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How to Identify Hot Commercial Real Estate Markets

One way to identify a potential investment location which is on the precipice of rapid value increase is to understand where gentrification has recently started.

Gentrification is “a process of renovation and revival of deteriorated urban neighborhoods by means of influx of more affluent residents” and can be an excellent signal for investment opportunities.

One must only look at places where former “rough and tumble” neighborhoods have emerged as valuable investment locations—Brooklyn and Oakland come to mind as early examples—to understand that this process has many signals which, to the discerning investor, can lead to very profitable investments.

According to Governing Magazine’s editors, the neighborhoods that have now been gentrified, are the ones where the number of college-educated residents and home values have increased at a rate that’s in the top third percentile of the city.

As consumer preferences change, the linkages between commercial real estate and residential are becoming more manifest. The increased desirability of urban villages, mixed use buildings, and the general move back into city centers has caused a shift in development planning and implementation.  

Often, in a location that is undergoing gentrification, you’ll see a short supply of homes on the market and at first, limited new construction. So, what are some signs that gentrification is in its nascent stage?

They’re close to high end or “nice” neighborhoods

Examples of the gentrification phenomenon can be found in many rapidly growing cities. Neighborhoods such as Seattle’s Rainier Beach, San Francisco’s Mission District, South Boston or “Southie”, or Washington DC’s Anacostia, Deanwood and Columbia Heights are all changing as new, more affluent residents are moving in and demanding new services and updated buildings.

In many cases, these areas are adjacent to wealthy or long standing “desirable” neighborhoods and the spillover demand is driving growth in the area. Look for rezoning, as this is the clearest indication of increasing population. In addition, places that are being rezoned will often have more flexible zoning or “floating zones” and planned development districts, which are alternatives to traditional zoning and give municipalities and developers greater flexibility by emphasizing general goals instead of strict regulatory requirements.

Artist’s call the place home


A thriving arts community is a surefire sign of a “hip” neighborhood. Artists typically choose a life of creativity and vision over a more traditional 9-5, money-centric lifestyle. However, their patrons and the consumers of their art are generally those who have a good aesthetic sense, the means to consume art, and these neighborhoods are generally more affordable.

The character artists bring to an area is a natural precursor to a growing and vibrant neighborhood, and these areas often evolve into prized housing markets. A great place to make investments.

Houses sell quickly

As days on the market (DOM) decrease, you can understand quickly that an area is increasing in value, and potential investment opportunities abound. Implementing your own, or utilizing a 3rd party help to monitor markets can help you identify trends.

As the housing supply dwindles, you can see that demand for retail and other amenities will go up. This would be an opportunity to start working on zoning proposals with your local municipal planning department and to consider adding in mixed use commercial and residential developments.

Retail is on the rise


If you’re noticing a lot of new restaurants, bars, and coffee shops moving into an area, you can see that the identity of the neighborhood is changing. Follow the big players. If Starbucks is setting up shop, you can bet that they’ve done their homework. Major retailers have the resources to identify trends and spend a lot of time examining new areas for stores.

This has also been called the “Starbuck’s Effect.”

Easy access to public transit or arterials

If people can easily get to work, they’re happier to live in a certain area. Whether this means access to public transportation (These are some of the biggest transit projects going on in the US in 2016) or close proximity to new highways or new and improved interchanges, people like to be in a position to get where they need to go quickly.

So keep an eye on your state DOT website and keep abreast of where infrastructure is being planned. People want to live where convenience abounds!

Trends in Retail that Center Owners Will Want to Know

With the continued evolution of eCommerce putting a dent in the bottom line of brick and mortar retail stores, from AAA national brands to local mom and pop shops, it’s tougher than ever for owners of retail centers, malls, villages, and the like to know what to include in their tenant portfolio to maximize effectiveness and ROI.

As a shopping center owner, you know that your property is very much a different beast than buildings in a downtown area or small local business strips. Yours is a space pre-built to drive demand due to factors like the interplay of tenants, available on-site parking, and overall convenience to retail customers.

As the shopping center has emerged and evolved as a cornerstone of retail commerce, complex patterns are emerging regarding types, naming conventions, societal preferences (in many places the “mall” is becoming a dinosaur), and even ecological impact—all of which influence consumer preferences and therefore the profitability of your tenants. Here are some of the top trends in retail happening this year:

What’s in a Name?

Marketing to recruit tenants, shoppers, and community support has lead to naming conventions that have in some ways become confusing or non-standardized. Identities such as “commons”, “market”, “village”, and even “mall” all mean different things to different interested parties. Considerations about where naming trends are going, or rebranding your space are both viable ways to keep your location competitive moving forward.   

Quora has a few brief articles if you’re looking for inspiration, here, here, and here.  

Pop-Up Retail

pop-up shop Trends in retail

One of the emerging trends in retail is the “pop-up” or flash retail phenomenon. This is the trend of opening short term sales spaces.

In the past, retail center owners were less likely to allow a pop-up operator into their space, preferring long term leases and stability. Convention was that a large anchor tenant was ideal, supported by long term smaller chains or local vendors.

Pop-up vendors were first seen in the early 90’s in major urban areas such as New York City, Los Angeles, and Tokyo. Pop-up stores allow for creativity and risk taking that consumers respond well to.

As defined by, a pop-up shop has a few features worth considering as a part of your tenant portfolio:

Term: Typically 1 day to 3 months

Location: High traffic areas (city centers, malls)

Price: Significantly lower than a traditional store, lease paid up front

Use: Sell products, allow a more diverse presence during holidays or events, supporting the launch new products, generate awareness (PR stunts and publicity), allow a retailer to move specialty or excess inventory, test a new idea or location, and for you (the center owner) increase the ‘cool’ factor of your property.

Pop-up shops are a great way to keep consumers interested in your space through novelty factor alone, and support your “anchor tenants” by drawing in new and diverse shoppers who may not have been exposed to the space previously.

And don’t think the Pop-up store is only a gimmick—Business Insider reports that Amazon is planning to open a slew of pop-up retail locations across the US in the next year.

Medical Facilities

massage Trends in retail

Modern life is, if anything, focused on convenience and maximizing time efficiency. Many medical outlets—physical therapists, massage, spa, general clinics, urgent care centers (for both people and pets), dentists, chiropractors, and alternative medical practitioners (Chinese, Ayurvedic, Reiki, etc) can now be found in retail centers, side by side with conventional stores.

As reported by, Americans are now spending more than ever on healthcare, want healthcare that is easily accessible and fast, and landlords are looking for creditworthy tenants to fill the space left vacant by failing traditional retailers. This focus on healthcare is pushing one of the current trends in retail. 

It is easy to imagine a couple on a shopping outing, stopping in for a massage or an acupuncture treatment, extending their stay in your shopping center and making it an overall more enjoyable experience.

It could even be argued that you, as the owner are now more responsible than ever for creating an engaging and multi-faced experience for consumers than ever before.

The sorts of medical-related occupants that are acceptable to consumers has changed significantly over the last 10 years, wellness, rehab, or medical locations now offer a slew of possibilities for you to consider.

Final Thoughts

As you and your property management team consider how best to manage your portfolio, be sure that you are thinking “outside the box” as new opportunities and consumer expectations abound. Your retail center can evolve from the traditional, long-lease-all-mercantile, to more of a service based, exciting, and consumer-centric location.

Follow these trends in retail for successful investments. Build space for the community to spend time, and they will.