All businesses need brick and mortar real estate. There are really only a few exceptions to the rule, and real estate isn’t one of them. In fact, it is increasingly becoming a differentiating factor. So what happened to corporate real estate? Why is it such a critical component to succeed in today’s investing landscape?
What Happened to Corporate Real Estate?
What happened to business real estate in America? Corporate real estate has always been a critical part of business. In fact, serious companies have whole teams and departments designated to sourcing, negotiating, and managing real estate assets, investments, and work and manufacturing spaces. However, there is no question that there was a dynamic shift in commercial real estate.
The convergence of the financial and housing market decline, in addition to online shopping and outsourcing all spurred businesses to shrink their physical footprint. Commercial landlords couldn’t give space away, even with six months of free rent. The current e-commerce boom took off as a result. Real estate assets were sold off and leases were abandoned seemingly overnight. Even executive suites had to reinvent themselves.
At the time, taking your entire business online became trendy. An online first approach has been very profitable for many types of businesses since then. In fact, thousands of startups and careers in real estate simply wouldn’t have been feasible between 2005 and 2014 without this lean mentality.
Surprisingly, the tides are changing. Changes in consumer tastes and shopping habits are driving the need for a physical presence and engagement, making real estate a profitable, must-have company asset. Smarter development and use of space, along with efficiency from technology, means that property is no longer cumbersome, expensive and inefficient. We are essentially seeing a drive back to the real world.
Retail Office Space Is Making A Come-Back
Many startups are emerging from what was an online first approach, and looking for brick and mortar hubs to run their businesses out of. They’ve proven their product and business models work, and have raised capital to stay in a specific location. Now they are opening shops and retail store fronts.
A great example of this is Inc.’s coverage of clothing startup Bonobos. Then there are the Tesla showrooms, Google and Apple stores, Facebook apartments and new campuses, and even Amazon expanding in Florida with new jobs, and square footage.
A reinvented office market is coming back. Spaces have been optimized, internet is faster, work spaces have been made more productive. As young companies grow, they need more office room. Many others, including many real estate companies, are finding that having a physical office or retail space is the differentiating factor that makes their ventures a success.
The Best Investment For Your Business
When optimized, real estate can be one of the best investments for any business. Some can do well with stand-alone, single-tenant buildings, For others, office condos, office buildings, retail strip malls, or mixed use centers are more attractive. Unless your business owns its premises, it will forever be a renter. That means being held hostage to whatever ransom price that landlords choose to ask. And it is pretty obvious that both residential and commercial rents are only headed up for the foreseeable future. Those with multiple units can find that their tenants provide them with free rent, and even additional income, and equity building. In many situations, they’ll ultimately find that the bulk of their true business value and equity is in the real estate held.
A Brilliant Business Tool
A great looking place to meet clients and customers can make all the difference in credibility, brand value, and marketing. For some, it can be their best marketing and conversion tool. Use it as a way to stand out, be personable when others hide behind the internet, create relationships and strategic partnerships, and to generate live real estate leads.
Smarter Business
There are many ways to make corporate real estate more efficient and profitable than in the past. Some ideas to bolster this include:
- Finding deals on commercial REOs
- Using alternative building materials like shipping containers
- Maximizing floor space per user
- Using technology and smarter building practices to optimize productivity
- Incorporating technology to boost visitor value, sales, and conversions
Summary
Commercial real estate and the business world is coming full circle. Real estate investment can be one of the best moves for all types of businesses today. This is especially true for real estate businesses. While it can work, it is a little hard to sell real estate and justify it to others when you don’t own any yourself. So what will you do to concrete your business, build value in it, and come out ahead?
