NAIOP

The evolution toward compact, high-performance workplaces reflects one of several ways organizations are redefining value in a changing landscape. While not every company will reduce its footprint, those that do are finding new opportunities to align space more closely with purpose. By embracing flexibility, integrating technology seamlessly, curating meaningful amenities and engaging employees throughout the process, a smaller office can become a strategic advantage rather than a constraint.

Less space demands sharper thinking about what matters most and how design can support it. The organizations that succeed will be those that recognize there is no single model for the future workplace, but rather a range of strategies, and choose the one that best reflects their people, culture and goals.

As organizations explore this shift, the challenge moves beyond deciding whether to reduce space to understanding how each square foot can work harder. For those pursuing a smaller footprint, success depends not on doing more with less indiscriminately, but on aligning space with purpose in deliberate, measurable ways.

Designing for variability rather than certainty

One of the most pressing challenges facing workplace leaders today is unpredictability. For organizations pursuing a more compact footprint, this unpredictability becomes even more pronounced. Attendance patterns fluctuate by day, department and season, making traditional space-planning ratios increasingly unreliable. Fixed assignments – one desk per person, a predetermined number of conference rooms – often lead to underused areas at some times and congestion at others.

To address this, organizations are moving toward environments that are adaptable by design. Activity-based planning replaces rigid ownership with a spectrum of shared settings: focus rooms, open collaboration areas, informal huddle spaces and convertible rooms that can shift function as needed. In practice, this approach allows teams to move fluidly throughout the day, choosing spaces that match their tasks rather than being confined to a single workstation. In one pharmaceutical workplace, for example, an open office environment supports this flexibility through a range of settings paired with furniture systems designed to allow for adaptability and choice in how spaces are used. Rather than guessing how many people will be present on a given day, these environments absorb occupancy peaks and valleys without sacrificing usability.

Flexibility also extends to the physical architecture itself. Modular planning strategies –standardized room sizes, demountable partitions and furniture systems that can be reconfigured – allow spaces to evolve as organizational needs change and increase the longevity of the design. This approach acknowledges a simple reality: work policies will continue to change, and the office must be able to change with them.

Once flexibility is established as a baseline, the next hurdle becomes ensuring that collaboration still works when teams are split between home and office.

Making hybrid collaboration seamless

Hybrid work has blurred the boundary between physical and virtual presence, raising the bar for how offices support collaboration. In workplaces that have adopted a more space-efficient model, the challenge is magnified. There is little room for spaces that only partially work. When technology fails or rooms are poorly equipped, employees quickly question the value of coming in at all.

Successful compact offices treat technology as infrastructure rather than an add-on. Integrated room-booking systems, reliable audiovisual setups and intuitive controls allow meetings to start quickly and include both in-person and remote participants equitably. In one life science workspace, the individual workspace is replaced by large team rooms, anchored by robust audiovisual systems that enable seamless interaction between in-person and remote, global participants without compromising spatial efficiency. The spaces support hybrid interaction through thoughtful planning around sightlines, acoustics and lighting so that people joining virtually feel just as engaged as those in the room.

Equally important is aligning technology with behavior. Employees need to understand which spaces are best suited for focused work, confidential calls or collaborative sessions. Clear cues – through design, signage, and onboarding – help people use spaces as intended, reducing friction and maximizing the effectiveness of a smaller overall footprint.

With collaboration supported, attention can turn to a less tangible but equally critical factor: workplace culture.

Sustaining culture in compact environments

For organizations that have reduced their physical footprint, a common concern is that smaller offices will feel cramped or impersonal, undermining the sense of community organizations are trying to rebuild after years of remote work. In practice, the opposite can be true when space is designed intentionally.

Compact offices tend to concentrate activity, increasing the likelihood of spontaneous interactions that build relationships and momentum. The need to come into the office for many is weighed largely on the desire (or requirement) to have face-to-face interactions with colleagues, making supporting this type of activity even more critical.  Strategically placed gathering areas – near entrances, stairways or coffee points – encourage chance encounters without requiring large, dedicated lounges.

In a healthcare administration workplace, for example, shared amenities are deliberately positioned to support this dynamic: a central hub off the elevator banking is anchored by a collaborative pantry and enclosed meeting space.  This provides opportunities for both formal and informal connections throughout the day by bringing these features to the forefront of the workspace, to an area in which everyone circulates through multiple times a day. These moments of informal interaction often become the social glue of the workplace, reinforcing culture in ways that formal meetings cannot.

Crucially, culture-driven design is not imposed from the top down. Engaging employees early through surveys, focus groups and pilot spaces helps surface what people actually value, whether that is quiet focus, mentorship opportunities or social energy. When staff understand the rationale behind space changes and see their input reflected in the outcome, they are far more likely to embrace new ways of working.

As culture is reinforced through design, amenities become the next lever for enhancing experience without inflating square footage.

Rethinking amenities for impact, not excess

In organizations operating within a reduced footprint, amenities must earn their keep. Lavish, centralized features that consume large areas are giving way to smaller, distributed elements that support daily routines. A series of modest coffee points, for example, can be more effective than a single oversized café, drawing people through the office and encouraging interaction along the way.

Wellness is another area where thoughtful integration matters more than size. Access to daylight, views and varied postures at the individual workspace often have a great impact on well-being and create spaces where people want to come to work. Similarly, small spaces for respite or private conversations can be woven into the plan without expanding the overall footprint.

What distinguishes high-performing compact offices is not the number of amenities but their relevance. When features align closely with how employees actually work – eating lunch, plugging in quickly, meeting informally – they enhance satisfaction while preserving valuable space. In one workplace, a central hub designed to support multiple functions illustrates this approach. By consolidating a pantry space for eating and getting coffee or water, seating for informal meetings and a physical display of the organization’s brand and mission for visitors, the design increases usage throughout the day while maximizing efficiency and engagement without expanding the overall footprint.

Underlying all of these strategies is a recognition that successful downsizing depends as much on process as on design.

Leadership, data, and trust

Reducing office space can be emotionally charged. For many employees, space is tied to identity, position and a sense of belonging. Navigating this transition requires clear leadership, transparent communication and a willingness to ground decisions in evidence.

Data plays a critical role in building confidence. Utilization studies, access metrics and survey results provide an objective picture of how spaces are truly used, often challenging assumptions held by both leadership and staff. When design recommendations are linked directly to these insights – and consistently referenced through a set of guiding principles – organizations are better able to maintain alignment even when difficult trade-offs arise.

Equally important is framing space reduction not solely as a cost-saving measure but as an opportunity to reinvest in quality, flexibility and experience. When people understand the broader goals – supporting collaboration, enabling growth and creating equitable environments – they are more likely to see change as progress rather than loss.

Taken together, these approaches point toward a future in which the success of the office is measured less by size and ownership than by intention.

A smaller footprint as a strategic advantage 

The evolution toward compact, high-performance workplaces reflects a broader shift in how organizations define value. The office is no longer a default container for work but a deliberate tool, one that can be scaled, adapted or reimagined to support connection, learning and innovation in different ways.

