Pissing on the CRE Campfire

by CoyDavidson on November 15, 2013

Campfire

Keeping it in Perspective

I have been creating content for this blog and curating content to share on the social web for almost 5 years now. As a result, I have learned that there are a few subject matters that will always resonate with the commercial real estate community. For example, if I share anything technology related it would typically get a lot of views. Furthermore, if I write or share an article related to coworking, disruption in CRE, open vs. private offices, urban core vs. suburban office space or social media in CRE it will always be popular.

I am certain that I am not the only person that has recognized this and as a result that is why you see so many articles related to these subjects. Now let me be clear none of these topics are insignificant trends. I think they are all important as they relate to commercial real estate. However what I do find is that often when people write about trends in commercial real estate the suggested impact or timing is often exaggerated. Maybe it’s for effect, often for the eyeballs and sometimes to push a particular product or service. Let’s take a closer look at these subjects.

Coworking

I am down with the coworking trend. The concept of a third place to work is one I embrace. However let’s put it in perspective. The world is not about to become one big coworking space. Most people still go to work in an office the company they work for leases or own at least most of the time. Sure, the workplace is more flexible today. However, you could add up the square footage of all the coworking spaces in the United States and it wouldn’t amount to a hill of beans compared to corporate office space. The rise of coworking space is more about the increasing number of freelancers, solepreneurs and small startups wanting a place to office and collaborate.

Disruption in Commercial Real Estate

Ever since Al Gore invented the Internet, I have been hearing that commercial real estate is ripe for disruption and this goes back to pre-Y2K when the Web emerged in the workplace. The reality is that not much has changed over the last 10-15 years. I see some start-ups in the CRE space doing some really interesting things but none and I repeat none is doing anything that is shaking the commercial real estate industry at its core. Industries change when consumer behavior changes. The thing is millennials don’t make real estate decisions in corporate America, nor do they risk significant investment capital into real estate. Maybe when the millennial gets older then CRE consumer behavior will change and real disruption will emerge. Don’t expect it to happen soon.

Open Concept vs. Private Offices

Just Google that! You will find plenty to read on the interwebs on this subject. You would think based on these articles that some are suggesting that nobody has a private office anymore. I do realize how companies’ layout their office space varies greatly by industry and some more than others gravitate to open office concepts. I also acknowledge that many companies have gone to more open office plans to reduce occupancy costs and there has been much written about collaboration in the workplace. Recently, I have noticed more articles about the pushback from open office concepts. Here is the thing, I help companies lease office space for a living and I walk through a lot of office space almost daily.  I still see a helluva lot of private offices and my clients are still incorporating them into their space.

Urban Core vs. Suburban Office Space

Much has been written about the decline of suburban office space as the millennial worker wants to live in the urban core as they embrace the live, work, play lifestyle particularly in large cities with significant employment bases. I am in no way refuting this trend as I see it everyday unfolding before my eyes in terms of new development. However it is not always at the expense of the suburbs. The cost of living in the urban core is often pricey which excludes some, and that millennial? Well, they meet, fall in love, get married then have babies; this is the cycle of life. Then momma wants that house in the quiet suburban neighborhood with a swing set in the back yard. Momma usually gets what she wants! If you are familiar with Houston, have you driven down the Katy Freeway (Energy Corridor) or been to the Woodlands? The skyline is dotted with construction cranes erecting suburban office space. The burbs are far from dead.

Social Media and CRE

There is no question that social media is becoming a more accepted business development tool among commercial real estate professionals. However all I have to do is look around my office and see who is using it. The majority is not incorporating social media tools into their practice. I don’t even see much adoption among younger professionals, maybe out of fear of what their older mentors will think. They may not roll their eyes anymore when you bring up social media, but the vast majority has not bought in.

Taking it in with a Grain of Salt

In summary, these are all important trends in commercial real estate. I understand all to well, the desire to have your article read or sometimes you have an agenda to push. All I am saying is let’s keep it in perspective. The world is changing, it always does, but it typically happens a lot slower than we sometimes think it will and sometimes it doesn’t really change that much.

  • abuchanan

    ALL great points! What this suggests to me is that CRE brokers are a bunch of lemmings…we are looking for a new cliff to vault. Maybe the reason the “disruption” topics get so much run is that we are all scared of the revenue model changing and don’t want to be left behind? Hope you are well, Bro!

