The impact of "phygital" (physical + digital) in Chicago commercial real estate
March 2012
The "phygital" trend - the blending of physical and digital commerce - continues to redefine the commercial real estate industry. Retailers such as Home Depot and Paypal, Foursquare and Walgreens, and Amazon are exploring ways to bridge the phygital divide. Tools and apps like QR codes and Belly bring the mobile world into the physical consumer experience. The use of social media among landlords is increasing, while traditional office spaces redefine their use as incubators for the next generation of internet giants.
How are these changes impacting commercial real estate business in the Chicago market?
Ed Zifkin, CCIM discusses the continued challenges facing the commercial real estate industry in an environment where digital commerce is increasingly competing for the same consumer demographic that brick and mortar businesses have long held.
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| Ed Zifkin, CCIM | |
CHICAGO LANDSCAPE REMAINS CHALLENGING
The Chicago real estate market remains challenging. The volume and velocity of transactions remain slow, although with more OREO starting to come through the pipeline coupled with the purchase, packaging and resale of notes there is activity. Significant amounts of money are on the sidelines waiting for the inevitable flow of transaction opportunities to begin. We hope that the wait will not be too much longer in coming. A few banks are making loans, some at aggressive interest rates, and in some situations only partial recourse is required.
SOME RETAIL & OFFICE ACTIVITY
The retail sector is experiencing a continued lease-up of existing second generation space since there is very little new development. A sentiment is developing that with no new development for the last four years a pent-up demand is building. On the office side, the city is stronger than the suburbs and has seen a firming of sub-markets such as the West Loop. The suburbs remain beleaguered.
CONTINUED GROWTH IN MANAGEMENT, MAINTENANCE & DISPOSITION OPPORTUNITIES
Zifkin Real Estate Group developed a strategy to maintain growth in a commercial environment with fewer transactions taking place. In 2008, we formed a property management group, Zifkin Realty Management, that has experienced steady growth. To complement our management services we started a receivership program which becomes more active each day. Additionally, we created a commercial maintenance company, Pinnacle Property Maintenance, that provides necessary services for commercial real estate including parking lot sweeping, day portering, parking lot light replacement, roof inspections, handyman services and snow plowing. The brokerage side of the business has grown by adding an office division and focusing more on commercial investment sales to take advantage of OREO disposition opportunities and in anticipation of an eventual significant transfer of commercial real estate assets.
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