For some, that means reducing square footage and investing more intentionally in how space performs. For others, it may mean maintaining or even expanding their footprint to meet different operational needs. What matters most is not the size of the workplace, but the clarity of its purpose.

In this context, less space does not mean less ambition. It demands sharper thinking about what matters most and how design can support it. The organizations that succeed will be those that resist one-size-fits-all solutions and instead align their workplace strategy with their people, culture and long-term goals.

Featured photo by Halkin Mason Photography for Ballinger.

Since our official launch in October of last year, CREDA Kansas City has hit the ground running, sponsoring networking and educational events that bring members of the commercial real estate community together to learn about new projects, exchange ideas and get deals done.

As chair of our Government Affairs Committee, I have focused on our chapter’s efforts to support the growth of the commercial real estate industry throughout the Kansas City metropolitan area through effective advocacy on local, state, regional and federal legislation that positively impacts our industry.

To bolster those efforts, more than 20 CREDA Kansas City members met last month with Congressman Ron Estes (R-KS), a member of the House Ways and Means Committee, for an engaging discussion on federal tax policy and the future of commercial real estate. The conversation centered on several key federal initiatives, including implementation of the Working Families Tax Cuts Act, the newly enacted 21st Century ROAD to Housing Act, the infrastructure-focused BUILD America 250 Act, and the SPEED Act, which aims to reform the federal permitting process.

The discussion was hosted by Mark Johnson of ARCO Construction in Riverside, Missouri, and moderated by CREDA Kansas City member Joe Oaks, an associate in the real estate practice at Polsinelli. CREDA Kansas City President, Ryan Tompkins from Hunt Midwest welcomed the group.

Congressman Estes represents Kansas’s 4th Congressional District in the U.S. House of Representatives. Since taking office in 2017, he has played a leading role in advancing tax reform, reducing regulatory burdens and implementing trade agreements with key U.S. trading partners.

While discussing the importance of the new tax law, Congressman Estes stated:

“The Working Families Tax Cuts created permanency in the tax code that provides certainty and stability for small businesses throughout Kansas, including those in commercial real estate. As a proud member of the Ways and Means Committee, I will continue to advocate for tax policies that incentivize long-term investment, promote job growth, and push back against overregulation. It was great to speak with CREDA members and discuss the growth of the Kansas City region, which has a positive impact throughout our state.”

Also in attendance was CREDA’s Senior Director of Federal Affairs Eric Schmutz. Schmutz emphasized the importance of Kansas City’s role in shaping public policy:

“While CREDA Kansas City is a new chapter, my time in Washington has taught me that commercial real estate leaders from the Kansas City area have long had a significant influence on local, state and federal policy. Positioned on the Kansas-Missouri border, the Kansas City metropolitan area is not only a major economic driver for both states, but decisions made here often influence policy discussions across the Midwest.”

Coming Up Next

Our next event will be a luncheon on Aug. 27 featuring special guests Korb Maxwell and Ron Ryckman. They will provide an overview of the Kansas City Chiefs stadium agreement, one of the largest cross-border economic incentive deals in the country.

The construction industry is facing accelerated division along regional lines. Data center construction, along with the infrastructure built to support it and downstream consumers, demands skilled trade labor and materials in specific metro markets, creating pockets of acute cost and schedule pressure even as national aggregates understate the problem. With this broader market concentration and contraction, fewer active contractors chasing more specialized, high-value work remains a persistent undercurrent.

Labor shortages, trade policy pressures and geopolitical disruptions are accelerating construction cost escalation, with further increases expected in the second half of 2026. According to JLL’s 2026 Construction Perspective: U.S. Mid-year Update, recognizing these overlaps and acting before contractors reach capacity is the defining factor separating manageable projects from constrained ones.

Structural Labor Shortages

The labor shortage in the construction sector is structural, not cyclical. U.S. construction employment growth is tracking at a meager 0.6% in 2026, falling well below the 2.7% historical average. An aging workforce, a narrow pipeline of new trade workers and an environment that has reduced the supply of immigrant labor have combined to create a permanent shortage that unemployment figures fail to capture.

Overall, this is a geographically locked procurement problem. Trades are locally credentialed, regionally organized and project-bound: they can’t easily migrate to new markets to improve labor shortages. Currently, 61% of U.S. metro markets are supply constrained; where pipeline growth outpaces labor force growth. This figure expected to rise to 72% by 2027.

The localized bottleneck is further squeezed by a persistent, structural million-job gap across the skilled trade sector. For every five workers who retire, only two replacements enter the workforce, a dynamic that JLL Research projects could leave up to 2.1 million skilled trade positions unfilled by 2030, with economic losses reaching $1 trillion annually.

Unfortunately, available labor is not concentrated in the markets with the most quickly expanding construction pipelines. In areas near active data center projects – notably Baltimore, Dallas and Pittsburgh – spillover competition for specialty trades has pushed building cost indices to approximately 7% year-over-year, nearly double the 4% national average. This divide is illustrated by contractor backlogs: contractors with data center exposure carry an average backlog of 12.2 months, compared to just 8.3 months for those without, according to the ABC Construction Backlog Indicator.

Trade Policy and Tariffs

Trade policy no longer just exists in the background; new and existing tariffs are impacting project costs directly. However, rather than uniformly changing costs, recent tariff restructurings have redistributed pressures across project types, based on materials, equipment and furniture needed.

A narrow group of equipment, mostly mobile machinery and certain HVAC systems, caught a temporary break: effective rates dropped to 15% through 2027, but that relief doesn’t reach the metals driving most project budgets. Office fit-out and interior upgrade projects face their own cost pressures too, driven less by a direct tariff on furniture and more by a change in how the customs value of imported materials is calculated, which effectively widens what can be taxed. Additionally, a pending federal review could stack new duties on top of existing tariffs, pushing effective rates on some materials past 50%.

Materials costs are already climbing faster than overall prices, and contractors have little room left to absorb that gap through their own margins, so bid prices are set to keep rising through the second half of 2026. And nothing here is settled: new tariffs on Canadian imports were announced as recently as late July, overlapping the already strained USMCA Trade negotiations.

Economic and Geopolitical Volatility

At the end of last year, many developers anticipated that 2026 would bring a period of stabilization, aided by anticipated interest rate cuts. Instead, the first half of 2026 has altered those expectations. At the June Federal Open Market Committee meeting, the median interest rate projection shifted to 3.8% by year-end, up from 3.4% in March, with nine out of 18 participants projecting a rate hike rather than a cut. The anticipated interest rate offset is not delayed – it has been removed from near-term expectations.

This shift, compounded by current geopolitical disruption, is adding cost complexities that domestic policy can’t fully address. Energy cost increases driven by ongoing global conflicts have increased the price of site operations, transportation and the production of energy-intensive materials globally.

As a result, construction materials produced in these highly energy-exposed foreign economies carry higher intrinsic costs that directly impact U.S. project estimates. This divergence is highly visible in commodity pricing: copper is up 36% year-over-year, aluminum is up 45%, and U.S. HRC steel is up 27%, even as Brent crude has dropped 38% from its April peak. In short, construction materials are simply not following energy price trends.

