6 Property Management Trends to Keep an Eye on in 2019

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As we close out the first month of the new year and look ahead for what 2019 has to offer, many real estate professionals, investors, property managers and others who like to keep up with the market may be wondering what trends will we see this year. When it comes to property management, as our culture evolves, so do trends in the property management market.

Let’s look at the various trends we will be keeping an eye out for in 2019, and how they can amp-up your success in the new year.

  1. Retention

In 2019 it will be incredibly pivotal to retain management that is long-term and consistent. This creates the capability for management to get to know the property and its tenants and provide the best possible results. With rental rates projected to plateau in 2019-2020, it will be key for management to maintain peak operating performances, mitigate vacancies and control expenses so investors and landlords can see maximum returns.

2. Technology

Our society is becoming more and more technologically advanced. Utilizing technology to create efficiencies and maximize a property’s performance. Allowing tenants to utilize technology to lessen human error allows for properties to run more smoothly and successfully. Additionally, studies show that tenants prefer mobile communication. Using these technological tactics will create happier tenants which in turn, produces longevity and fewer vacancies.

3. Amenities

One trend that will be eye-catching this year is the usage of amenities and how they are provided, managed and maintained. Good management will listen to tenants on what amenities they want and need. If a yoga room or a third-space is a preferred amenity amongst tenants, a good property manager will look into converting an underutilized amenity, like an outdated racquetball court into one that will be used. Additionally, modern amenities such as Wi-Fi and solid signal are to be expected by tenants to be provided and maintained by management.

4. Customization

It will be important to employ a management company that does not have a “one size

fits all” mentality. Managers that take the overall nature of tenants, landlords, property type, location, and other specifics into consideration to provide a custom experience will prosper.

5. On-Site Management

As we do become more technology-based as a society, some buildings become more digital. However, it is good to maintain an on-site property manager. Tenants like to have a friendly face and accessible person on-site to manage and maintain the property. Off-site companies just do not give tenants the same peace of mind.

6. Inclusivity

As the United States becomes even more diverse, it is important that your property manager embraces and includes all types of culture, specifically those in the immediate area of your property. For multifamily investors and landlords, non-natives are more likely to rent than buy, so having a manager who speaks different languages can be key.

Of course, trends in property management are constantly evolving, however, these are some sure-fire trends to keep an eye on this year for optimal property management success.

How Did Co-working Fare in 2018?

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2018 was a year of tremendous success and continued growth for the co-working sector. We experienced many large consolidations, new operators entering the picture and new trends in how co-working spaces are operating. Let’s dive into some of the biggest things that happened in co-working in 2018.

Spike in Investment in Co-working

Private equity firms and investors have shown an increased interest in the co-working sector. FlexiOffices, a UK brokerage, experienced a management buyout backed by NVM Private Equity and Industrious raised $80 million in series C funding. Blackstone, the largest private equity firm in the world, acquired The Office Group, which is one of the largest co-working brands in Europe. With Blackstone’s investment, The Office Group can expand and go global. According to Allwork, flexible workspace will represent between 5% and 10% of office inventory in various markets, making it a prime investment option.

Ucommune Gave WeWork a Run for Its Money

Over the past year, Ucommune has acquired rival co-working firms and thus positioned itself has the largest co-working provider in Asia. The co-working company operates over 200 locations in more than 37 cities all over the world and has done so in just 3 years. While WeWork has a current valuation of over $40 billion, Ucommune’s $3 billion valuation will quickly catch up at the rate it is growing.

Corporate Co-working Solidifies

The giant co-working company WeWork has seen a huge increase in the number of companies with 1,000+ employees that utilize their space. Just in the last year, WeWork’s corporate clients have doubled. Companies like Starbucks, Microsoft, Bank of America, and Salesforce all use WeWork space. Twenty-five percent of WeWork’s annual revenue is from these large corporate companies with over 1,000 employees.

Co-working has also transitioned from a trend due to the partnerships we are seeing form between landlords and co-working operators.

Acquisitions and Mergers in the Co-working Sphere

Co-working firms have become targets for cross-border mergers and acquisitions as the sector looks for more opportunities for global expansion. In April 2018, Naked Hub, a regional co-working company based in Shanghai, completed its acquisition of Australia-based Gravity Co-working. Just days later, WeWork acquired Naked Hub in a $400 million deal after acquiring Singapore-based SpaceMob in August 2017. According to Bloomberg, WeWork is actively pushing for expansion further into China, particularly since the company received $4.4 billion in growth capital from Softbank with $1.4 billion dedicated to expansions into Japan, China and Southeast Asia.

