Author Joe Brady Talks About The Future Of Commercial Real Estate
By ERIN FLYNN JAY
The author of a new book says commercial real estate owners need to be forward-thinking if they are going to remain relevant.
Joe Brady is the former head of real estate for Walgreens and served as CEO of Americas at The Instant Group, a global leader in agile and flexible workspace, development, and consulting. His book, “Work Shop: The consumer-driven transformation of Commercial Real Estate,” was released in May.
The Mortgage Note recently spoke with Brady about how shopping and work trends are shaping the future of CRE.
He said malls nationwide have ceased to exist because of changes in shopping patterns as online retail sales have grown over the past 15 years. Pressure on stores increased during the Covid pandemic as people ordered goods through their iPhones rather than visiting physical locations to purchase merchandise.
Retailers who have excelled are the ones who understand technology and the value they have to convey to consumers.
“They have to be relevant, and they have to continuously adapt and adopt what consumer behavior changes are imparting on them,” said Brady.
This approach also applies to office space, Brady said.
The concept of work and offices has been decoupled since 2020 as more people work remotely or in hybrid settings. That means office building owners have to know what employers need to accommodate modern employees who work in-person.
“The future of office space is tied to the future of work,” said Brady. “There will be a significant more amount of activity needed to understand how employees (I use employees and consumers interchangeably) are voting with their feet as to where they want to work and why.”
Brady used an example of a biopharma company he worked with which built a 50,000-square-foot office space in Philadelphia. They installed anonymized sensors that were designed to show what areas employees used.
“When we built the space out, we had about 15 different areas where work could happen,” said Brady. “After studying the consumer behavior for four months, we were able to determine that three of those vignettes were simply useless – the consumer voted with their feet and they weren’t working in those areas.”
Brady’s team ripped them out and replaced them. They started getting used, he said.
When it comes to how communities support CRE success, Brady said employees want to work in places that cater to the live-work-play lifestyle.
“When you have a situation like the Chicago Loop where you have a preponderance of just office or what I call work and an absence of live and play (a healthy ecosystem), there’s a problem,” said Brady. “Because we’re finding that consumers and employees want to be in 24/7, 365 communities. They don’t want to commute into either Midtown Manhattan, downtown Philadelphia, or the Loop in Chicago if they don’t have to – if they could sit at home and do the same thing.”
Brady used Detroit as an example of a city where business leaders are catering to the demands of modern employees.
“You see cities like Detroit who have a civic leader like Dan Gilbert from Rocket Mortgage who has invested close to $6 billion of his own money into the city to build that healthy live-work-play environment that’s anchored by a sporting venue, has residential, has office, has attractions, and retail, and experiential venues as well.”
Brady said that as office spaces and the communities around them continue to evolve, company leaders need to understand that the business of business operates at a frequency different than 10 years ago. He added that it will take public-private partnerships in many cities to accomplish the stability that’s needed long term.
The Mortgage Bankers Association estimates that roughly $1 trillion dollars in CRE mortgages will mature this year. Brady said the effects of that remain to be seen.
Brady’s book is available for purchase on Amazon and at other retailers.
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