NAC’s Fall Meeting Focuses on Industry Disruptors
BOMA International’s National Advisory Council (NAC), made up of senior real estate industry executives, gathers three times a year to discuss the emerging trends and issues impacting commercial real estate.
The fall meeting was yet another productive exchange of information between industry leaders, led by insightful presentations and thought-provoking discussion on a host of subjects, most notably the growing number of industry disruptors. The recap below includes the key topics and takeaways from the recent NAC meeting, which took place early October in Carlsbad, California.
U.S. Economy
Soft Landing Ahead: According to former Colliers Chief Economist Andrew Nelson, the longest period of economic expansion in U.S. history could be coming to an end. He predicted a 50 percent chance of recession in 2020. Contributing factors would include slowing asset appreciation, fallen consumer confidence, pessimism about the future and a drop in industrial production. Nelson noted that the next recession is not likely to be as long or deep as the last one. Expect a “soft landing” rather than a hard crash.
This decline is already reflected in today’s market performance. At 6.4 percent, current property investment returns are well below the 2015 peak of 12.7 percent. The industrial sector, however, remains strong.
Technology
Keep It Simple: Jim Young, founder and CEO of Realcomm Conference Group, believes the value in technology lies in its ability to simplify the number of steps to accomplish a task. This gets complicated for properties with multiple software packages, but Young points to software that can communicate easily with other platforms as a promising solution.
Space = Service: Modern technology has significantly increased the possible service offerings within an office building, which flex office providers like WeWork have demonstrated in their high-comfort, high-amenity work spaces. To remain competitive, the traditional office sector must provide occupants with an experience, rather than just four walls in a building. This approach is what Young calls “space as a service.”
The Future of (Prop)Tech: Realcomm’s Young presented attendees with more than a dozen other crucial trends to monitor over the next year. They include brick and mortar’s fight for relevance with digital offerings; increasing cybersecurity threats; artificial intelligence and machine learning applications; the race to 5G; and a growing technology skills shortage in the industry. Read more about Young’s predictions in this recent article.
Data Housekeeping: Software company VTS’s Chief Product Officer Gijo Mathew discussed how real estate technology companies can help buildings and portfolios gather and analyze data to improve business operations and decisions. Mathew refers to data maintenance as “the new laundry”—much like laundry, properties gather a lot of data, but that data is not useful until it has been cleaned and sorted.
Flex Office
Flex Remains Firm: A recent report by CBRE projects that the flexible office sector will occupy approximately 13 percent (or 600 million feet) of U.S. office space by 2030—an almost 11 percent increase from its current market share. Increasingly, coworking providers are being joined by traditional real estate companies, such as CBRE, which has launched subsidiary company Hana, and Hines, which partnered with Industrious and Convene to create The Square.
2020 U.S. Presidential Election
Trump vs. Biden = A Likely Ballot and an Even Bet: According to David Wasserman from Cook Political Report, the 2020 election is likely to result in Democrats maintaining control of the House and Republicans maintaining control of the Senate. Wasserman sees President Trump’s reelection as an even bet, citing the economy and united Republican support as factors in his favor. Former Vice President Joe Biden remains the Democratic frontrunner, and Wasserman predicts he would have a likely chance against Trump. However, Democratic support is scattered among the more than a dozen other Democratic candidates in the race, which Wasserman cites as a disadvantage for the party.
Women in the C-Suite
Accelerating Advancement: The women of NAC gathered for an exclusive luncheon to discuss a recently released research report by the Commercial Real Estate Women (CREW) Network. The report highlights that companies with female leaders are generally more productive and profitable. These findings are especially pertinent for the commercial real estate industry, where women only hold 9 percent of C-suite positions.
NAC’s spring meeting will take place in Miami from May 6-8, 2020.