Stay in the Loop With These 10 Must Reads from 2023
Welcome back to LoopedIn — a monthly recap of the most noteworthy articles on commercial real estate trends, projects and market insights to help you navigate the industry and stay in the loop.
2023 was quite a year for the commercial real estate industry. The rise in interest rates, corporate adjustments to the hybrid work model and the looming specter of a recession that was promised but (fortunately) never delivered were just some of the forces impacting both tenants and investors across all sectors of CRE this year.
But notable trends emerged that showed a way forward: niche sectors, like self-storage, attracted increasing levels of investor interest; inventive projects where tenants and owners unlocked potential in even the most unusual spaces generated new revenue; and then there was pickleball — so much pickleball.
Here are 10 of the trends and projects that captured the attention of our editors and readers this year, many of which we anticipate will endure in 2024 and perhaps well beyond.
Top 10 Must Reads from 2023
Investor interest in the self-storage sector is by no means a new trend, but in 2023 the asset class’s appeal became turbocharged. According to a survey of global investors by brokerage firm CBRE, 41% of respondents planned to pursue investments in the sector this year.
According to Morgan Windbiel, a senior vice president with CBRE’s Self Storage Advisory Group, “The industry has continued to grow and outperform many other asset classes through both good times and bad.” In this Q&A, Windbiel outlined the appeal of the self-storage sector and the challenges curious investors should be aware of.
Triple-net retail properties are practically the antithesis of a trendy real estate investment. Reliable, consistent and low-maintenance are some of the adjectives mostly associated with these assets. However, the sharp rise in interest rates had a predictably pronounced effect on an asset class that many investors consider akin to a government bond.
In this article, Andrew Bogardus, executive director in the net lease group at Cushman & Wakefield, detailed both the basics of investing in triple-net lease properties, as well as how interest rates were impacting the current market.
The question of how to make a return to the office more appealing, not just for the average employee, but for the corporate decision makers determining how much space to lease, has been persistent for years now and, with the rise in interest rates, became only more urgent in 2023.
At the CRETech conference in New York this September, industry leaders such as Michael Przytula, Accenture’s managing director of intelligent and digital workplaces, stressed that office owners and users needed to focus on innovation.
When Kevin Song’s parents lost the lease on the grocery store business in Brooklyn that they had spent decades building, he was inspired to help other small business owners gain more control over their destinies. That’s why he founded Withco, a lease-to-own commercial property company.
“Most mom-and-pop owners aren’t commercial real estate investors, and they may not have the commercial real estate expertise to get into the business of [property] ownership. So, we brought the lease-to-own model to the commercial market to empower them to become property owners, and give them the ability to turn their incredible cash-flowing businesses into generational wealth,” Song said.
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Chicago’s Willis Tower’s lobby, trafficked by its thousands of tenants per day, wasn’t being used thoughtfully and was idling as untapped space in the building. A renovation added 300,000 square feet of retail and dining space, a 30,000-square-foot outdoor terrace that’s accessible to the public and 150,000 square feet of new tenant-exclusive amenity spaces.
“The transformation has resulted in a human-focused, hospitality-driven, amenity-rich environment that people will choose to come to even if they have the ability to work from home,” said Kirsten Ekdahl Hull, vice president of portfolio management for building operator EQ Office.
Over the past few years, we’ve seen a lot of concepts about how to repurpose underutilized office properties — from the predictable (multifamily conversions) to the more imaginative.
But vertical farming, the use being championed by Calgary-based company Agriplay, is perhaps the most innovative use yet. The company has developed technology that enables vacant office space to be used to profitably grow up to 150 different crops of fresh produce for local markets.
Even for smaller, entrepreneurial investors, real estate investment has increasingly become a global pursuit. In fact, according to the 2023 edition of The Wealth Report from Knight Frank, private investors were the most active investor group globally in 2022.
To understand where these investors are placing their bets, LoopNet looked at the top 10 countries for private real estate investors, which included nations such as the United States, the United Kingdom and other European countries.
Buying distressed commercial property certainly isn’t a new trend, but the pursuit took on new relevance in 2023, as rising interest rates meant that a growing number of properties were headed toward foreclosure.
To help investors interested in distressed properties understand how to pursue them, LoopNet spoke with two New York-based attorneys who explained how to define and acquire distressed properties, among other nuances of the sector.
Using the slope of a hill as well as innovative and ambitious construction methods, developers seamlessly tucked a massive 1.8-million-square-foot mixed-use development behind a historic office building in Washington, D.C. In this exclusive video series, LoopNet got a behind-the-scenes look at the $715 million project that transformed a 10-acre site into an “urban village.” Watch how they did it in our first CRE Close-Up.
No 2023 trends round-up would be complete without pickleball. The sport that has swept the United States over the past several years has also made an indelible mark on commercial real estate, showing up in multifamily projects, retail strip centers and more. In this article, LoopNet looked at one operator’s plans for commodifying America’s enthusiasm for tennis’ younger sibling, as well as other burgeoning retail trends to watch in 2023.
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