As the pace of innovation races towards never before seen speeds, many industries are being forced to undergo massive changes. The impact of contemporary tech trends have played a huge role in shaping CRE – and the metamorphosis is only just beginning.

The industrial sector is one of the areas most affected by big data and tech growth. While these groundbreaking tools help to streamline workflows and increase efficiency, they also come along with their own set of challenges.

Let’s analyze these 3 key ways that technology is transforming the warehousing industry – and how CRE needs to support these changes.

AI Automation

One of the most notable changes within warehousing is the massive increase in robot use. As AI technology continues to advance, these devices are able to complete complex tasks with striking efficiency rates.

Amazon, one of the world’s most influential companies, is a huge proponent of tech’s encroachment into warehousing. As the world’s largest e-commerce retailer, Amazon’s warehouses contain an intimidating collection of about 45,000 robots – a greater headcount than that of the Netherland’s entire army.

The current numbers mark a 50% increase when compared to the end of 2018, where the company reported only 30,000 robots in use. These figures demonstrate the widespread move towards creative automation within the warehouse industry.

Cloud Software

The marriage between cloud technology and warehouse totally changes the game. This incredibly helpful technology is popular amongst warehouses, where it is revered for its groundbreaking developments for the industry.

Cloud-based software enables warehousing to keep better control over changing inventories, even when the physical environment gets hectic. Cloud technology allows for on-going updates and guarantees up-to-date information across all spectrums, which limits disruptions within the warehouse scene. Since this data bank is usually remote, it also limits the space needed to store information.

Software Path’s 2019 WMS Report indicates that 91.5% of businesses were considering a cloud-based WMS in their current selection project. Cloud management systems are key components in the future of industrial.

Big Data

In any business endeavor, information means everything. The more you know, the more strategic moves you’re able to make – helping to reach goals and attain success. The popular term “big data” is defined as a colossal data collection which is digitally analyzed to hone in on trends and patterns, most of which couldn’t be detected by human senses alone.

The hits warehouse scene through the use of barcode tools and technology. Big-name brands with massive warehouses utilize barcode scanners to keep track of each and every individual item which passes into, through, and out of their facilities.

It doesn’t stop there – barcodes are now more advanced than ever, with capacities that elevate the warehouse efficiency to an entirely new level. On the topic, SystemID shares that warehouse workers can glean valuable information like origin, destination, photographs, price, stock levels, and more with just the scan of the code.

All these advancements occurring in the warehouse industry are thanks to developing technology. After all of this, the biggest question on everyone’s mind is “what can possibly come next?”

While there is a huge growing trend toward being able to work remotely, it comes as no surprise that the majority of businesses today still operate out of some form of commercial space, whether that be a factory, office, or retail storefront (or some combination of these). If you are in the market to launch a new business, or even if you are just thinking of expanding or altering your existing business, one of the first steps you will need to take is deciding how to finance your commercial real estate.

Most often, this choice comes in the form of either renting or purchasing commercial space. When you purchase commercial real estate, you can either buy it outright or finance it with a loan from a bank or other financial institution. When you lease you simply rent the term for an agreed-upon amount of time; once this time is up, you must renegotiate the lease if you’d like to stay in the property — at the risk of paying more for the same space.

Not surprisingly, there are pros and cons to both buying and leasing commercial real estate. Several factors should go into choosing the right acquisition strategy for you and your business, including business equity, tax implications, cash outflows, property value and more. To help you make a more informed decision, let’s dive deeper into some of the pros and cons of buying and leasing commercial real estate.

Buying Commercial Real Estate: The Pros

• Buying builds equity. If you purchase your property outright, you own 100% of it right away. However, the majority of commercial purchases are financed. Even in this case, your down payment and all of your monthly payments are continuing to build equity in the property — helping to add to the overall value of your business.
• Control. When you own your commercial property, you have complete control over it (for the most part, excluding zoning restrictions). This means that you don’t have to negotiate with a landlord if you want to update or reconfigure the space. You also have greater control over your finances, paying a fixed monthly mortgage that doesn’t fluctuate (unlike rent payments, which can fluctuate every time a lease is renegotiated).

Buying Commercial Real Estate: The Cons

• Upfront spending costs. Typically, in a commercial space, you can expect to pay anywhere from 10% to 40% as a down payment — in addition to closing costs and other fees of due diligence. To put this in perspective, for a $2 million commercial property, you can expect to have to come out of pocket $200,000 to $800,000 — just for the down payment.
• Risk of capital loss. Unfortunately, depending on the market conditions, you are always taking a risk in buying that your property’s value will decrease or decline. If this is the case, you may end up taking a capital loss if or when you decide to sell your commercial real estate.

