What will real estate be like 30-40 years from now?

Question

I have recently been made a partner of a firm that will be adding at least $1 million in cash to their portfolio every year hopefully for the next 30 years. I am trying to be forward thinking. I personally believe that we should stay away from retail with the rise in e-commerce. But what about other classes of real estate? Apartments? Hotels? Office space? Will people be working from home in the future? I don't really know anything about industrial space right now. What should I be looking for? Will hotels still be the same in 30 years?

Jeff Filali · Answer

Even with ecommerce, those businesses need warehouses, office space, etc.  Plus the products they sell are created by companies somewhere that also need warehouses, office space, etc.  I don't think brick and mortar retail will ever go totally away, but those in retail better learn to adapt or lose their business.  They need to figure out the middle ground of mixing B&M with Online.  Some people would still rather go to a local store.  Its just like landline phones, there's no reason to have home phones anymore, but millions of people still do.  Same thing with checks and cash, why do they still exist...

I wouldn't be looking 30-40 years out, look 5-10 and adapt along the way.  If commercial property is your goal now, go for it.  If whatever type buildings you have start to go away, that's why they make bulldozers!!

Joel Owens · Answer

Yes stay away from retail. More opportunities for me............. : )

Young adults love brick and mortar. E-commerce is a tiny slice of overall retail. There are destination and experiential tenants that are growing like crazy. Goods that can be shipped like clothing, sports equipment, books, etc. will have a downsizing of some stores and more movement online. Malls are not dying either they are re-tenanting the base there for experiential types to draw in crowds. People do not remember another ho-hum clothing store going to the mall. They do remember a unique experience they didn't get elsewhere. Retail is changing not going away. SECRET: All asset classes are constantly evolving and changing. Pick one and become an expert in it.

Jeff Kehl · Answer

@Patrick Philip Just getting to this after posting to one of your other threads. I think you already have some great input from @Joel Owens and @Jeff Filali but let me say a couple of other things.

The people that think commercial real estate are threatened by technological innovation are very limited in their thinking. It is changing sure, but not going away.

Quality properties in key locations will ALWAYS be valuable.

Why? People will always have certain wants and needs which will need to be satisfied by businesses and until the day when those businesses can beam matter to a location to create a product, physical location, experience, customer service, and convenience and  overall experience will matter.

As someone brought up earlier, experience will always be something people will want.

Ironically, this makes small, specialized retailers more important than ever.

I live in a small town that had a circuit city but was too small to have a best buy. The circuit city went out in 2013 or 2014. Kmart and Sears have also shut down. So, there are no electronics retailers here now other than Walmart and Amazon/Internet Retailers.

I am dying to walk into a small shop where someone can demonstrate to me the best new tvs, stereo equipment and video games to buy. Better yet, I will go in use this equipment with a group of friends before I decide to buy it. And we will be served food and drink while we try it out :)

And none of this considers the latest Augmented or Virtual Reality technologies which could make this so much better.

Joel Owens · Answer

GET GOING today. WORRY about future tomorrow.......... : )

Ronald Rohde · Answer

Bolded for emphasis, I really agree with this, but expand that it can be retail experience or experience-experience like an Escape Room, coffee lounge, etc.

I also see the costs of doing business ever increasing, we may see a pause in the next 4-8 years with Trump, but insurance, labor, etc. are increasing that it makes it much more expensive to start any business. So I'd posit that larger or nicer buildings will be better off than the C class stuff with $700/month tenants...my 0.02, all opinions are my own.

Patrick Philip · Answer

So it'll be basically the same...

But with robot janitors.

HotelBot 5000.

Drones with laser beams? Will Elon Musk be involved?

Okay probably just over thinking it.

What will real estate be like 30-40 years from now?

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