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The changing commercial real estate landscape

On Behalf of | Jun 7, 2016 | Commercial Real Estate |

Real estate developers in California and around the country are discovering that many of their office tenants now favor casual mixed use spaces with added amenities over traditional office buildings with imposing lobbies and strict security. A sign of the growing popularity of office sharing is the spectacular rise of New York-based WeWork, which was founded in 2010 and has become a $16 billion company in just six years.

Developers are also finding it more difficult to attract tenants willing to sign long-term leases as more and more companies are opting to occupy spaces that reflect their current needs even if they may soon outgrow them. The length of office leases have been getting shorter for several years, and the competition for tenants has led many commercial property developers to load their buildings with amenities that cater to the needs of young urban professionals who have hectic schedules and value convenience.

Millennials also like to live and shop close to their workplaces, and mixed-use buildings with abundant restaurants, retail stores and even hotel facilities are becoming an increasingly common sight in major U.S. cities. Many owners of older and more traditional buildings have noticed these real estate trends, and they are investing millions to retrofit their spaces with luxury conference rooms, cafeterias and fitness facilities. Some are even stripping their buildings of the marble and granite cladding that was de rigueur just a few short years ago.

Real estate attorneys may urge their developer clients to prepare for future trends in the commercial property market by spending additional time on due diligence and market research. They could also be of assistance by reviewing key contracts in advance to ensure that any potentially troublesome provisions are addressed.