  • GilWhiteCRE

    Well said Coy. Kudos to you for using “doesn’t amount to a hill of beans.” That phrase doesn’t get used these days. Cheers!

  • David Auel, CCIM

    We were discussing an open office concept this morning that is currently used by a company in our area. The “bench” is getting horrible reviews from the people that actually have to use it. I personally know of one individual that is actively looking to leave the company primarily because of this new workplace environment. Looks good to the bean counters and the architect that sold the concept, but maybe they ought to come back after completion and talk to actual users via an anonymous comment forum.

  • David, we just moved into our new offices about 6 months ago. We stayed with a traditional plan. Open plan would have not been popular.

  • Thanks Gil

  • Doing well amigo….thanks for the comment

  • Dave Lewand

    Great stuff, Coy. I think we agree that it’s wise to view CRE technology and trends from a broad, historic perspective. HBU and optimization of office space is a great example. Innovative solutions are specific to an individual user, not one-size-fits-most. Workplace mobility is being given undue attention as a fresh concept, but as you know it was a hot topic since office space existed, and certainly prevalent 20+ years ago. E&Y’s mid-90’s hoteling model comes to mind as possibly more disruptive (although itself not a pure company-wide solution) than many of today’s concepts being accepted as industry-wide solutions.
    What I find tremendously exciting are advances in communication that allow all space users/owners/developers the ability to more quickly identify proven solution providers. No doubt social media is an under-utilized channel in that regard. Can ONE online channel emerge as the “go-to” environment that connects unique CRE requirements with unique CRE solution providers? Of course not, but I think most CRE tech enthusiasts have careers linked to a favorite!

  • Alex Lassar

    Great points, Coy! The millennial topic(s) really resonate, especially because I happen to be one. Millennials love to self promote– especially online. Hence the coworking articles as the flavor du jour in many major publications lately– real estate, business, and tech alike. The decision-makers I work with that are also millennials (who own all spectrums of ‘start up’s at all stages of the lifecycle) often revert to the risk-averse and capital-eschewing attitude you described– they default to ultimately wanting the zip car of workspace. As we all know, that’s challenging to service in the CRE model. It will be interesting to see if some of these trends have staying power as this demographic grows up and maybe even have to get that dreaded “corporate” job to feed the kids! The question is, the trend is there now, so how do we as CRE professionals make the most of it, today?

  • Coy – Totally agree with you on the article save for one minor point. The trends on Millennials are that due to recession, student debt etc. they are putting off those decisions to marry and have kids and not getting to those “suburban-pulling” pressure points during normal time frames, if at all. I will also have to comment, that in a world where “mommas” as you put it are doing the pulling, with many more of us Mommas being the breadwinners, suburbia is only attractive if, like me, you have family support there and the flexibility to telecommute, work in flex space (as needed) and are willing to hop on airplanes a lot! And that goes for the Poppas too!

  • Lowell Peabody

    Great points Coy. Perspective is a key! On the urban Vs Suburban point do you think this is also a result of not having enough price differentiation to make suburbs more attractive?

  • Scott Davis

    Good article, Coy. I think the Millennial suburban vs. urban thing is mis-read. They want to live close to where they work which could be in suburban locations as long as it feels urban. What’s more is that there is growing evidence that Millennial parents are not that different than parents of previous generations, which you touch on.

    I know that you know Houston is adding 150K+ people a year, and maybe building 5,000 a year units in “urban” areas — the bulk of people are still moving to suburban locations. It’s just the scale of people coming here is so large that the number of in-town migrants is large, even if the percentage is relatively consistent with historical patterns. Even being in the business, it’s hard to recognize the scale of it.

  • CREOutsider

    Just have to say that this was one of my favorite posts of the year. Well written, of course, and I agree with every word. Enjoy the holidays!

Previous post:

Next post:


Disclaimer: All blog entries on this site are the opinion of the author and not those of either Colliers International - Houston or Colliers International (collectively, "Colliers"). Colliers neither endorses, sponsors nor necessary shares the opinions of the author, regardless of whether any blog is posted by any employee, officer, agent, or representative of Colliers. Colliers has not authorized or verified any statement of fact made in a blog, and any such statement does not constitute a statement of fact by Colliers. Colliers is not responsible for the monitoring or filtering of any blog, nor does Colliers claim ownership or control over any blog content.