CRE Landscape

What You Need to Know About the Changing CRE Landscape

Brokers don’t have it easy these days.

They’re facing an evolving marketplace, driven by a pandemic, lockdowns, re-openings, protests, and economic volatility.

“I have a lot of respect for the brokers that are in the industry and continue to stick through it to the next stage,” said Rethink CEO Vijay Mehra. “We’re going to see a lot of shifts, a lot of momentum changes.”

Vijay — who has 15 years of commercial real estate experience, ranging from underwriting and acquiring commercial properties and managing sale-leasebacks as part of a $1.2 billion joint venture fund to overseeing development projects — went on to explain that brokers’ entrepreneurial spirit will determine how well they handle this and future challenges.

“At some point in their career, every broker has to say, ‘It’s going to be feast or famine for me,’” he explained. “They’re sort of driving their own financial fate. And they have to make pivots. Today, it’s COVID. Tomorrow, we have no idea what it will be.”

In a recent webinar, Vijay teamed up with L.D. Salmanson, the CEO of Cherre — an augmented real estate data provider — to discuss the challenges CRE brokers are facing.


Since the pandemic began, existing difficulties in retail have become more pronounced.

“You have companies like J. Crew, Neiman Marcus, and J.C. Penney who’ve all filed for bankruptcy, which is really scary,” Vijay explained. “In 2019, we saw 9,300 retail locations shut down. This year, we’re expecting 12,000 to shut down.”

But just because these outlets are closing their doors doesn’t mean CRE brokers focused on retail won’t have new opportunities.

“Think about Blockbuster,” Vijay said. “Blockbuster was something we all knew. It was part of my upbringing — every Friday, my family and I would go to Blockbuster. When it disappeared, people were scratching their heads thinking, ‘What does this mean? What’s next for the industry?’ But guess what … those Blockbuster stores eventually transitioned to something else. They became martial arts centers, Starbucks, Wendy’s, and what have you.”

The point is this: Opportunities are out there. Brokers just have to find them.

“Brokers today are going to have to be innovative and figure out the next evolution of this space,” Vijay said. “By nature, humans love to interact. They love to go out and meet people — whether that’s through dining, bars, or shopping. So, there’s going to be another iteration of retail. Brokers just have to get creative and think outside the box about which tenants and landlords can make the best use of the space that’s now available.”

In some cases, that outside-the-box thinking may lead them to new asset classes.

“One question I get almost weekly from our clients is ‘What do we do with all these large footprint shopping centers and malls that people no longer need to go to?’” Vijay said. “A lot of companies like Favor, Foxtrot, goPuff, and other app-driven delivery services are really accelerating in this economy, and they’re experimenting with brick-and-mortar distribution models. In areas centrally located between a CBD and a suburban area of a major metropolitan, I could see brokers placing those companies in repurposed malls to use as their fulfillment centers.”


Industrial is one of the few asset classes that’s actually benefited from the pandemic.

Online ordering is increasing at a rapid pace, and industrial centers are needed to house the goods people want delivered.

“What we’re seeing are accelerated trends,” L.D. explained. “Delivery traffic is increasing, distribution centers are growing, and so are data centers. These accelerated trends are lighting up the future and showing brokers what they need to plan for.”

“Industrial is an easy horse to bet on,” Vijay added. “For the foreseeable future, there’s going to be a need for manufacturing and distribution. People love online ordering, and that drives a need for those goods to be manufactured, shipped, and delivered. For that reason, I see industrial being a safe bet.”

Vijay also noted there’s an opportunity to get creative with adaptive reuse.

“In certain markets, a lot of old industrial buildings are getting converted to Class A office or Class A retail — especially in opportunity zones,” he explained. “They’re sort of taking that old essence of the industrial building and playing it into the new vibe.”


When it comes to office space, the effects of the pandemic are unclear.

So far, we’ve seen a dramatic increase in organizations transitioning to a work-from-home model, and while this trend is slowly regressing to the mean, it’s unlikely to vanish completely.

“Almost immediately post-COVID, we saw this migration to work from home, which was really scary — even for me,” Vijay said. “As a smaller organization, we typically work on-site, and that’s where collaboration happens, that’s where ideas happen. But as we began working from home, we realized we’re just as — if not more — productive now.”

