Macro Trends Affecting Commercial Real Estate Worldwide: 2006-2015

I have discovered a great information source, ResearchWorldwide.com, a worldwide Commercial Real Estate information portal. I have come across an article: Macro Trends Affecting Commercial Real Estate Worldwide 2006 - 2015

The major points are somewhat obvious to anyone following the business world over the last 5 years or so, that business activity is shifting to Asia, and with it, the need for office buildings and retail space. It also forecasts a deterioration of Western economies and standards of living, as the populations there age and demand more tax money to take care of this burgeoning population of elders, but businesses move to more tax friendly countries (with younger, more energetic populations), exacerbating Western fiscal problems.

One interesting they say is this:

Conversely, with this shift eastwards, existing commercial buildings experiencing reduced demand may require remodelling, possibly including for other uses, in order to remain financially viable.

I have been playing with the idea of learning a little Chinese.

I also have been thinking about the possibility of office space being used for other purposes. At the office equipment company I worked for near Grand Central Station, I was calling companies within our building and I found law offices listed as residences. Could ordinary people be living in an office building? It turned out that these were purely offices leased to people who were sole proprietors and doing business under their own names and social security numbers. Such a solution could have an impact on the residential market. The only issue would be pricing. Ordinary people would not be able to pay the prices that start at $40 per square foot all the way up to along the lines of $100 per square foot for many office building spaces. A new model would have to evolve to price office space and residential space in the same building. Very messy.

Lastly, they mention a squeeze of mid-sized companies that would also squeeze the demand for commercial real estate.

The article concludes with:

"These changing trends of global realignment of economic activity, aging populations requiring increases in taxation, changing consumer spending, new technologies replacing the need for expensive commercial space, scarcity of knowledge workers limiting office demand in developed economies and growing office demand in developing countries, the looming un-sustainability of the environment to cope with global economic growth, redefining corporate structures and the need for increasing sophistication to be economically competitive all have consequences for the demand and supply of commercial real estate space worldwide during the next decade"

It's a rather downbeat prognosis for status quo commercial real estate business. It is time for creativity combined with decisive action in order to "avert the evil decree."