastic example of placemaking. It’s about going beyond, just building structures. And instead, creating spaces that foster a sense of community, encourage social interaction, and enhance the overall quality of life for residents.

It’s a really inspiring approach to development. Yeah. How can developers replicate this success in other locations? What are those key ingredients for creating these vibrant, community driven spaces? We’re replicating that success. It starts with a deep understanding of the local community’s needs and desires.

Developers need to engage with residents, listen to their preferences, and incorporate those insights into the design and planning process. It’s about creating a sense of ownership and belonging. For the people who are going to be using those spaces and when it’s done well, placemaking can generate benefits for everyone involved.

For investors, it can mean increased property values, higher rental rates, and a stronger return on investment. For the community, it means a better quality of life, stronger social connections, and a real sense of pride. Okay, we’ve talked about the big picture, zoomed in on DFW, explored the rise of experiential retail, I even touched on placemaking.

Now, get ready for this one. We’re going to talk about dry cleaning vending machines. Dry cleaning vending machines. Yes, you heard that right. One company is installing these vending machines in apartments, offices, even retail centers, focusing on those high traffic areas. And they’re partnering with JLL.

To roll us out on a larger scale, it seems, both ingenious and a little bizarre, at the same time, what do you make of this trend? I think it’s a perfect example of the growing demand for what we call hyper convenience in retail. Consumers are more and more pressed for time. And they’re looking for those quick, easy solutions for everyday needs without sacrificing quality businesses that can deliver that kind of seamless on demand service, they’re getting a real competitive advantage.

It’s like the next generation of the vending machine. What other examples of this hyper convenience trend are you seeing pop up and how might it reshape the commercial real estate landscape down the line? Think about automated grocery stores. Mobile ordering a pickup, even the rise of drone delivery services.

These are all examples of how businesses are using technology and innovation to meet that growing consumer demand for instant gratification. This trend is likely to drive demand for smaller, more strategically located retail spaces that cater to crypt transactions and on demand fulfillment. We could see an increase.

In micro fulfillment centers, dark stores, even repurposed retail spaces designed for those hyperconvenient services. It’s amazing how quickly things are changing. Now, let’s take a look at retail investment for a moment. We’ve got some data from chain storage showing that some cities are outperforming others.

In terms of retail investment returns, Vegas is a top performer fueled by its tourism and strong retail sales. And then Charleston, South Carolina is another standout thanks to its population growth and higher than average incomes. What makes these cities so attractive to investors? The key is understanding those factors that are driving retail performance in each market.

Vegas benefits from that constant stream of tourists, which creates a really consistent base of shoppers. Charleston’s appeal really comes from its combination of population growth. Those rising incomes. And its own vibrant tourism industry. These factors create fertile ground for retail businesses to flourish.

And that attracts investors, seeking strong returns. Are there any hidden risks or opportunities that people should be aware of when they’re considering investments in these markets? Of course. Every market has its own little nuances. While Vegas enjoys that robust tourism sector, it is heavily reliant.

On the leisure and hospitality industry, which can be vulnerable to economic downturns. Charleston’s rapid growth can lead to some challenges like increased competition for retail space and rising operating costs. The key takeaway here is to do your due diligence, understand the unique dynamics of each market and weigh those potential risks and rewards.

Before you decide to jump in. Sound advice. All right. For our final stop on this retail journey. Let’s talk about Tractor Supply, the nation’s largest rural lifestyle retailer. They’re on an aggressive expansion path, planning to open 90 new stores in 2025. That is impressive growth, especially when you think about the broader trends we’ve been talking about in the retail sector.

Right. They’re tapping into what they call the life out here trend, offering a wide range of products from pet supplies to farming equipment. What are the main drivers behind this trend and how might it affect commercial real estate? The The life out here trend reflects several significant shifts in society.

We’re seeing a growing interest in sustainable living, self sufficiency, a desire for more space, and connection to nature. And this is driving population growth in rural areas and creating a really strong demand for businesses. That catered to that lifestyle. Tractor supplies expansion is a direct response.

To this burgeoning market and their success shows the potential for other retailers and businesses that are targeting this segment. So this life out here trend, it’s more than just a fad. It appears to be a much more fundamental shift in lifestyle preferences that’s likely to have a lasting impact on commercial real estate in rural areas.

We can see increased demand for retail space, housing, even mixed use developments that cater to this specific demographic. It’s definitely something to keep a close eye on. It’s amazing to see how these trends impact all these different sectors of the CRE market. You know, we talked about the rise of experiential retail, this demand for hyperconvenience, the growth of online shopping.