What Comes Next: A Shift in Procurement Strategy

We have entered a market that has concluded that economic relief is not coming, and contractors are pricing their 2027 and 2028 bids accordingly. According to the ABC Contractor Confidence Index, roughly three in four contractors across size categories expect profit margins to stay the same or expand over the next six months, a level of confidence not seen since early 2025. The market has clearly adjusted its pricing to an elevated baseline.

To navigate this complex environment, CRE leaders must shift to a structural procurement strategy:

• Engage partners early. Waiting to engage partners is a legacy strategy that will not succeed in the current market. Early contractor engagement is essential to capture both availability and terms.
• Utilize mid-to-small-size contractors. For owners who don’t overlap with active data center regions or draw heavily from the same specialty trade pool, mid-to-small contractors can offer a window of contractor availability and scheduling certainty, rather than relief from overall cost pressures. Moving forward with these partners secures capacity and timeline reliability as broader commercial demand recovers.
• Implement dynamic risk-sharing. Owners should work collaboratively with partners to dynamically share risk, rather than forcing contractors to absorb volatility.

Ultimately, early action remains structural, not just directional. In an environment where the mechanisms that would have moderated either cost or labor pressure are no longer in play, organizations that engage now capture availability and terms their competitors bidding later won’t see.

Content and strategies shared on CREDA blog posts are intended to provide information and insights to industry practitioners and do not constitute advice or recommendations. CREDA and its blog post authors disclaim any liability for actions taken as a result of these blog posts.

As office vacancy remains elevated in many markets, developers across the country are asking the same question: How can obsolete office buildings be successfully repositioned for new uses? 

On a recent episode of the Inside CRE podcast, Steve Neiger, managing principal at CAST and 2026 president of CREDA Southern Nevada, shared lessons from The Cliff at Green Valley Ranch, a $55 million office-to-retail conversion transforming an aging suburban office campus into a vibrant destination for dining, retail, wellness and entertainment. 

His experience offers valuable insights for developers evaluating adaptive reuse opportunities in today’s market. 

The unique challenges of adaptive reuse  

While adaptive reuse is often viewed as a solution for obsolete office buildings, Neiger says existing properties present a very different set of challenges than ground-up development. 

“Adaptive reuse can feel like opening Pandora’s box,” he said. “The biggest struggle with making adaptive reuse pencil comes down to time and cost.” 

Unlike new construction, adaptive reuse projects must contend with aging building systems, existing infrastructure, zoning considerations, evolving building codes and lengthy entitlement processes – all of which bring uncertainty to project schedules and budgets. 

Those delays can significantly affect returns. 

“In the brokerage world, we always say time kills deals,” Neiger said. 

Start with market fundamentals 

For developers considering an office-to-retail conversion or other adaptive reuse project, Neiger believes success starts long before design begins. 

For The Cliff at Green Valley Ranch, rather than focusing on what an existing building could become, his team first evaluated whether the surrounding market could support a premium lifestyle destination. 

Located at the intersection of two major highways in Henderson, Nevada, The Cliff benefits from strong demographics, exceptional visibility and an underserved trade area. 

“The more you looked at the fundamentals,” Neiger said, “the more excited [we] got about the project.” 

Only after confirming the market opportunity did the team determine what level of investment the project could support. By working backward from achievable rents and projected net operating income, they created a redevelopment plan grounded in financial feasibility rather than wishful thinking. 

More than filling vacant space 

The Cliff demonstrates that successful office redevelopment isn’t simply about replacing office tenants with retail tenants. 

Instead, Neiger’s team focused on creating a destination with a carefully curated mix of restaurants, retail, health and wellness businesses that reinforce one another. 

“We are calling it ‘Henderson’s new center of gravity,’” he said. 

Rather than accepting the first lease opportunities, the team remained disciplined in selecting tenants whose brands and customer base aligned with the project’s long-term vision. 

The result is a lifestyle-oriented development designed to generate sustained traffic and create value for both tenants and visitors. 

Modernized regulations could unlock more opportunities 

One of the biggest obstacles facing adaptive reuse projects isn’t the building itself – it’s the approval process. 

Neiger noted that The Cliff should have taken 12 to 18 months to reach the construction phase but instead required nearly three years because of entitlement and permitting delays. 

“I don’t think municipalities understand how the erosion of [Internal Rate of Return] can really discourage folks from doing these kinds of projects,” he said. 

As more communities seek solutions for obsolete office buildings, Neiger believes local governments have an opportunity to modernize development processes and remove unnecessary barriers while maintaining appropriate public safeguards. 

He pointed to Maricopa County, Arizona, which recently eliminated dozens of pages from its development code – an example other jurisdictions could follow. 

“I would like for us all to get to a point where we call Maricopa County an inspiration and not the exception,” he said. 

Lessons learned 

As demand for traditional office space continues to evolve, adaptive reuse will play an increasingly important role in redevelopment. 

Neiger encourages developers evaluating office-to-retail conversions or other adaptive reuse opportunities to remain disciplined, prioritize strong market fundamentals and focus on communities experiencing sustained economic and population growth. 

“Growth is the key to our industry,” he said. “Growth will always happen wherever it’s easiest and best to do business.” 

Projects like The Cliff demonstrate that while adaptive reuse of obsolete office buildings is rarely easy, the right location, thoughtful planning and patient execution can transform underperforming assets into thriving commercial real estate destinations. 

 Listen to the full episode of the Inside CRE podcast. 

This post was created with the assistance of AI tools; all content was reviewed by the author. 

Featured photo courtesy CAST.

Artificial intelligence has moved beyond experimentation in commercial real estate. As owners, operators and investors face persistent rising operating costs and growing pressure to do more with existing resources, AI is increasingly being deployed to improve efficiency rather than replace people.

The strongest returns are emerging in areas where work is structured, repetitive and data-intensive – from financial operations and leasing to lease administration and building performance. Rather than disrupting existing workflows, today’s most effective AI applications are natively woven throughout the systems property teams already use, helping automate routine tasks, surface insights faster and improve decision-making.

Financial and administrative efficiency

1. Operational workflow automation

Finance, accounting and operations teams spend a disproportionate amount of time on repetitive, rules-based work: processing invoices, reconciling data, generating reports and moving information between disconnected systems. These are exactly the types of tasks where AI is delivering measurable value.

Across the industry, enterprise real estate platforms are embedding AI directly into day-to-day workflows, enabling teams to retrieve portfolio information, generate reports and automate routine processes using natural language instead of manual data gathering. Rather than spending hours compiling information, a property manager can simply ask, “Run a budget-versus-actuals comparison for all properties in Q1 2026,” and receive an answer within seconds.

Yardi Virtuoso illustrates what this looks like at scale. Rather than functioning as a standalone AI application, generative AI capabilities are integrated throughout the platform to support everyday operational workflows.

“The biggest savings come from purpose-built AI agents activated for specific workflows”, says Turner Levison, industry principal at Yardi. “Smart Approval auto-approves low-risk invoices against vendor history, saving an estimated 6,500 hours per 100,000 invoices. Lease Audit Analyst scans leases against Voyager records to catch billing gaps, recovering an estimated 1% to 3% of top-line revenue. Vendor Payment Terms Specialist optimizes payment terms to unlock 2% to 3% in operating spend savings.”