Leasing Commercial Real Estate: The Pros

• The ability to focus more on your business. Owning and managing a commercial property can be hard. There are a number of things you have to consider — maintenance costs, insurance requirements, and more. Leasing commercial space gives you the freedom to focus on what you do best — managing your business.
• Added flexibility. It’s a simple fact that qualifying for a commercial lease is often easier than qualifying for a commercial mortgage — meaning that you will immediately have more options when choosing your space. You also have the freedom to move at the end of your lease, if you want — without the added stress and headache of having to sell your property first.

Leasing Commercial Real Estate: The Cons

• Rent is costly. It’s no secret — your monthly rental payments will usually cost more than the mortgage payments on the same property. In a typical commercial lease, the tenant is responsible for additional expenses, including monthly insurance costs, property taxes, maintenance costs, monthly utilities, and more. As a result, it can often be more expensive to rent a space that to purchase it.
• Less control over the space. If you don’t own your commercial space, your options are limited when it comes to the control that you have. Your lease may have certain restrictions or clauses built in that hamper your control over the space, you have very limited control over potential rent hikes once your lease is up, and even if you go out of business or close up shop, you may still have to pay off the remainder of your lease — or face stiff penalties.

When shopping in some of the biggest cities in the world, you may be surprised to find out that the architecture of some of the flagship designer shops rivals that of many of the other most well known landmarks or destinations of the city. While this is true of the larger fashion houses and luxury brands, it also stands true for a number of other retailers.

When it comes to the success of flagship stores, it can be argued that the hits — and misses — truly lie in the details. There are plenty of retailers who are getting flagship retail right but, unfortunately, there are just as many who just miss the mark.

For those retailers that are getting it right, their success lies in a unique combination of experience, location, and interaction. Here are 3 reasons why retailers should focus on cultivating beautiful flagship storefronts.

Attracting Destination Shoppers

One of the reasons some of the largest retail brands in the world choose to have such elaborate and luxurious flagship stores is to attract visitors to the destination into their stores. While it’s true that many of these shoppers have a particular brand’s store nearly in their backyard, they are still likely to want to go inside a flagship store and shop. For instance, the vast majority of Americans have a Macy’s store inside their nearest mall — but an estimated 20 million shoppers still visit the brand’s flagship store in NYC’s Herald Square each year.

Part of the appeal is pure curiosity and interest,  but many shoppers are also interested in collections that they simply can’t find at home in their local store.

Building Brand Identity

Another reason brands should focus on their flagship store experience is building their brand identity through taste and great design. There is no denying or arguing that there are a number of products and services that are extremely expensive — and some may even go as far as to say excessive (check out this article on the most marked up consumer goods from MoneyTalksNews). Yet, still, consumers line up to purchase these items en masse… but why?

Simple. The reason consumers are willing to spend so much of their hard earned money on these products is a unique combination of the prestige of the brand, their quality, and the sense that they are getting something unique and special in terms of design and/or status. By having unique and beautiful flagship stores, brands are backing up this notion, helping to sell their products and show even the people who don’t shop there that they truly offer the ultimate in design.

Publicity and Brand Awareness

Think about it… if you are traveling to a new city, its unlikely that you’d share a picture of the local Vinny’s Pizzeria where you grabbed a quick lunch in the nearest strip mall. However, if you come across an incredible or iconic building (think the Chanel store in Zaragoza, Spain or the Tiffany & Co. store in Manhattan), you may be inclined to snap a photo, whether it be to share on social media with your friends and family, or to be kept as a personal memento of your travels.

This type of unique, grassroots publicity helps keep the visible, whether people shop in their stores or not. This provides a number of benefits to brands, regardless of industry. Keep in mind that it is vitally important that there be clear brand alignment and reinforcement between these flagship stores and the other ways in which the brand communicates. Flagship stores should always be in line with the overall look and feel of the brand — yet elevate the experience to a new level for customers and guests.

Have you heard the news? Amazon is stealthily targeting airports, interested in bringing their futuristic format of checkout-free stores to these crowded hubs in order to win business from busy time-crunched and hungry travelers. This strategic move is just another in a series of ways the online retail giant is shifting from their roots as a simple online bookseller into physical brick and mortar retail space, to capture a greater market share and more shoppers’ dollars.

With several of these locations already under the belt of Amazon, including in Chicago, San Francisco, Seattle, and more, let’s take a closer look at ways this move may or may not make sense, and what the future may hold for Amazon in your local airport. Here are 3 things to watch about the expansion of Amazon into airports.

Oslo, Norway – January 2018: Oslo Gardermoen International Airport departure terminal architecture. The Oslo Gardermoen airport has biggest passenger flow in Norway.

Airports may be a natural environment for Amazon. 