Many other organizations are coming to the same realization. Twitter, for instance, announced they’re going to work from home indefinitely.

Still, many companies prefer the increased collaboration that comes from working in an office. To entice those organizations back to the office, changes must occur.

“Historically, we’ve trended toward an open-floor-plan design, where you can move around and interact with a lot of different people,” Vijay said. “I think that will continue to some degree. But what I think is going to change now is that certain teams in an organization might come in for a few hours during certain days of the week, and then the rest of the week, they can work remotely wherever they choose.”

Vijay went on to point to Cushman & Wakefield’s six-feet office as a way to safely bring office tenants back.

“They started designing what the new sort of modern-day office will look like post-pandemic — traffic is only allowed to move in one direction, every workspace has a six-foot circumference, and you’re not allowed to go inside that parameter,” he explained. “Of course, that increases the square footage per person in the office, so upon renewal, brokers can start thinking of ways to get innovative to help negotiate those renewals for the clients.”

L.D. added that these new trends are just another example in a long list of tenant-driven changes to office spaces.

“I feel bad for the office owner-operators because they’ve just gotten over the last tenant whim of seeking hybrid-flex spaces, after asking for open spaces and more conference rooms before that,” he explained. “And now post-COVID, the range of possibilities of where we go from here is very broad and difficult to predict.”

That being said, he encourages brokers to look at ushering in the next era of change as a chance to set themselves apart.

“Change is good. It presents opportunities,” L.D. said. “If things go back to normal, you have a huge arbitrage opportunity. If a new office feature picks up steam, you have a huge new product to sell that you didn’t before. As long as you stay ahead of your competition, clients will continue to seek you out. You just have to be nimble and willing to work.”


When predicting the future of multifamily properties, the possibilities are endless.

But L.D. noted the trends so far haven’t matched the dire expectations.

“It wasn’t the doomsday everyone expected,” he said. “They didn’t expect stimulus checks. They didn’t expect PPP.”

That being said, he also believes that without additional protections, rent collections could become increasingly difficult.

“I think we’re going to see a lot of people evicted unless you have a law that protects tenants,” L.D explained. “And if you have a law protecting them from eviction, you’re basically passing the buck on to the owner. Roughly half of multifamily properties are owned by larger corporations, and roughly half are kind of these mom-and-pop, single owners. That half I’m more concerned about.”

When it comes to university housing, the future is equally vague.

“People have mentioned that education might just become completely remote,” L.D. said. “What I think people forget is that universities were designed to create artificial exclusivity. I can’t imagine Harvard or MIT diluting their brand, which can easily happen with broader accessibility.”

He also noted the college experience is a big part of the draw for students.

“It’s a unique situation where you get a lot of people together in an educational environment with little real-world responsibility,” L.D. explained. “I think that’s something special, and it’s here to stay.”

The key to the future is data

So, how can brokers keep up with these changes and those that will follow in such a rapidly evolving industry?

The key is identifying trends and acting on them as they’re happening.

“A broker stays relevant by capturing and tracking information in real time,” Vijay explained. “12 months ago, you could look at a data set across the last year to identify trends, but today, you’re limited in the timespan you can look at and you’re probably limited in data set, as well. Brokers who have access to relevant, timely data on their markets are going to be the ones who can support their clients and appropriately negotiate deals.”

To give brokers and firm leaders access to that data, Rethink and Cherre partnered to create Rethink Intelligence — a new solution that integrates data on more than 8.5 million commercial properties with Rethink’s core dealmaking platform.

The solution helps brokers:

  • Gain critical market intelligence — By pulling together more than 300,000 unique data sets, Rethink Intelligence gives brokers unprecedented insight into current market conditions and helps them quickly identify properties that fulfill client requirements.
  • Strengthen negotiations — With a greater understanding of a property’s specifications and the transaction prices of similar properties, brokers can approach negotiations with confidence.
  • Craft relevant and engaging marketing collateral — Armed with greater insight into the properties and spaces they represent, brokers can easily create marketing materials that present their listings in the best light.
  • Improve property tours — The solution’s mobile-friendly app allows brokers to quickly access the data they need to answer prospects’ questions when touring properties.