Commercial real estate in California and the rest of the country has been resistant to incorporating change in how it does business. However, proptech, or real estate technology, is beginning to transform the industry.
It isn't uncommon for a business owner to have some leeway in negotiating the terms of a commercial real estate lease. However, how much leeway it will have depends on market conditions. For instance, if most buildings in California are occupied, the landlord will likely be less willing to make concessions. On the other hand, if a landlord has many vacancies, it may be easier to get favorable terms.
California business owners often strive to expand their commercial spaces. This may be office space, a warehouse or whatever else fits their needs. Prior to doing so, it is a good idea to locate an area in which to start looking for a property. Ideally, it will be in an area that is close to major highways and otherwise convenient for people to get to.
Tech startups are taking up increasing numbers of office spaces in California. Since 2017, tech companies have accounted for 42 percent of the square footage in leased commercial spaces in North America. That amount is double the percentage of the financial industry.
Those who start businesses in California do so with the hope that their organizations will grow. One consequence of a growing business may be the need for a larger office, warehouse or retail space. Ideally, business owners who negotiate commercial leases will negotiate clauses that make it easier to get out of them before they expire. It may also be a good idea to ask for a short-term lease if a landlord doesn't want to negotiate an early out provision.
Just as Bitcoin and other cryptocurrencies are sparking interest among many entrepreneurs in Southern California, the potential of blockchain technology could also be a boon to commercial real estate investors. Blockchain allows information to be distributed through a digital ledger and shared widely. This decentralized system allows transactions to be completed and recorded reliably. While a blockchain technology underlies Bitcoin, Ethereum and other cryptocurrencies, it offers a wide range of potential future applications, including the ability to be exploited as a digital contract mechanism for real estate transactions.
Many commercial properties in California come with high price tags, but prices have begun to stabilize after years of growth. Price tracking at one online real estate marketplace indicated a small 0.2 percent rise in the August 2018 price index. Looking back at a full year, the marketplace calculated year-over-year growth at a modest 0.4 percent.
As California companies get bigger, they generally need more space to function in an efficient manner. In some cases, this means buying a warehouse or a larger manufacturing space. In others, it could mean buying a larger office to accommodate more workers joining the company. When purchasing commercial real estate, it is important to consider how it helps the business both today and in the long-term.
Investors in commercial real estate projects in Los Angeles may be curious about how the technological developments that are constantly taking place can be used to maximize their return and promote their projects. Technology specifically for real estate development is a growing market, especially as tenants of a building can generate significant data that can help investors, developers and others make decisions about what features are important and how they can attract high-value tenants. By learning more about the needs and wants of building tenants, managers of these properties can determine new ways to generate revenue.
The commercial real estate market in California is increasingly looking toward the future, and for many developers, that means tailoring work to the interests of Generation Z. Developers have noted that young people are interested in eco-friendly construction as well as spaces designed for higher levels of socialization. Generation Z is defined as anyone born after 1996, the generation following millennials. As older members of the generation graduate from university and move into the business world, their purchasing power and influence is on the rise.