Currently, there is a very strong demand for commercial warehouse, commercial garage service, commercial land, and light industrial properties in the Windham area. However, there continues to be very low inventory levels. And most of the existing commercial/light industrial buildings that had been vacant, have been renovated and leased-up over the past few years. There is certainly an opportunity for developers and investors to build new 5,000- to 20,000-square-foot structures in business parks like Quarry Ridge Business Park on Enterprise Drive and along major traffic corridors. These commercial properties are a win for Windham with added jobs and increased commercial tax base.
Traditional retail properties will more than likely need to evolve and adapt in the near future. No other commercial real estate properties have changed more than the retail space. The pandemic has dramatically altered the shopping behavior of consumers and the behavior of the retailers as well. Future space offerings should differentiate the shopping experiences with niche businesses with solid business models that support consumer needs and wants.
In many cases, the retailer is no longer solely dependent on the storefront for generating sales. The shopping experience is now optimized for the digital world. This means the retailers now must go through both the online channels in addition to their storefronts. This requires a significant investment in the digital platforms and an expansion of the sales strategy to capture storefront and web-based sales. And, with web-based sales, a 24/7 operating system presence.
To fulfill all the orders coming from multiple sources, the retailers, especially the smaller niche ones, may find the need to convert sales floor space into stock room space due to the growth in online orders. There should be a more demand for commercial storage space and commercial stock room space in the near future.
A lot of consumers of retail stores and restaurants will continue to expect an enhanced wellness and safety protocol to reduce the risk of entering a public shopping space. The precautions will vary depending upon the property type, market, store, or restaurant. Disinfecting shopping carts, consistent cleaning, credit card keypad, upgraded air filtration system sanitization are just a few. In many cases, the customer will not interact with a cashier at all. Temporary outdoor seating at restaurants may need to become permanent to accommodate the consumer and help the restaurant businesses survive.
The local office inventory has been absorbed well in recent years as inventory levels are fairly low and the size of the office suites in the marketplace tend to be under 3,000-square-foot. In and around Windham, several Office Tenants have become office condo owners as prices have remained reasonable with low interest rates and lenders have been readily issuing small commercial real estate loans.
The multifamily sector will continue to grow during economic distress, and housing is a primary need in a community like Windham. Because multifamily properties are a housing option with the lowest entry barriers, there will be a great demand in the future. Absorption of available apartments in Windham is very brisk.
Affordable housing is still a significant concern as stagnating wages and increased rental prices reduce affordability in most areas. Windham can grow smart and find balance with all the different real estate sectors, especially the housing sectors that include single family homes, multi-family projects, senior living projects and to direct the growth to areas where we want the growth.
Commercial and mortgage interest rates should remain low to stimulate the local economy and the Federal Reserve has reduced interest rates to all-time lows. The Fed’s should continue maintain low levels of interest though 2021, and into 2022, which is very favorable.
Some of the advanced retailers are upgrading their game to augmented reality as a part of the omnichannel sales strategy, especially to the millennials. They are making use of the technology now to allow the consumers to try on the clothes virtually as one prime example. Businesses need to be smart phone friendly these days and it should be at the top of every business owner’s to-do list!
Builders, developers, and investors should consider these trends and think about how they will renovate or build the space. For example, what extra precautions will they take to attract inbound sales in a store while at the same time, keeping in mind all the safety precautions. Developers should have a better chance to ensure high demand for their rental spaces and investment properties with consideration of trends and planning for the new build or build-out of space.
The Covid-19 pandemic has brought in a significant change in the commercial real estate sector. It has been quite a challenging period for private businesses to survive. Landlords need to take proper measures to ensure success for their investments.
From a real estate investment standpoint, it is essential to return to the fundamentals of cash flow analysis. This should ensure that the tenants in the future will have the financial resources to make the rent payments. Landlords should be evaluating the business models thoroughly to ensure the tenants stay consistent with the emerging trends and to remain relevant.
As the Town of Windham plans for and directs growth, continues to work on bringing public sewer and lateral access/service roads as well as interconnectivity via some of the private roads and shopping center drives to the North Windham Shopping District, residents of our town should see the added benefits of these infrastructure investments through strategically planned growth, improved traffic movement, a well-diversified tax base and a positive experience for consumers and businesses.
The Town of Windham investing in infrastructure for our future is key to the continued success of all of our Windham-based businesses. <
This article was brought to you by Larry Eliason, Commercial Broker with Butts Commercial Brokers in Raymond. You can reach him at 207-415-2112.