Ultimately, AI’s greatest value isn’t simply reducing manual work. It enables organizations to standardize repeatable processes, improve data consistency and expand team capacity without proportionally increasing headcount.

2. Accounts payable automation

Invoice matching, GL coding and approval routing remain among the most time-consuming processes for finance teams because they combine high transaction volumes with standardized business rules. AI is particularly well suited to these workflows, automating invoice capture, coding and approval recommendations while reducing manual review.

For commercial real estate operators, faster accounts payable processing means more than administrative efficiency. Cleaner financial data improves budget forecasting, accelerates month-end close cycles and gives finance teams more time to focus on analysis rather than transaction processing.

Lead acquisition and nurturing

3. AI-assisted leasing and prospect engagement

In leasing, speed and follow-through are the two variables most likely to determine whether a prospect converts or moves on. A high-intent lead who submits a detailed inquiry at 11 p.m. on a Saturday and receives no response until Monday morning is a lead already evaluating alternatives. AI-assisted leasing platforms can respond immediately using current inventory, pricing and property information while maintaining a consistent experience across email, text and phone.

The more durable advantage is continuity. When a prospect moves across email, text and phone over the course of a week, most leasing operations lose the thread. AI systems that retain the full conversation history across every channel – preferences expressed, questions asked, objections raised – allow every subsequent interaction to build on what came before rather than starting from scratch. That continuity reduces drop-off rates between initial inquiry and tour, which is where conversion is most often lost.

For multifamily operators, AI leasing tools can recognize behavioral signals – a lead who engaged enthusiastically and then went quiet – and adjust follow-up timing and tone accordingly, rather than continuing a generic drip sequence. For CRE operators managing longer, more complex leasing cycles, the same principle applies: AI can track prospect engagement signals across weeks-long conversations and prompt outreach at the moments most likely to advance a deal.

Critically, the value is not in replacing leasing agents. It is in ensuring that no lead falls through the gap between business hours, team capacity or channel fragmentation. AI handles the first mile of every inquiry so that human expertise is concentrated where it has the most impact: tours, negotiations and closing conversations.

Lease and contract intelligence

4. Lease abstraction and document intelligence

Commercial leases often run from dozens to well over a hundred pages, with amendments, SNDAs and co-tenancy clauses adding complexity. A thorough manual review of a standard commercial lease can take hours, which is why KPMG identifies document review and data extraction as among the high-value applications of AI in real estate. At portfolio scale, those hours compound: a 100-lease portfolio represents hundreds of analyst hours that AI can reduce substantially while giving teams a cleaner starting point for review.

AI-powered lease abstraction extracts key terms in minutes, reducing the risk of missed rent escalations, incorrect CAM billing and overlooked renewal deadlines – each of which can affect portfolio performance. Several commercial real estate technology providers – including Yardi Smart Lease, MRI Software and Prophia – use large language models to interpret lease language and populate key lease data directly into management workflows.

5. Tenant risk monitoring

AI can help asset managers detect early signs of tenant risk by analyzing operational signals such as declining space utilization, shifts in service-request activity and changes in communication patterns. By bringing these insights into existing property management workflows, AI provides earlier visibility into potential renewal challenges, giving teams more time to strengthen tenant relationships, explore lease restructuring or prepare contingency plans if needed.

Lenders are also beginning to use AI to enhance portfolio monitoring by identifying patterns that may indicate emerging financial stress, complementing traditional covenant reviews with more continuous analysis. Because these models rely on tenant, occupancy and financial data, organizations should establish clear governance policies, limit the use of personally identifiable information and ensure human oversight remains part of any significant operational or lending decisions.

Asset and facilities performance

6. Predictive maintenance dispatch

Work order data, IoT sensor readings and asset age create the structured, high-volume dataset AI handles well. Models trained on historical failure patterns flag equipment likely to fail before it does. Early adopters report repair cost reductions of 20% to 30%, consistent with McKinsey’s finding that digitized, automated maintenance delivers a 20% to 30% reduction in costs across asset-intensive industries, with fewer unplanned outages.

In industrial and office portfolios, the primary impact is HVAC and critical systems uptime. Failures that interrupt tenant operations carry lease risk that routine repair costs understate. Major property management platforms – including Yardi, AppFolio and Entrata – are increasingly incorporating AI-assisted maintenance triage and work-order dispatch into existing operating systems.

7. Building energy management

AI-driven HVAC and lighting optimization tools adjust to occupancy patterns, weather forecasts and utility rate schedules in real time, helping reduce energy costs by 10% to 20% in commercial buildings with existing sensor infrastructure. JLL has reported that its AI platform cuts HVAC energy use by around 20% while maintaining tenant comfort. The U.S. Department of Energy’s Federal Energy Management Program documents that well-executed operations and maintenance programs (including predictive maintenance) can reduce energy costs by 5% to 20% without significant capital investment.

The case is strongest for office and industrial portfolios, where energy is a meaningful expense line and ESG reporting adds a compliance driver. Building technology providers including Johnson Controls, Siemens and Yardi now offer AI-enhanced energy management capabilities that integrate with existing building management systems, helping operators optimize HVAC performance while supporting broader sustainability goals.

Where to start

JLL’s 2025 Global Real Estate Technology Survey shows that 88% of investors, owners and landlords are piloting AI. Yet despite near-universal adoption, only 5% of CRE occupiers report achieving all their program goals. How organizations apply AI makes all the difference.

Rather than pursuing AI for its own sake, successful operators are focusing on clearly defined workflows where automation delivers measurable business value. Before investing in new technology, evaluate the AI capabilities already embedded within your existing platforms. Measure their impact, identify opportunities to expand successful use cases and prioritize solutions that integrate naturally into daily operations.

Organizations seeing the strongest returns aren’t necessarily deploying the most AI. They’re applying it selectively where structured data, repeatable processes and human expertise work together to improve operational performance.

Content and strategies shared on CREDA blog posts are intended to provide information and insights to industry practitioners and do not constitute advice or recommendations. CREDA and its blog post authors disclaim any liability for actions taken as a result of these blog posts.

Her path into commercial real estate may have been unconventional, but every step was deeply intentional, said Jennifer Villalobos, senior associate, Cushman & Wakefield, and a recipient of the 2025 Developing Leaders Award.

A first-generation Mexican American, Villalobos initially considered a career in healthcare. She ultimately found commercial real estate to be a better fit, offering the same sense of purpose through service, relationships and community connection.

Villalobos serves on the CREDA Arizona Developing Leaders Steering Committee and was previously also the Developing Leaders Education Chair; she is also a founding member of the chapter’s DEI Committee. She was selected as a 2024 recipient of the Prologis and CREDA Inclusion in CRE Scholarship. With CREDA Arizona, she also teaches Real Estate 101 courses for high school students in Tier 1 schools.

Villalobos is a founding member and board member of the American Cancer Society’s Latinos Contra el Cancer, Arizona chapter – an initiative that is being expanded nationally. She also serves as a board member for both the Valleywise Health Foundation and Arizona Financial Credit Union. She co-founded a statewide “Girls Can Build” program in partnership with the Girl Scouts to introduce girls, especially those from underrepresented backgrounds, to careers in commercial real estate, construction and architecture.

