ST. PETERSBURG, FL--- Three major industry trends brought on by the recession are changing how commercial property is developed in Florida, says one management strategist.
All three trends are likely to be long term and suggest a major rethinking of commercial investment, development and design strategies, said Rachel Elias Wein, AIA (top right photo), founder and principal of WeinPlus Real Estate Advisory Services in St. Petersburg.
“Commercial real estate companies and commercial property owners are reforming their business models and their compensation structures to more closely match their focus on income and profits,” Wein explained.
Wein foresees major changes in the way commercial leasing agents are compensated.
Retail leasing compensation based on a portion of rental revenue instead of the dollar-per-square-foot model is gaining popularity among commercial real estate owners. In the past this strategy was primarily only used on the brokerage side of the business, Wein said.
In the new model, incremental increases in leasing revenue, increases the agent’s commission. Typically, the dollar-per-square-foot model compensates agents the same regardless of lease duration or rental rates, Wein said.
In the office sector, companies are reducing their operating expenses to reflect realities in the work place.
“This frequency includes flex-time and work-from-home days,” Wein explained, and it means more companies are looking at “hoteling” their employees’ office space. “If a company doesn’t have all of their employees in the office at a time, they don’t want to pay for the additional space.” Wein said.
Coupled with another emerging strategy — temporary specialists hired on a project basis — the strategy means smaller or more flexible office leases and fewer private offices coupled with a new demand for executive office space associated with these specialists, Wein said.
Additionally, multi-family properties are seeing a significant change in how people live, Wein added.
“In the past, it was common to get married, have kids, and buy a house in a four to seven year time span after completing school,” Wein said. “Renters tended to view their early living arrangements as temporary, until they could buy a home,” Wein said. “Now, college grads are not as likely to marry quickly. They are much more willing to relocate for employment opportunities, they have seen the value of their parents homes erode and they are more likely to rent for up to 15 years before settling into a single family home, significantly increasing the demand for multi-family housing,” Wein said.
That scenario could result in major challenges and major opportunities for developers,” Wein said. “Over supply of condos, lower rental rates and high multi-family construction costs have dampered new multi-family construction, which could lead to a shortage in the coming years,” she added.
For more information, contact
Rachel Elias Wein, AIA, Founder / Principal, WeinPlus, 727-386-9346, http://www.weinplusassociates.com/
Larry Vershel, Larry Vershel Communications 407-644-4142 or 461-3780 Lvershelco@aol.com
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