An Accelerating Cultural Shift Brings Massive Changes to Commercial Real Estate

A current, major cultural shift will have dramatic changes to how all commercial real estate is viewed, developed, occupied and managed, according to commercial real estate consultant Peter D. Morris of the Greenstead Consulting Group, located in Vancouver, Canada.

“Since the beginning of time, our culture  has predominantly been to go to get products, services, entertainment, and even work. The shift now is that consumers now want all that to come to us instead. We call it the Come to Me SM Culture”, said Morris.

While a small minority embraced the idea of some things being delivered to the consumer, such as mail order companies and their customers; Covid has brought the idea of having products and services delivered rather than going to get them ourselves into the mainstream. Morris notes that this cultural shift affects almost every aspect of our lives today and will accelerate at an increasing pace into the future. Morris believes commercial real estate owners and occupiers should now investigate the ramifications of this significant trend to stay ahead of the curve.

He noted, as an example, that just a decade ago retailers were told they needed an omnichannel presence to be relevant, so many created websites that were more or less brochures or billboards on the web. Today, retailers of all stripes must have an ability for consumers to easily buy from the comfort of their home and have the products delivered to them, to align with this trend. Morris cites emerging companies such as Foxtrot, a young US, technology based convenience store chain that was primarily created around web-based purchasing and home delivery first, with physical locations too.

Meal and grocery delivery services are another example of products going to the consumer rather than the consumer going to the store. Likewise, third-party restaurant delivery services such as DoorDash and Uber Eats (and many others) are flourishing. Even restauranters are carving out virtual restaurants with ghost kitchens that don’t have a physical presence.

Before Covid, employers were reluctant to have remote workers, citing supervision and productivity as just two potential issues. Technology platforms such as Teams, Skype and Zoom demonstrated that people no longer needed to go to the office, and even sales staff are conducting sales presentations virtually. The stigma of virtual communication is wearing off.

Morris stated that even in entertainment we have seen a significant demand for things such as first run movies simultaneously screened in theatres and with on-demand, pay per view offerings. “There is a reason people are buying ever bigger TV screens”, he said “and the movie producers are responding.”

Given this, Morris has been watching how this trend may affect all the commercial asset classes, such as retail, office, warehouse/distribution and mixed use. He contends all commercial real estate owners and occupiers must view their real estate through the lens of optimizing this cultural shift.

“One asset class that seems somewhat insulated from major disruption so far is warehouse logistics,” he said. Overall, new industrial completions are forecast to jump by 29% next year, according to CBRE Econometric Advisors. However, Morris notes that the leader in ‘Come to Me’ culture, Amazon, is also raising the bar.

“Amazon has taken the concept of people wanting products to come to them to the next level by incorporating how long should the consumer wait? Amazon is conditioning the consumer to believe they don’t have to wait weeks or days for something to arrive, but mere hours in some cases”, Morris said.

Morris doesn’t believe those in the commercial real estate industry have fully embraced this new culture and thinks more innovation is on the horizon as the culture sets in deeper and broader.

Morris concluded by saying; “All those involved in the commercial real estate sector need to abandon century’s old ideas of what their real estate means because the Come to Me culture is upon all of us.”

Posted in Development, Landlord Related, Occupier Related, Opinion.