In her role with Cushman & Wakefield, Villalobos specializes in representing high-growth tenants in office leasing transactions representation throughout the metro Phoenix area. She and her team have completed numerous leases from small spaces to large, complex build-to-suit transactions. Villalobos assists corporations locally, nationally and globally in every stage of the real estate process, including projects such as relocations, consolidations, subleases, acquisitions, dispositions, strategic planning, demographic and site consulting, project management and post-occupancy services.

Prior to joining Cushman & Wakefield, she spent five years in the commercial real estate industry as the vice president of business development and marketing for a general contractor.

She has been recognized for her leadership by both the Phoenix Business Journal and AZ Big Media.

CREDA asked this purpose-driven leader how she got involved in commercial real estate and what advice she would give to other young professionals in the industry.

CREDA: Can you talk about a project or initiative you’re particularly proud of and what you learned from it?

Villalobos: One of the projects I’m most proud of is a 30,000-square-foot, five-year engineering office deal I worked on early in my commercial real estate career. It was especially meaningful because it came from a long-standing relationship I had built with the business owner over years of networking. It reinforced for me that relationships and consistency matter; sometimes the seeds you plant today turn into opportunities much later.

CREDA: How has being a member of CREDA helped your career?

Villalobos: I genuinely believe that I’m a broker today because of the doors that CREDA opened for me. The relationships I’ve built through this organization – especially within the Developing Leaders program – have been instrumental in my growth, both personally and professionally.

From day one, I’ve been surrounded by peers and mentors who not only believed in me but invested in my development. Their guidance gave me the confidence to make the leap into brokerage, and their continued support has helped me navigate the challenges and opportunities that come with this career.

CREDA has given me access to a network of leaders who lead with purpose, a platform to contribute to our industry, and a community that truly champions the next generation. It’s more than a professional association – it’s been a catalyst for the career I’m proud to be building today.

CREDA: What is one piece of practical advice you would give to Developing Leaders who are just starting out in their careers?

Villalobos: Get involved early and don’t be afraid to invest in yourself by paying membership fees – it’s worth it. Organizations like CREDA have given me invaluable relationships, educational opportunities and scholarships that have advanced my career. Those investments helped me grow, represent my clients better and open doors to opportunities I wouldn’t have had access to otherwise.

CREDA: What is your ultimate career goal?

Villalobos: My ultimate career goal is to build a legacy of success that creates space for others – especially those who come from backgrounds like mine. I’m inspired by the achievements of my senior partners and hope to follow in their footsteps, not only in business but in impact. I want to continue growing as a top producer in the Valley so that I can expand my ability to work with nonprofits, first-generation business owners and local entrepreneurs who are often overlooked in traditional commercial real estate spaces.

Beyond the deals, what drives me is the opportunity to be a visible example for underserved communities – proof that someone who looks like them, who comes from where they come from, can thrive in this industry. I’m committed to paying it forward, whether that’s through mentorship, board service or volunteer efforts like Junior Achievement, where I help introduce students to the powerful, life-changing career paths available in commercial real estate. My long-term vision is to help others build generational wealth, just as I continue to build mine – one relationship, one deal and one community at a time.

CREDA: What do you like to do outside of work?

Villalobos: Working out is a non-negotiable for me – it’s how I recharge, stay disciplined and decompress. I also love spending time with family and friends; those relationships keep me grounded.

CREDA: What is something you’re passionate about?

Villalobos: I’m deeply passionate about my community, especially giving back and creating access for others. As a first-generation Mexican American, I experienced firsthand the barriers created by language and lack of access to resources. That drives me to mentor, serve on nonprofit boards and advocate for underserved communities. My “why” is opening doors for the next generation and helping people who look like me gain opportunities they might not otherwise have.

Read more about the 2025 Developing Leaders Award winners in Development magazine. Recipients of the 2026 Developing Leaders Award will be announced this summer.

While he jokes that his aunt, a broker, talked him into a career in commercial real estate, Alex Vasileff, vice President, acquisitions, Bedrock Detroit, and a recipient of the 2025 Developing Leaders Award, said that the complete answer is that he was drawn to the ability to transform communities, combined with the use of skills related to problem-solving, math, research and relationship building.

In his role as vice president of acquisitions with Bedrock Detroit, Vasileff sources on- and off‐market commercial real estate of all sizes and product types in downtown Detroit and Cleveland, leads acquisitions that drive over $7.5 billion investment and development across 140+ properties, spanning 21 million square feet of office, retail, residential and hospitality space; runs deal negotiations and due diligence from initial underwriting through closing; manages a team of three; and handles all transaction-related endeavors.

“One of Bedrock’s pillars is creating space for the community,” Vasileff said, noting that the company believes that “great cities are only as strong as the communities within them.” To that end, the company engages with organizations, businesses, civic leaders and nonprofits to orchestrate spaces that serve the community and carry out Bedrock’s vision, partnering with groups like Gleaners Community Food Bank, Michigan Veterans Foundation and Arts for Scraps.

Vasileff is the inaugural chapter president of CREDA Detroit and has played an instrumental role in launching the chapter. He is also a member of the Capital Markets 6 CREDA Forum.

CREDA asked this visionary leader more about his work and involvement with CREDA.

CREDA: Can you talk about a project or initiative you’re particularly proud of and what you learned from it?

Vasileff: I’ll always be proud of helping to facilitate GM’s move from the Renaissance Center to Hudson’s Detroit. This project required intense collaboration across teams and a fast-paced timeline, all in service of a transformational moment for our city. While my role was one part of a much larger effort, the long-term impact of this move – driven by two iconic companies deeply committed to Detroit – will reshape our urban core for generations.

CREDA: How has being a member of CREDA helped your career?

Vasileff: The relationships and diverse experiences I’m privileged with as a member of CREDA have not only made me a better professional but also a better person. Some of the smartest people I’ve met have been through this organization and I always walk away from a conference or event more inquisitive and educated than when I arrived. My membership in CREDA has also directly aided in helping solve new problems as I’ve been able to get advice from my network from someone who has dealt with the subject.

CREDA: What is your ultimate career goal?

Vasileff: My career goal is to continue to transform cities and people through real estate and provide solutions to housing shortages and improve the community.

CREDA: Name a person who has had a notable impact on your career. What did they do that made a difference?

Vasileff: Cathy Clark, Bedrock’s CIO and my manager, has had a profound impact on my career. She has shown me that sincerity and respect are not only compatible with high-stakes transactions, but they’re essential. From her, I’ve learned the value of grit, curiosity and a relentless focus on solving problems. Her leadership style has shaped how I approach challenges and build trust in complex deals.

CREDA: What is something you’re passionate about?

Vasileff: I’m passionate about all things Detroit: its people, its energy and its potential. Whether it’s through real estate, community engagement or simply cheering on our teams, I’m proud to be part of the city’s continued resurgence and evolution.

Read more about the 2025 Developing Leaders Award winners in Development magazine. Recipients of the 2026 Developing Leaders Award will be announced this summer.

