As we welcome the warmer weather across our abundantly beautiful Charleston, it’s apparent that new life is springing forth. Just as the tides refresh our shores twice a day with the influx of new food for the chain, the asset class “commercial real estate” (CRE) brings about widespread change as it adapts to a higher and better use.
New growth is omnipresent and we all benefit when values increase. I’ve recently aided a software client into a former mattress factory. The new workforce takes home in one month what the previous workforce made in a year. In the same building.
Simply put, our current supply of sites and buildings cannot accommodate the present demand for growth. Our Charleston Industrial market continues to operate at a decade-low vacancy rate, hampered by the recession’s credit contraction hangover. I fear we’re suppressing the pace of our recovery by not returning capital into the transformative power of commercial real estate.
Corporate investment in CRE is much more sophisticated than a decade ago. The C-suite views CRE as a strategic instrument that must support increased efficiency and profitability. Today’s mobile and connected workforce no longer sits in closed offices, meeting rooms lie empty, cubes are being abandoned. The future demands a convergence of both CRE and technology.
Charleston has far too many Class C buildings on Class A sites. Investors and users refuse to continue paying for functional obsolescence. We need a lending program, similar to SBA, to rehabilitate and modernize…we need a refreshing springtime to begin the process of strategic intervention in the life of our buildings.
Next Month: “Trading pine trees for concrete tilt walls: Spec Building Success Stories”