Oh, I can’t forget. About that ongoing evolution of the industrial sector driven by e commerce and all those sophisticated logistics operations that we’re discussing earlier. All of these trends are really reshaping the CRE landscape. It really is a dynamic time for the industry. But here’s something I’ve been thinking about.

You know, as we’ve been talking about all these trends and these technological advancements, what about the human element? How will all these changes impact the way that we interact with physical spaces? That’s a really crucial question. Has our lives become increasingly intertwined with the digital world?

The role of physical spaces needs to be reimagined. What’s going to draw people to those brick and mortar locations when they can do so much online? The answer probably lies in creating experiences that can’t be replicated virtually, creating spaces that foster genuine human connection and a sense of community.

We touched on placemaking, and I think That’s a perfect example of how developers are starting to think differently about the purpose and design of those physical spaces. Makes a lot of sense. Okay. Before we wrap up, I wanted to circle back to something we talked about earlier, the labor market. We talked about how a strong labor market is generally positive for CRE, but I noticed something interesting in our commercial real estate news source.

It looks like hiring in the leisure and hospitality sector is still Below pre pandemic levels, that is great observation. A little bit of a paradox when you consider the overall strength of the labor market that we’ve been seeing. Exactly. So what’s going on there? Why is that particular sector lagging behind the leisure and hospitality industry was hit incredibly hard by the pandemic.

Those lockdowns, the travel restrictions, social distancing measures really forced widespread closures. And let the significant job losses the sector has made progress since then, but it hasn’t fully recovered. Yeah, I can see why that would be the case. Our source also mentioned that the increase in office absorption, meaning companies leasing more office space, is being driven primarily by the Professional and business services sector.

That’s right. We’re seeing that shift in demand as we move further away from the peak of the pandemic with some sectors, we’re covering much more quickly than others looking at these different pieces of the puzzle, right? What does this tell us about the broader economic recovery and its impact on the CRT market?

It points to an uneven recovery With some sectors leading the charge, while others are still playing catch up, and that’s bound to have different effects on different types of commercial real estate. While we were seeing that increased demand for office space in some segments mm-hmm . The slower recovery and leisure and hospitality could have an impact on hotels.

Yeah. And other tourism related properties. It’s important to look beyond just those overall economic numbers. Right. And really dig into the sector specific trends. Absolutely. That nuanced understanding of those trends. Is crucial for investors and developers as they’re making decisions about where to allocate capital and what types of projects.

They should prioritize, they need to be able to anticipate those shifts in demand and adapt accordingly. Well, I think we have officially unpacked all of your sources for today. It’s been a really great conversation. Really insightful. Always a pleasure to delve into these topics and explore all those forces that are shaping the CRE landscape.

I agree. Before we sign off, any final thoughts you want to share with our listener? Just this, the CRE world is constantly evolving. There’s always something new happening, some new trend to watch, some new opportunity to explore. It’s a really dynamic field. And staying informed is absolutely key to navigating its complexities.

I couldn’t agree more. And that’s what makes these deep dives so fascinating. There’s always something new to learn and explore in the world of CRE. Exactly. It’s a field that, Constantly adapts new technologies, changing demographics, evolving economic conditions keeps you on your toes. It does. Speaking of evolving, you know, we’ve touched on so many interesting trends today from the rise of experiential retail to that increasing demand for hyper convenience.

But I’m curious, as we wrap up here, is there one trend that you find particularly intriguing or maybe one you think our listener should keep an eye on? That’s a great question. I think the convergence of technology and real estate is particularly compelling. We’ve talked about how e commerce has reshaped the industrial sector, and we’re beginning to see how things like AI and robotics are influencing everything from pharmacy fulfillment centers to those dry cleaning vending machines we talked about.

It’s really fascinating to see how technology is not just changing how we use space, but But also, how we design and build it. Yeah. That’s a really good point. And as we think about the future, it makes me wonder how these advancements will impact the role of physical space in our lives. That’s the million dollar question.

As we become more and more digitally connected, the value proposition of physical space needs to evolve. It’s not just about functionality anymore. It’s about creating those experiences. Fostering connections. Providing. That sense of place and community. Those are all things. That technology. Thank you. It can enhance, but it can’t fully replicate them.

Hmm. I think. That’s a really great takeaway for our listeners today. The world of commercial real estate, it’s complex, it’s always changing, but by understanding those key trends and driving forces, it can help you make more informed decisions, whether you’re an investor, developer, or just someone with a real interest in the future of our built environment.

Absolutely. Thank you. And remember. The CRE landscape is full of opportunities. Stay curious. Yeah. Stay informed. And embrace the possibilities. Well said. This has been your deep dive into commercial real estate. We hope you found it valuable, and we’ll see you next time for another fascinating exploration.