SIOR Global President Robert Thornburgh on CRE’s 2019 Threats & Opportunities

Robert Thornburgh, President of the board of directors of SIOR and an executive vice president and partner at Kidder Mathews, shares insights for the coming year in our latest 3 CRE Q&A.

Q: How will the economy affect commercial real estate in 2019?

Thornburgh

A: The U.S. economy has been on a remarkable run and most experts believe this will continue at least through 2019.

The current global appetite for investments across all product types, the influence of e-commerce, changes occurring in office and retail use, mergers and acquisitions, the quickly expanding influence of technology along with the next generation of real estate professionals coming into the business continue to change our landscape in positive ways.

However, it’s hard to ignore many of the potential threats to our industry – rising interest rates, slowing growth in GDP, the back and forth tariff dispute between the U.S. and China and most recent government shutdown to name only a few. Despite increasing economic uncertainty, this remains an exciting time to be in commercial real estate.

Looking ahead, businesses and CRE professionals must stay vigilant and continue to innovate so that when a downturn does occur, they will be positioned for success in the face of any adverse market conditions. Amazing opportunities exist in both rising and declining markets for those who are paying attention and prepared to act on sound strategy.

Q: What does the industrial landscape look like for 2019?

A: I don’t see many surprises for us, at least in the short run. Driven by an extraordinary, prolonged surge in e-commerce and expanding global trade, the industrial market remains the hottest sector across the United States, with California setting the pace.

Changing consumer and lifestyle trends – how we work, shop and live – have all been the primary driver for this, leading to flourishing new development, robust rent increases and in the process, steadily increasing property values.

While each industrial region has its own story, they all seem to end in a transformative environment that is repositioning antiquated real estate, pushing building design, expenses, pricing and real estate professionals in unique ways that we have not seen before.

That said, escalating land prices, major barriers to obtaining entitlements for developers, steadily rising constructions costs, along with constraints in labor are all worth keeping a close eye on.

Q: How is technology changing how brokers work?

A: Technology continues to be a catalyst for change in all areas of business and industry, and the real estate market is no exception. The rapid advances in technology are shifting the way we communicate and work together – broker to broker and broker to client.

Everything is accelerating as are the variety of services being created. Think of AI, machine learning, VR, the Internet of Things, blockchain and even the benefits generated through the cloud. New platforms are bringing together forms of disparate data, including advanced analytics, to not only compete at a much higher level, but ultimately assist our clients reach smarter outcomes.

What people must not lose sight of is the actual rate of change itself. It’s exponential and will affect us all in massive ways. The best way to maintain relevance in the backdrop of this transformation is to keep pace with today’s technology and the emerging trends that surround it – not an easy thing. The reality is most of us simply don’t like change. However, tomorrow’s leading brokers and the next generation of disruptive, industry-changing real estate organizations will be the ones who have embraced technology early on and built a culture around reinvention.

For comments, questions or concerns, please contact Dennis Kaiser