Coworking Adopting Franchising Models

There are only two major co-working operators that are utilizing a franchising strategy. Serendipity Labs and Venture X are paving the way for more co-working operators to leverage this model to expand and grow. For example, Ucommune partnered with Serendipity Labs to enter the U.S. market. This deal offered Ucommune instant access to U.S. companies and it encourages international growth while offering Serendipity Labs access to foreign investors as it seeks to expand into other markets.

5 Ways E-commerce Has Changed the Game for Industrial Real Estate

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E-commerce has been a crucial driver in the industrial real estate market for both leasing and investment activity. This new niche market of retail is transforming the entire industrial sector from logistics to warehouse design. Let’s take a look at a few ways e-commerce has changed the game for industrial real estate.

Logistics

The logistics part of the industrial sector is on fire, primarily because of e-commerce. The requirements behind logistics facilities for e-commerce are very different than for in-store retail. As e-commerce grows, retailers will need to expand their logistics space for a variety of reasons:

  • Need to stock a wider variety of SKUs
  • Need more space for processing returned items
  • Need to have more buffer stock on hand
  • Need more space due to individual order picking, packing and shipping directly to the consumer

Facility Locations

One of the biggest differences with e-commerce warehouses and distribution centers are where they are located. In-store distribution vs. e-commerce fulfillment means shipping cases or products vs. shipping a necklace, toilet paper and a pair of shoes directly to a customer. When you do the distribution to stores, you need a location that is semi-rural where land is less expensive and there is plenty of space, but with fulfillment, the opposite is needed. You need to be close to the consumer for quick delivery times.

Different Process

When you are choosing boxes to be delivered to a retail store, the level of automation is low, but when you are choosing specific items to send to a consumer, the automation must increase and requires three times as much space. Fulfillment requires a different location, operation and size than distribution requires. As e-commerce continues to boom, this will affect the number of fulfillment centers vs. distribution centers.

Developers Need to Position Themselves for the Future of E-Commerce

New centers will require bigger buildings, which means developers will need to change the way they approach industrial real estate development. Developers will need to get out in front of it because many companies are underestimating the amount of space they will need for e-commerce operations. Spec buildings will increase in demand due to the growth of e-commerce. Because so much space will be needed to meet the demand for e-commerce facilities, developers who have the buildings will ultimately win the game and will be taking on little risk, because there will always be a demand.

More Fulfillment, Less Distribution

Real estate experts project e-commerce will have double-digit growth every year, which will result in more fulfillment and fewer distribution centers. Consumers are going to purchase more via their mobile devices than they will on their computer and these purchases won’t be lengthy ones, but rather one or two item type transactions. These quick one or two item purchases will affect labor since the labor to pick four one-line-item orders is much more than the labor to pick one four-line-item order. With more labor in demand, more space and resources will be required.

How is Virtual Reality REALLY Going to Impact CRE

Male and Female Architects Wearing  Augmented Reality Headsets Work with 3D City Model. High Tech Office Professional People Use Virtual Reality Modeling Software Application.

Male and Female Architects Wearing Augmented Reality Headsets Work with 3D City Model.

Virtual reality (“VR”) will create opportunities for everyone. In an excellent article on the topic by The Counselors of Real Estate (read it here), they explain how the use of virtual reality could change every aspect of deal making.

“One of the main uses of VR for real estate is marketing. While the cost of a virtual model may seem high to some, the cost can be offset through the reduction of other marketing spend, a reduction of holding costs by compressing the transaction cycle and accelerating cash flow, which also reduces the risk of closing. The model can also be repurposed for use in facilities, asset and property management. A VR model can save time and money in terms of making design decisions more quickly and avoiding mistakes during the build out of a space. Similarly, VR models can be used to facilitate and make planning meetings or economic development agency initiatives more accessible and efficient by putting models online to help make real-time changes, by any or all of the stakeholders.”

“Transaction friction can also be reduced, as potential buyers or tenants can “see” a range of properties without having to travel to each location. Imagine the productivity gains over the course of a year from being able to see ten properties without leaving one’s office in the time it would take to drive to and from just one property. The use of a VR model can also expand the market for buyers, as the entire globe is now able to see the property. Brokers are able to measure reaction in real-time via embedded audio and video capabilities. This also makes brokers more efficient, as they do not need to coordinate logistics for and host extensive property tours that undoubtedly will include properties that are not given any consideration by the client.”