Last weekend, House Speaker Mike Johnson (R-LA) and members of his leadership team retreated to Camp David with a number of GOP members to discuss strategies for advancing a third budget reconciliation bill. Republicans hold a narrow majority in the House, with 219 Republicans, 215 Democrats and one independent. In the Senate, Republicans hold a 53-47 majority, but 60 votes are needed to overcome an opposition filibuster effort that would block legislation from advancing. But Senate procedures make a budget reconciliation bill immune to a filibuster, allowing it to advance legislation with a simple majority vote. As a result, congressional Republicans and the administration have spent much of this Congress relying on budget reconciliation as a means of advancing priorities through the Senate.

Congressional Republicans were relatively successful in using reconciliation to pass major tax legislation last summer as well as funding for the Department of Homeland Security, which ended the partial government shutdown earlier this spring. Now, they are pursuing a third reconciliation bill. President Donald Trump would like to use it to fund his Department of Defense spending priorities, while House Speaker Mike Johnson has promised to include election security measures from the SAVE America Act.

Budget reconciliation was never intended to be the legislative tool it has become today. It was originally created as a procedural mechanism to help Congress align spending and revenue with its overall budgetary framework.

Over the past several decades, however, increasing political polarization and the Senate’s 60-vote threshold for overcoming a filibuster have transformed reconciliation into the primary vehicle for advancing partisan priorities.

While President Ronald Reagan used reconciliation during his first term to pass his Economic Recovery Tax Act of 1981, the first major partisan use of reconciliation (with the president and both chambers of Congress held by the same party) occurred in 1993, when President Bill Clinton and congressional Democrats passed the Deficit Reduction Act. President George W. Bush and congressional Republicans later used the process to enact the Economic Growth and Tax Relief Reconciliation Act in 2001 and the Jobs and Growth Tax Relief Reconciliation Act in 2003. Divided government largely sidelined the process until 2010, when President Barack Obama and congressional Democrats used reconciliation to pass portions of the Affordable Care Act. It was later used in 2017 by Trump and congressional Republicans to pass the Tax Cuts and Jobs Act in his first term.

The process gained even greater prominence during the 117th Congress, when President Joe Biden and congressional Democrats successfully used reconciliation twice: first for the American Rescue Plan in 2021 and then for the Inflation Reduction Act in 2022. Not to be outdone, Trump and congressional Republicans passed the One Big Beautiful Bill Act last year and, in June, used reconciliation to fund the Department of Homeland Security and end the partial government shutdown.

Johnson is now directing Republican members of the House Budget Committee to advance a third reconciliation package before the August recess. The bill is expected to include $67 billion in supplemental funding for military operations in Iran, and Trump has requested $350 billion to cover the remaining FY 2027 Department of Defense budget request, that was not included in the regular appropriations process. Johnson is also exploring ways to incorporate provisions from the SAVE America Act.

This will be a significant challenge because reconciliation may only be used for three purposes: spending, revenue (taxes) and the debt limit. The Senate’s Byrd Rule imposes a “mere incidental” test, requiring that a provision’s budgetary impact be its primary purpose rather than a byproduct of a broader policy change. To address this limitation, House Republicans are proposing a $4 billion grant program designed to incentivize states to verify voter identification and citizenship.

The reported total for new spending in “Reconciliation 3.0” could exceed $420 billion. Although House Republicans have proposed offsetting a portion of that spending with fraud-reduction reforms in Medicare, Medicaid and other federal assistance programs, those savings are unlikely to fully cover the cost. In previous reconciliation efforts, both the Biden and Trump administrations proposed reforms to Section 1031 like-kind exchanges and carried interest provisions as ways to increase federal revenue. These tax provisions are critically important to the commercial real estate industry, and CREDA’s Federal Affairs team has successfully advocated for their preservation in prior negotiations.

The recent passing of Senate Budget Committee Chairman Lindsey Graham (R-SC), the illness of Senator Mitch McConnell (R-KY) and resistance from Senate appropriators all present significant obstacles to Reconciliation 3.0. In addition, there are fewer than 25 legislative days remaining in the 119th Congress before the Nov. 3 midterm elections. During this critical time when events can move rapidly, CREDA’s government affairs team is taking nothing for granted, and will continue working to ensure that revenue provisions harmful to commercial real estate are not included in any emerging tax and spending bill.

Michael Tait has built his commercial real estate career around relationships – and now he’s using those relationships to help open doors for the next generation of industry leaders. Tait, a recipient of the 2025 Developing Leaders Award, successfully revived the mentorship program of CREDA Maryland, which had previously struggled to get off the ground. Through his strategic vision and concerted efforts, Tait created a new structure for the program that has facilitated frequent meetings and long-lasting relationships between mentors and mentees.

In his role as a leasing representative with St. John Properties, Tait is responsible for the leasing efforts of an office and flex portfolio totaling more than 2.6 million square feet of space. He manages all facets of the leasing process from conducting tours, proposals and lease negotiations to collaborating with in-house design, interior construction and property management.

Tait is an active member of the CREDA Maryland chapter, including serving as a chapter board member and Developing Leaders chair. He is also a board member of both the Army Alliance and the Touchdown Club of Annapolis.

CREDA asked this passionate and driven young leader about his path to commercial real estate and his work with his chapter.

CREDA: Can you talk about a project or initiative you’re particularly proud of and what you learned from it?

Tait: One project that I’m particularly proud of is re-starting CREDA Maryland’s mentorship program. I’ve been fortunate enough to have a few wonderful mentors and coaches throughout my life and career, and I want to give back to those coming up in the industry. I believe strongly that to be successful, not only in this industry but overall, you need to have strong mentors who are invested in your success. If we’re able to open the door to new relationships between industry veterans and young Developing Leaders, that will not only help those involved but also the local CRE industry as a whole. 

CREDA: How do you continue to grow and develop as a leader?

Tait: As a leader, I believe staying curious and asking “why” is key to growth. I actively listen and ask thoughtful questions to gain deeper insights and diverse perspectives. This approach clarifies challenges, fosters collaboration and sparks creative solutions. It keeps me adaptable and committed to evolving as a leader.

CREDA: What motivated you to get involved in commercial real estate?

Tait: With my mother working in the legal department for a national real estate investment trust, my uncle in property management and my aunt handling lease administration, commercial real estate was undoubtedly in my DNA. Despite earning a degree in kinesiology with dreams of training athletes, I quickly pivoted to CRE when I realized my talents in sales and developing relationships would take me further. While the path was slightly circuitous, I firmly believe I made the right decision and never looked back.

What is one piece of practical advice you would give to Developing Leaders who are just starting out in their careers?

Tait: My biggest piece of advice would be to find a good mentor (whether in your organization or outside), that you’re able to be open with, while receiving their honest and constructive feedback. This person should be someone who celebrates the wins while helping work through challenging times – and there will be both.

CREDA: What is something you’re passionate about?

Tait: I’m very passionate about hockey – it’s been a huge part of my life. I’ve played since I was a few years old and coached for a few years after I finished playing. I am a huge fan of the Washington Capitals.

Read more about the 2025 Developing Leaders Award winners in Development magazine. Recipients of the 2026 Developing Leaders Award will be announced this summer.

