In today’s economy, everything is about convenience, from food delivery apps to the ability to shop for just about anything online to the growing trend of living, working and recreating in the same complex. This need for convenience has been exacerbated as the coronavirus pandemic has many working from home and ordering everything from groceries to cleaning supplies to retail items online. The desire and need for convenience is impacting every industry, including commercial real estate.
Two key areas seeing increased demand during this unique time as Americans continue the shift towards a convenience economy are industrial warehousing and mixed-use spaces. Both have been heavily influenced by the desire of Americans to access goods and experiences quickly and easily. While convenient housing and working facilities offer consumers the ability to address daily needs without leaving their neighborhood complexes, industrial warehouses facilitate the expansive online experience that defines modern shopping.
Industrial warehousing is booming thanks to the “Amazon effect.” The “Amazon effect” refers to the shift of retail from brick-and-mortar stores to a digital marketplace, where shoppers can purchase items from the comfort of their own homes. Particularly for the Lehigh Valley, this trend toward e-commerce means industrial warehousing and manufacturing segments are booming. The proximity and easy access of the Lehigh Valley to major transportation arteries makes it a prime location for warehousing. The region is seeing a large housing boom as well with a 25% increase likely in the next 10 to 15 years due to the proliferation of manufacturing and warehousing jobs.
Mixed-use spaces put everything within reach. An increased need for housing brings a corresponding need for recreational and shopping spaces. Although there might be a diminishing role for traditional retail and office spaces (especially as many companies are having employees work from home), many developers are looking at the “live-work-play” model for retail, residential and office construction. Creating a self-contained lifestyle complex is becoming increasingly popular. According to a survey by the National Association of Realtors, 60% of Americans prefer a neighborhood with a mix of houses, businesses and stores. This presents an opportunity for builders and developers to combine three relatively stagnant or declining segments into a community space that appeals to both millennial and baby boomer generations.
As industries change and generational preferences shift, commercial real estate must adapt to take advantage of new opportunities spawned by growing trends. As society shifts towards the desire for convenient access to work and play opportunities as well as the ease of online shopping, the need for mixed-use spaces and digital retail warehouses increases. The professionals at Univest are here to help builders and investors navigate commercial real estate lending in these changing times. Contact us to start a conversation.
Univest Bank and Trust Co. is an Equal Housing, Opportunity and SBA Preferred Lender.