The Commercial Real Estate Revolution

Volatile, global, disruptive, accelerating, complex, unpredictable… If that sounds anything like what your organization has experienced in the last year, welcome to the extreme future. Some of us have been describing this new reality for over a decade.

Construction, architecture, FF&E and all related stakeholders have seen their businesses drop 20%, 30%, 40% and some even more.

Some hope that this recession will be like others; hunker down, wait a while and then a new resurgence will emerge. But is this like recent recessions?

Here are some factors to consider:

1. There a large excess of inventory (buildings).
2. $3 trillion in financing is up for renewal this fall. It is estimated that 1/3 of these loans will default.
3. The credit rules have changed requiring more equity from developers by a factor of 5 and more. That means fewer more selective buildings.
4. The green steam roller is in full gear. Old buildings will be devalued and fewer, smaller buildings will be the new strategy.
5. Corporations are divesting of their fixed overhead and new mobile technologies will be the beneficiaries.
6. The warts of our industry are under full scrutiny and owners are demanding lower cost, higher quality green buildings.
7. There is a digital generation (70 million) who are stepping into the workplace and their agenda is not their mom and dad’s agenda.

There is a new normal coming. But I see little innovation (changed life style) in the wake of this industry wide near-death experience.

What will your business look like in 2010? What will your new markets be? Where will your new customers come from?

Here is a short clip from Dr. James Canton, author of Extreme Future.

Tags: change, disruptive, recession