Tenants demands have been evolving since the start of COVID-19.  While today’s tenants generally need less overall space, the full picture is more complicated than that. When a company is moving into a new space – whether due to right-sizing, relocation, or another need – they need to make the space their own.  This is not about smaller space; it’s about smarter space.

In the past, many landlords would offer a tenant allowance, in which a tenant would need to engage an architect, hire a general contractor, plan and purchase furniture. Though this put more in the tenant’s control, it would greatly extend the amount of time needed for the tenant to properly execute this plan and ran the risk of delivering the space late and over budget.

More recently, the tenant market has moved to speculative suites (spec suites). These spaces are move-in ready, including furniture. The cost is known, and the occupancy date is determined at lease signing.

Spec suites reduce uncertainty in an uncertain decision-making environment. Not only does the timing and cost become more certain, but so does the outcome. Spec suites take the abstract and make it tangible. Tenants can walk a space and understand how it functions, then make decisions faster and with more confidence.

To address the tenants’ needs in this environment, property owners and managers need to keep some key factors in mind.

Think beyond the suite. Tenants are looking for quality from the second they enter the building through the lobby. Attractive lobbies include newer entry systems, well-maintained elevators, updated common corridors and restrooms, modernized LED lighting, etc. These features put the future occupants in the right mindset to envision what could be possible in their space.

Spec suites have and continue to evolve. Once they arrive at the spec suite, they need to feel like their business can thrive in the space. These spaces are more hospitality focused and quality driven than traditional office space. Demand is shifting toward layouts that balance collaboration and focus rather than maximize density.

Flexibility still matters, even within spec. Even though tenants reap the benefit of leasing furnished spaces, they will often have requirements to modify the layout or re-work the design altogether. The design has to work, not just fit. Landlords need to remain nimble. Strategic adjustments to layout or finishes are often part of getting a deal done, but the spec suite fosters the ability of the tenant to “fit” in the space presented with a few minor manipulations.

Make it as turnkey as possible. Tenants are not looking to manage construction projects. Most companies do not have the expertise, nor desire, to run an office buildout. Spec suites eliminate the need to dedicate internal resources to a complex, unfamiliar process. While prospective occupants want to put their stamp on their future home, they want the decisions to be streamlined.

Landlords are increasingly acting as curators, not just providers. The value is in showing tenants what a high-functioning office looks like, how space can be used to support culture, productivity and team interaction. When our industry talks about the “flight to quality,” the motivation is not just about aesthetics but about performance. The office has to compete with working from home. That means it needs to be a place people want to be – comfortable, functional and thoughtfully designed.

Spec suites demonstrate landlord strength and capital investment. Delivering high-quality, move-in-ready space shows that ownership is invested in the asset. That matters to tenants evaluating long-term stability and partnership. In an economic environment when many businesses are constricting, a decision to lease a new office means the business leaders have a vision for enduring success that will be fostered in that space.

Spec suites offer an opportunity for owner-managers to set themselves apart in the new era of office leasing. As hybrid work becomes the standard for most companies, tenants want flexible choices and efficient processes in their office buildout as well.

Image courtesy of Urban Innovations.

Today, I am proud to announce a pivotal moment in our association’s history: We are now the Commercial Real Estate Development Association (CREDA). This change goes far beyond a name change; it signifies a clear statement about what our association stands for, who we serve and where we are headed.

More than 50 years ago, a group of professionals focused on the development of office and industrial parks first came together. These individuals saw a need for an organization that could connect people working in this industry as well as advance the interests of commercial real estate on the state, local and federal levels.

Over time, our association has grown to include 22,000 commercial real estate professionals in 55 chapters across the U.S. and Canada. We have produced countless research reports through our Research Foundation; grown our flagship Forums program to more than 1,100 members; launched new courses and resources to advance our members’ careers; and brought together the members of our extensive network to build relationships and partnerships. And, of course, true to our origins, we have achieved numerous legislative successes at all levels of government.a

Commercial real estate has changed over the history of our association and it is time for our name to reflect that. The industry encompasses multifamily, retail, aerospace, industrial outdoor storage, senior living, data centers, medical office, life sciences, student housing and more. It connects developers, owners, investors, building managers, engineers, architects, brokers and others. Commercial real estate has adopted new technologies and adapted to changing ways of working and living.

The Commercial Real Estate Development Association is direct, precise and clear. It affirms that our association is the place for commercial real estate professionals to develop their skills, build their careers, shape the industry and make a difference in their communities. It conveys to policymakers and partners that our association represents our members and the industry. It creates a bridge between the public’s perception of commercial real estate and the work that our members do in the communities in which they also live, work, shop, innovate and connect.

From creating jobs to delivering tax revenue, commercial real estate plays a significant role in the economic growth of cities and towns across North America. But above all, our industry is one focused on people. The relationships that go into a development team require strong partnerships and commitment. As bright, bold and high achieving as our members are, they cannot accomplish a development project without a team. This mirrors the foundation of our association; our focus is, as it always has been, on people.

As we go forward under this new name, our unwavering commitment to our members has not changed. Members will continue to benefit from exceptional education, effective advocacy, extensive networking and cutting-edge research. Our association will continue to provide our members with innovative resources to stay at the forefront of change. Now, they can move forward with confidence that this new name will bring clarity as we tell the story of commercial real estate development and the critical role it plays in communities across North America.

I would like to thank the members of our executive committee and board of directors, the members of our rebrand task force, our CREDA Global and chapter staff, our graphic design and media partners working on this rebrand, and above all, our members. You are the reason that our association exists, and it’s with you that our association thrives.

Together, we will build on the established strength of our former name and look to the future with our new one. Together, we will advance our members and the commercial real estate industry. Together, we will build what is next for commercial real estate.

Americans are moving less. In 2024, about 7.15 million people relocated across state lines, according to a recent StorageCafe analysis. The number, representing 2.1% of the U.S. population, is the lowest interstate mobility rate in more than a decade and a clear step down from 2.5% in 2022 and 2.3% in 2023.

The rapid reshuffling that defined the early 2020s has cooled, easing the demographic momentum that often influences housing demand and broader commercial real estate activity. Yet the slowdown does not mean stagnation: regional winners and losers are still emerging; family, jobs and affordability remain central drivers; and generational patterns are reshaping who moves and where they settle.

Gen Z accounts for the largest share of interstate movers

Gen Z leads all generations in interstate moves, accounting for roughly 2.2 million relocations. That reflects life-stage mobility: early careers, education transitions and rental housing flexibility.

Millennials remain relatively mobile as well, with 2 million moving to a different state during the same period. However, rising home prices, mortgage rates and the natural progression toward a different stage of life have obviously altered decision-making related to moving. With borrowing costs elevated and many homeowners locked into lower mortgage rates secured before 2022, discretionary relocation has slowed.

Texas and Florida still lead in net gains, but growth has tempered significantly

Despite the broader slowdown in interstate mobility, Texas and Florida remain the top two states for net domestic migration in 2024. Texas recorded approximately 76,000 net inbound domestic migrants in 2024. That total, while enough to secure the No. 1 position nationally, represents a sharp decline from 2023, when the state added roughly 136,000 net newcomers. Florida followed with about 68,000 net new residents in 2024, down significantly from the roughly 126,000 it gained the year prior.