While the idea may initially seem novel, airports could actually prove to be the perfect home for this futuristic concept. Neil Saunders, managing director of research firm GlobalData Retail, sums it up best: “One of the biggest problems at airports is that [people] are very busy and often very stressed, and there’s a real restriction on time. Its very interesting Amazon is looking to go there.”

The very setup of an Amazon Go store is a natural fit for travelers, complete with no checkout lines or even cashiers. Shoppers simply scan their phones at a turnstile upon entering, and then cameras and sensors help to keep track of which items shoppers put in their carts — and which they put back on the shelves. Once shoppers have everything they need, simply walk back out of the store, and their phones generate a receipt and a summary of their shopping experience.

There have been some concerns about how shoppers and their data are tracked.

The use of cameras and sensors understandably raised some eyebrows about how closely shoppers and their data would be tracked and used. Certain privacy experts cautioned potential shoppers that they may not even understand exactly how much of their personal information they would be giving away by shopping in these stores, and that Amazon has the ability to track more than just what you buy.

But it’s important to note that Amazon insists that their technology doesn’t use any type of facial recognition. Instead they rely on large codes on certain items that help cameras realize when they’ve been picked up, as well as a sophisticated system of weight sensors installed in shelves.

The future of Amazon in airports is unclear. 

Some experts, including Ramon Lo, publisher of Airport Experience News, agree that the Amazon Go model is the perfect addition to today’s busy airports — especially in large hubs such as Atlanta, Houston, or Dallas — where big numbers of busy travelers are looking for something fast and efficient in between their connecting flights. But does this type of model make sense for smaller hubs with significantly less foot traffic? Maybe not.

Ryan Hamilton, a professor at Emory University’s Goizueta Business School, points out that Amazon Go stores need to factor in the hefty price tag of installing this type of sophisticated camera and sensor system — and then weigh it against the potential return from shoppers. And, while not hiring cashiers does take away a large portion of the traditional operating costs, this model may not always be a good fit where the number of travelers simply doesn’t warrant this type of investment.

There has been a buzz about new markets and where Amazon Go may go next, but the company has remained tight-lipped about the future plans for these types of shops. Still, don’t write off this savvy retailer anytime soon. Keep an eye out the next time you’re running through the airport — you might just be surprised at what you see.

Life science is not just that high school class you took in 10th grade. In fact, it is a flourishing industry and it has caught the attention of many prominent and budding CRE investors recently. The life and bio science industry has been steadily surging for some time now due to increased knowledge, funding and research in the scientific and medical fields. In fact studies show 79% of adults say “science has made life easier for most people and a majority is positive about science’s impact on the quality of healthcare, food and the environment.” So why are investors eyeing these properties? Let’s take a look.

Female and Male Scientists Working on their Computers In Big Modern Laboratory. Various Shelves with Beakers, Chemicals and Different Technical Equipment is Visible.

1. Life Science Jobs are Increasing

Life science and biotech jobs are increasing at a steady rate. In recent years much of society has shifted into caring about scientific advancements in various fields such as, medical, nutritional, environmental and more. It has been recorded that “science holds an esteemed place among citizens and professionals. Americans recognize the accomplishments of scientists in key fields and, despite considerable dispute about the role of government in other realms, there is broad public support for government investment in scientific research.”

With this mindset, from now to 2026,  jobs are predicted to increase by 10%, a faster than average rate, and medical research will increase demand for workers. When investors see that an industry is steadily rising with no indication of plateauing anytime soon. it is normally a good industry to invest in early.

2. The Demand is High

Considering new innovations and jobs are opening incredibly frequently in this field, it is no surprise the demand is high. Growth has occurred in some of the most prominent cities including Boston, San Diego, Chicago, New York City and more. Vacancy rates for life science properties are remaining low. How low? It can fluctuate between 2-4% range, but in some cities like Cambridge, Massachusetts, for example, vacancies are virtually 0%.

In fact, rents in this city for scientific properties are on average $75/SF as per recent research. This is good news for developers and the investors who back them. Increasing supply in the slightest when demand is high can be a great move financially.

3. Advancements in Biotechnology

With the population of seniors growing, many diseases like cancer, HIV, and diabetes making headway in new medical advancements the need for lab spaces is critical in cities all over the country. One of the biggest reasons lab space has increased recently is the mapping of the complete human genome, and the specific advancements that have accompanied it. The price of mapping these genomes once cost millions of dollars, but with recent advancements, has dropped to around $1,000. This has resulted in expansive DNA research as well as medical and scientific advancements across multiple fronts.

The great thing about scientific advancements is that they build on each other, and one discover leads to the discovery of new things, which keep the market constantly evolving — a great thing for investors.