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What was "Roaring 90's" has emerged as a new
reality in this new century
As we near the end of 2001, our hearts are filled with sorrow, and our prayers
go out to all of the victims of the World Trade Center and Pentagon tragedies.
No words can express any more than the words that we have all already said and
heard. But, our spirit and enduring values as a nation will demonstrate the
great resilience we have as a nation into 2002 and beyond.
The world has changed in so many ways. What now seems like the "Roaring 90's"
has emerged as a new reality in this new century. Commercial/industrial real
estate also reflects profound changes in this new era. A chapter in
PriceWaterhouseCooper's post-September 11 Emerging Trends Newsletter best sums
these changes:
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We've moved into the second inning with the tech wrech. The internet lives! The
game has just begun, and the business world, including real estate, is just
learning how to apply technology effectively;
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The flow of information now approaches "real time". Instant information flow
has changed real estate markets. Real estate formerly required 6 to 9 months to
affect the market. No more;
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Prime locations and flexibility of space remain primary considerations of
tenants. Location is complemented by building flexibility to accommodate the
next wave of technological advances.
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Just-in-time inventory and shipping systems have transformed warehouses into
distribution centers, concentrated at major regional hubs. Storage is out,
logistics is in. The life cycle of older buildings has been telescoped and the
growth curve for industrial space inventory has been lowered;
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Don't dismiss e-retailing's impact, just yet. Although E-commerce has captured
only about 1% of total sales, its made significant inroads in certain commodity
merchandise categories, such as computers (17%), books (11%), and music and
video (6%). Retailers will use bricks-and-clicks strategies to retain as much
market share as possible;
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The office is less important for conducting business. Most executives now do
more of their work outside the office than ever before, enabled by an
increasing variety of handheld e-mail devices, laptops and cell phones. Voice
mail, e-mail, and computer discs have turned file clerks and personal
assistants into endangered species;
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Real estate ventures into technology were a bust. Some real estate companies
started telecom ventures, which will be no more. Real estate companies will
stick with only real estate.
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The new economy will continue to be an important demand driver. "We're just
taking a breather". Computer, software, communications, and other high-tech
companies, including reconfigured Web firms, will proliferate in the future;
Under All is the Land...a famous real estate expression. Whether a new economy
or an old economy, real estate will be a fundamental component. But, it is also
well understood that change is a fundamental underlying appraisal theory. The
only consistency in real estate is that change is consistently changing.
Know these underlying variables in this new world, know your risk, know that the
greatest wealth in America has been made in real estate. This will always be
true.
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