When we think of demographics, commercial property management is not the first application of such data that comes to mind; however, as a commercial property owner, you are missing opportunities if you ignore today’s swiftly changing demographics in the United States.
Let’s start with the basic questions: what are demographics, and how do they impact my commercial property?
Demographics are defined by the Oxford Dictionary as “statistical data relating to the population and particular groups within it.” Merriam-Webster defines demographics as “the statistical characteristics of human populations (such as age or income) used to especially identify markets.”
Demographics and the markets that are driven by them, as well as your understanding of this essential data, are your keys to ensuring your properties are successful.
In the U.S. today, our population centers are changing rapidly. Keeping up with these trends can be a challenge to even the most seasoned professional. Add in the new dynamics of social distancing and work-from-home solutions that many companies have adopted, and we have a commercial landscape never seen before. The response to these changes will be the defining factor in the health and longevity of your commercial investment.
All this is great, but until we actually look at a few statistics, analyze them and then apply them to your commercial property, they have no meaning. So, let’s dig into a few stats and see where they take us.
Statistic: An estimated 10,000 Baby Boomers will reach age 65 every day through 2030, at which point, they are of retirement age.
Market interpretation: Between now and 2030, a huge portion of the U.S. population will reach not only retirement age, but presumably most will retire, or partially retire. If we look at housing stats, we can also see that a majority of these retirees also own their home (76.2%).
OK, you say, interesting stats, but how does that impact your commercial property?
Well, let’s look at what we have here in these two statistical data points. We have a large expanding population that will be retiring at least partially if not fully in the next 10 years; furthermore, this population has a mortgage-free home. We have a population that is now having much more free time on their hands, time that can be devoted to hobbies, volunteering, family, etc., and a population that has no burden of a mortgage, meaning less spent on home is more spent outside the home. If we go even one more step and look at the needs of this population, we can see that a significant more amount of money is spent on medical care. So then let’s consider the growing field of “concierge medicine.” We see that this same population is spending a significantly more amount on concierge medicine than the general population.
Thinking about how utilizing this data can be impactful on your commercial property, you can position your building occupants in the marketplace to cater to a population that fits this demographic across the next 10 years. For example, you may want to research and court a concierge medicine group from another area to consider your next vacancy. If you can give the company owners clear statistical data on our local population and the growing need for their services, you may secure a great long-term tenant. If we go even further, now, as we have new vacancies open up, we start thinking about tenant mix, and how we can bring in tenants whose population base would be a complement to a concierge medical practice.
The above data and subsequent analysis was just one example of positioning your building for long-term success and maximizing its return. There are many directions one can go when considering tenant mix and demographics. Let’s face it, the amount of research, analysis and data interpretation can be daunting for most commercial property owners and this is why a majority of commercial property owners rely heavily on commercial property managers. Commercial property managers not only maintain and manage the tenants of your building, but help you navigate the future of your investment. QCBN
By Cooper Anderson
Cooper Anderson at Bloom Tree Realty is a realtor, commercial property manager and leasing specialist in the Quad Cities area.