Let’s take a deeper look at how VR is going to impact CRE.

You’ll be able to visualize developments and properties in completely new ways.

We’ve seen this concept commercially with Lowe’s VR design service, where a customer can see the color of paint in a room before they commit to it. “Developers will be able to complete showroom experience to local and remote clients that allows them to select their own finishes, furnishings and other amenities — before groundbreaking.

Buyers/tenants can instantly see themselves in the space the way they want it, creating the opportunity to shorten sales cycles and sellout periods as well as reduce holding costs,” explains an article by The Counselors of Real Estate. One of the most profound ways they list that leasing brokers and owners will be able to “use VR tools to complete test fits of spaces for potential tenants in real-time, online or on site, without the need to wait for an architect.” Property and asset management can utilize VR for  property and space availabilities, occupancies, maintenance requests or records.

Virtual Reality expedites stakeholders’ decision-making.

An article for Bisnowexplains that “one of the biggest benefits of VR technology is that it enables owners, brokers and tenants to envision a potential master plan, building or interior space quicker and easier than ever before; the immersive experiences allow critical team members to make quick decisions and get the project moving.”

In the article, GA director of virtual design and construction Michael Schroeder says that “with the VR technology, I can engage all the important stakeholders in the process on their own schedule.”

“The technology allows the process to move forward at a quicker pace, enabling crucial decisions to get the consensus response they need. It’s a vital step in saving time for all parties involved.”

Virtual reality allows everyone to be in one place at once.

In CREtech’s articleabout ways virtual reality is changing commercial real estate, they explain that “as foreign investments in U.S. properties continue to increase, being able to make deals remotely is imperative. VR technology allows brokers and agents to show a space to potential clients on the other side of the globe in real-time and as if they are actually walking through the space. Showings are no longer limited by space and time which is resulting in a limitless global base of potential clients.

New Listing – 15 acres of land along Rt. 61 in Ontelaunee Township

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Bryan Cole and John Buccinno of NAI Keystone Commercial and Industrial have been retained to exclusively represent Greater Berks Development Fund (GBDF), an affiliate of the Greater Reading Chamber Alliance, in the Sale or Lease of approximately 15 acres of land along Rt. 61 in Ontelaunee Township.

GBDF purchased the land, which was originally 22 Acres and is in the process of subdividing 7 acres which will be sold to an End User.  The remaining 15 acres is ideally suited for industrial or manufacturing users.

The concept plan shows the potential for a two-building site. The site can accommodate users from 10,000 square feet to 140,000 square feet and is located at the lighted interchange of Rt. 61 & Rt. 73 which provides easy access to I-78 and Rt. 222.

“GBDF and GRCA are committed to helping Berks County employers grow and expand their business and local workforce,” said Randy Peers, GRCA President & CEO. “Industrial and manufacturing companies play a large role in our local economy, and the availability of more sites like this one help support existing business growth as well as our business attraction efforts.”

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

John Buccinno and Bryan Cole complete 146,324 SF lease at former VF Outlet

 

NAI Keystone’s John Buccinno and Bryan Cole have executed the lease of a 146,324 SF office space lease on 15 acres at the former VF Outlet in Wyomissing. The lease which has a total value of over $61 million was finalized the end of last year.

There is 19 acres of land remaining for build-to-suit office or flex space opportunities from 10,000 SF up to 100,000 SF. For more information on these availabilities please contact either Bryan Cole at 610.370.8502, bcole@naikeystone.com or John Buccinno at 610.370.8508, jbuccinno@naikeystone.com.

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

Sly Fox Brewing Co. Moves into VF Outlet Center

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NAI Keystone is pleased to announce the completion of the lease of the former Dooney & Bourke outlet located at the former VF Outlet Center, now known as The Knitting Mills, in Wyomissing to Sly Fox Brewing Co. NAI’s John Buccinno represented the landlord, Equus Capital Partners while NAI’s Kyle McKechnie represented the tenant, Sly Fox Brewing Co.

The Pottstown-based brewing company has plans to open up a restaurant in their approximately 5,900 SF space located in the front half of the building. The restaurant’s preliminary plans state they hope to be open by late summer or early fall.

Since the inception of this revitalization project at the VF Outlet Center, and in addition to Sly Fox Brewing Co., NAI Keystone has found a home for UGI Energy Services new headquarters in the old outlet’s ‘Blue Building’ and represented Equus Capital Partners in the sale of the 20,000 SF building formerly used by Rawlings to Orthopedic Association of Reading.

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.