Commercial Investment Real Estate May/June 2017 - Page 21

leasing in Denver, followed by high-tech users representing approximately 14.4 percent of leasing, according to CBRE. Companies in these sectors seek workplaces that are conducive to innovation. To deliver brand value and retain the best employ- ees, these tenants will gravitate toward spaces with on-site ameni- ties, creative offi ce space, and highly effi cient industrial feature. Insatiable Appetite In fourth quarter 2016, national vacancy rates in all industrial product dropped to 4.9 percent and positive net absorption totaled 47 msf, indicating 41 percent less demand compared to third quarter 2016 for industrial space in markets across the U.S., according to CBRE. However, this is the 27th consecutive quar- ter of positive net absorption . Much of the existing product, on the other hand, was not designed with the end user in mind and often lacks the proper infrastructure to appeal to today’s industrial tenants. The limited supply of high-quality industrial product, coupled with its pent- up demand, creates an opportunity to fi ll a void with industrial facilities that are both high-quality and creative. Based on shifting tenant preferences and national fundamen- tals, it’s time for the industrial sector to embrace creative space. The rationale is straightforward. Tenants understand that it’s “Today’s millennials place a greater value on a company’s culture and demand creative environments to support them in their personal and professional growth.” better to pay a little extra per sf in rent for a high-quality facility than to lose their best employees. By creating thoughtfully designed workspaces that encourage social connections and provide opportunities for enriching live/ work/play experiences, industrial owners and developers will enable tenants to attract and retain their best employees, allow- ing owners to keep their tenants and drive stable cash fl ow on their investments. By integrating lifestyle amenities and creative office elements into industrial buildings, industrial owners and developers can leverage tenant demand for high-quality work environments, resulting in strong cash fl ow and risk-adjusted returns for years to come. Adam Robinson is founder and principal of RAF Pacifi ca Group based in Encinitas, Calif. Contact him at adam@rafpacifi cagroup.com. Join CCIM Institute and STDB at Reserve your meeting table now. Space is limited. CCIM.com/RECon May 22-24, 2017 Las Vegas Convention Center Booth #C2020 CCIM.COM May | June 2017 19