In preparation for our annual Commercial Real Estate Trends and Issues Forum on April 25, we asked our panelists to share one commercial real estate trend that business leaders need to be aware of. 

Their responses raise a variety of questions: How will technology alter and disrupt the industry? How will transportation changes affect Des Moines? What effect will there be from an influx of national and international investors? Will the industrial market continue to burn hot?

I’ll be moderating the event, and I’m excited to delve into these topics and a number of other issues surrounding an industry that’s percolating on a variety of fronts. 

In addition, we’ll be distributing the 2018 Annual Real Estate Magazine at the event, which is sure to be a useful tool jam-packed with stories, trends to watch, market facts and property listings for industry subsections.

— Chris Conetzkey, publisher of the Business Record

We asked our panelists:
What is one trend in commercial real estate that business leaders should be aware of?

Dylan Mullenix, Assistant Director, Des Moines Area Metropolitan Planning Organization
The rapid advancement of technology will factor into numerous aspects of the commercial real estate industry. “Smart cities,” “internet of things,” and “internet of everything” are buzzwords that are becoming more popular, and for good reason ? It is estimated there will be more than 50 billion connected devices by 2020, compared to just 7 billion in 2014. What does this mean for CRE? Think smart buildings equipped with sensors that can help reduce energy consumption, maintenance costs and general expenses while improving tenant satisfaction. The use of drones, 3-D printing and biophilic design in the building process. And autonomous vehicles that could reinforce the demand for more pedestrian-oriented, dense development in the urban core yet also propagate more suburban, car-oriented development in areas underserved by public transportation. Regardless of the specific technologies our region ends up adopting, it is clear this trend is building and will be demanded by the public. Regions that do not embrace this trend risk becoming part of a new digital rust belt.  

Cara Underwood, Managing Director, Capital Markets, Principal Real Estate Investors
One of the trends in commercial real estate is the impact of technology on the workspace, specifically in the office, retail and industrial sectors. Mobile technology allows employees to work remotely or move within an office building, which changes the office space needs (e.g., hoteling, collaboration configurations). It therefore has reduced the overall office square footage needs of many businesses (e.g., transition from full wall offices to smaller cubicles, hoteling and desk sharing) and has created building infrastructure needs for flexible wiring and configurations, enhanced Wi-Fi connectivity and increased power needs. Technology is continuing to impact the retail sector in both in-store sales and alternative supply chain methods, thus forcing retailers to change their business to survive. Retail businesses have reduced their store footprints to stay relevant but have had to increase their online sales capabilities to compete. With the reduction of in-store sales and increasing online sales, the retailers need less physical square footage in malls but more square footage in their warehouse distribution facilities. The industrial sector is the largest benefactor of this changing technology, due to the increased space needs for storing and distributing retail goods for online sales, as well as increasing the number of warehouse locations for these retailers so they can distribute timely to the ever-changing consumer.  

Bill Wright, Senior Vice President and Managing Director, CBRE | Hubbell Commercial
The Des Moines commercial real estate market is no secret. Regional and national investors are developing or acquiring properties in Central Iowa at a pace previously unseen. This trend is across all asset classes, including retail, office and industrial properties, but perhaps most noticeable in the multifamily category. Investors from all regions of the U.S. are attracted to our market for a multitude of reasons. Employment growth is consistent and strong, cap rates are 100 to 200 basis points higher than other major metropolitan areas, and favorable economic conditions result in stable real estate investments. The accolades that Des Moines has been awarded, such as being the No. 1 city in the U.S. for millennial homebuyers to being a top seven city of “where the jobs are,” have paid huge dividends for our economy. I have no doubt that the attention we have garnered as a community has impacted the marketplace for real estate investors. As I expect our economy to continue to grow and as the region continues to develop as a premier destination to live, work and play, I expect interest in our market from outside investors to continue. The landscape in our commercial real estate market will continue to be ultra-competitive for investors near and far. 

David Maahs, Executive Vice President of Economic Development, Greater Des Moines Partnership
The industrial market is strong throughout the country. This is the case in Greater Des Moines (DSM) too. There are several large speculative industrial buildings under construction in Des Moines. E-commerce activity and Des Moines’ strategic location, at the crossroads of the nation, are driving demand for industrial space in our market. Another strength of the market is that Iowa State University has one of the nation’s best supply chain management programs. In the past few years, US AutoForce, Toro, Power Distributors, Tobroco-Giant and Daimler Trucks North America have established new distribution centers in Des Moines. Plus, several existing operations have expanded distribution facilities, including Atlantic Coca-Cola Bottling Co., Baker Group, Casey’s General Stores, Corteva Agriscience, Crossroads Cold Storage, Excell Marketing, Iowa Cold Storage, EP2, Johnson Brothers of Iowa, Loffredo Fresh Produce, Owens & Minor, PDI, PurFoods, Rising Star Wholesale, and Siegwerk USA Co.