Trends That Will Impact the Success of Downtown Topeka Redevelopment
By Ken Schmanke, Commercial Real Estate AdvisorCBRE
REURBANIZATION Millennials and empty nesters are migrating to downtown and urban core neighborhoods with a mixed use of residential, shops, dining and entertainment, office and light industrial uses—all within the same building or within walking distance of each other. Suburban developments are working to compete with this trend by offering urban features within mixed use projects. Topeka is very well positioned to benefit from this trend with the public and private investment taking place Downtown.
TALENT TIPS THE SCALE Markets with talented employees (mostly technology talent) are in hot demand by investors. These markets are attracting employers to occupy industrial and office properties, which leads to population growth, which leads to residential and retail developments. It usually happens in that order—but not always.
reurbanization
ADAPTIVE REUSE Technology and the accelerated pace of change is greatly affecting the way we live, work, shop and play—and how we use space and location. To adapt and survive, property owners are changing the use of space that was initially intended for a different use to meet changing market demand. A little creativity can uncover opportunities that would otherwise be missed.
BRAND AWARENESS Commercial real estate is a critical element of brand and how people perceive a company. Companies are using their real estate to attract and retain talent and customers. While some retailers are working to take advantage of reurbanization trends and adaptive reuse opportunities and occupy space that otherwise does not fit a prototype, the cookie cutter approach to store development is still the norm.
SAFE IS BORING & REWARDED Safe commercial real estate investment will result in less risk (boring) and higher values (rewarded). Safe (low risk) investments in commercial real estate are more about the credit worthiness of the tenant and less about the long term value of the real estate, and include the following characteristics:
Single tenant with strong credit.
Lease term of 10+ years.
Zero landlord operating expenses.
This safe and predictable investment is typically the same prototype facility from market to market and often conflicts with the unique characteristics of the reurbanization and adaptive reuse trends above.
Safe investments in commercial real estate may not produce environments and lifestyles that improve quality of life and attract talent. The more inspired and creative commercial real estate projects include more risk, are more difficult to finance and require cash investors interested in building community assets.
