A former real estate manager with National Food Stores, Terrence Sommerfeld draws upon more than 50 years of experience in commercial real estate management as owner of Chicago-based Metropolitan Real Estate Co. In this capacity, Terrence Sommerfeld specializes in the leasing, management, and design of community shopping center developments and other retail spaces.
The United States economy as a whole improved in 2017 despite a distressed retail segment. Given recent changes to tax laws and other world events, below are three trends commercial real estate professionals need to consider.
1. Foreign lending - Despite being designed to benefit business with a lower corporate tax rate, the new tax laws could negatively impact banks around the world and their commercial real estate lending business. Bank of America and Citigroup have already stated the changes would lower their 2017 profits, while the implementation of the base erosion and anti-abuse tax could be a detriment to foreign banks that regularly shift money between different business units.
2. Changing demographics - There are now more Millennials than baby boomers and, as a result, the majority of real estate and consumer spending decisions are being made by people younger than 40 years old. While Millennials might gravitate toward experiences, baby boomers are retiring and moving out of the suburbs and into the city. Retail industry professionals must be aware of the changing preferences for experiences, services, and products of both generations.
3. Experienced-based retail uses - Because of changing demographics favoring Millennials, commercial real estate developers need to focus more on providing consumer experiences rather than products and services. Traditional retail space such as family clothing stores and department stores are going to be replaced at a rapid rate with restaurants, fitness and recreation facilities, hotels, and theaters.