South Carolina posted around 54,000 net gains, and Arizona added about 51,000. Nevada, North Carolina, Georgia and Tennessee also ranked among the top states for net migration.

Nevada stands out in particular. With over 45,000 newcomers, the state more than doubled its net domestic migration compared with the previous year, marking one of the strongest year-over-year accelerations in the country. Tennessee follows the same trend, increasing net migration by 19% to receive 33,000 newcomers, incentivized by a still-affordable housing market.

The Midwest is starting to emerge as an attractive moving destination

Among the top 10 states for net migration in 2024, only one falls outside the South and Mountain West. Ohio recorded approximately 29,000 net domestic migrants, marking a meaningful reversal from prior years of population loss.

Ohio’s surprising inclusion in the top 10 signals an emerging shift. As housing costs have climbed in traditional Sun Belt destinations, some households are broadening their search. States in the Midwest are benefiting from lower home prices and stable employment bases, which are drawing movers seeking affordability without sacrificing economic opportunity. Looking beyond the top 10 states for net migration, Michigan and Wisconsin are also showing signs of capturing interest from Americans moving long distance.

While the Midwest does not yet rival the South in total inbound numbers, its relative improvement suggests we might soon see a far more diverse migration landscape.

Smaller states lead per-capita migration gains

Population-adjusted migration reveals something raw totals can’t: where growth is most concentrated relative to the existing base. That distinction matters because structural shifts in housing demand, labor supply and local economic activity are driven by growth intensity, not volume, and, on that measure, smaller states dominate the rankings.

By that measure, Vermont ranks first nationally, adding just over 20 net domestic migrants per 1,000 residents in 2024 – roughly 2% population growth from interstate moves alone. The composition of that inflow sharpens the picture further: 86% hold at least a bachelor’s degree and 36% are Gen Z. For a small state, that level of concentrated, education-driven in-migration can meaningfully reshape local labor markets, housing demand and the commercial activity that follows both.

North Dakota and Wyoming each added more than nine net newcomers per 1,000 residents, but the two states tell different stories. North Dakota’s arrivals skew younger and more rental-oriented – only about 31% purchased a home shortly after moving. Wyoming’s movers, by contrast, transitioned predominantly into homeownership, suggesting financially established households with a different footprint on local services and retail activity.

West Virginia and Idaho round out the top five at roughly eight and six net newcomers per 1,000 residents respectively. In both states, Gen Z represents the largest incoming cohort, reinforcing the growing role of affordability and lifestyle considerations in shaping where younger Americans are choosing to settle.

California heads high-cost states that continue to see net migration losses

The migration map in 2024 still shows a clear divide between high-cost coastal states and lower-cost interior markets.

California remains the largest net exporter of residents. The state recorded a net domestic migration loss of more than 263,000 people in 2024, marking the 10th consecutive year of net migration losses. While departures are no longer at the extraordinary levels seen in 2021 and 2022, when remote work flexibility accelerated exits, the overall trend has not reversed.

New York follows with a net domestic loss of approximately 129,000 residents. Unlike California, however, New York’s outflow slowed meaningfully compared with the prior year, with about 50,000 fewer net departures. The state continues to face housing affordability constraints, but the pace of relocation appears to be stabilizing as labor markets in finance, media and technology regain momentum.

Illinois and New Jersey also remain in negative territory. Illinois saw a net loss of roughly 81,000 residents in 2024, while New Jersey recorded about 61,000 more departures than arrivals. Both states improved slightly year over year, yet the longer-term direction remains outward.

Self-storage adjusts to the slower migration cycle

Self-storage demand closely follows mobility. Even with interstate migration slowing to 2.1% of the population in 2024, more than 7 million Americans still changed states, sustaining a solid baseline of relocation-driven storage use.

During the peak migration years, many inbound states expanded aggressively. Storage inventory now sits well above the national benchmark of 7.4 square feet per resident in key growth markets: 11.4 square feet in Texas, 11.7 in Nevada, 9.8 in Florida and 13.2 in Oklahoma.

As migration cooled, markets began differentiating. In states where inbound flows eased, such as Texas and Florida, street rates adjusted modestly, down 0.9% and roughly 1.5% respectively. In contrast, Nevada, where net migration more than doubled year over year, saw rates hold steady despite elevated supply. Oklahoma recorded a 1.1% rate increase alongside stronger net migration.

The takeaway is balance. Storage markets are aligning with local migration fundamentals rather than broad national momentum. For operators, that means performance increasingly depends on disciplined market selection and supply management. For renters, it generally means greater choice for self-storage services and pricing affordability and stability.

Like other legislatures around the United States, the New York State Legislature spent the first half of this year considering policy on controversial topics that affect commercial real estate development. When both chambers adjourned their 2026 legislative session in early June, two bills they had passed demonstrated the antithetical approaches to development policy that many other states are currently deciding between.

On the one hand, there was the Responsible Data Center Development Act (A.11560/S.106420), a one-year moratorium on data center development that, if signed into law, will become the harshest statewide restriction on data center development in the nation. On the other hand, A.10009-C/S.9009-C, the state’s budget bill for fiscal year 2026-2027, included a significant reform of the State Environmental Quality Review Act (SEQRA) that both NAIOP chapters in New York – NAIOP Upstate New York and NAIOP New York City Metro – supported during their Day at the Capitol in Albany earlier this year. These diverging approaches to development policy within the same state illustrate the crossroads at which many states find themselves while trying to fulfill promises of affordability.

Though data centers have existed for decades, opposition to data center development rapidly became a prominent political issue nationwide starting in 2025 amid the AI boom. Over the past year, dozens of municipalities have placed temporary bans, or moratoriums, on data center development. Though these moratoriums largely started in smaller towns, they have spread to major cities like Denver, Minneapolis and Charlotte by the spring of 2026. No state has yet enacted a data center moratorium, though there has been one close call. Maine passed a one-year moratorium bill through both chambers of its state legislature in April 2026; however, an unexpected veto from Governor Janet Mills killed that effort until at least 2027. Now, New York has become the second state to pass a data center moratorium through its legislature and potentially will become the first to enact it.

New York’s Responsible Data Center Development Act contains multiple provisions affecting development of data centers, which the bill defines as any facility with a peak electrical power demand of at least 1 megawatt that is used for computing or related services. The strictest regulation, of course, is the one-year development moratorium, which will freeze permitting for “large” data center projects with peak loads of at least 20 megawatts. Additionally, these “large” data centers will face a new public utility classification for their electricity and water usage, provide benefits programs for the local community where the data center is located, and host a public hearing on development at least three months before receiving a permit. All data centers with peak loads of 5 megawatts or higher will face strict renewable energy and prevailing wage labor mandates, while data centers of any size will have to comply with energy efficiency requirements. Finally, the bill directs the Department of Environmental Conservation to complete an 18-month study on the environmental impact of data centers to inform future regulations. New York Governor Kathy Hochul has until Dec. 31 to decide whether to sign or veto this bill, meaning it could take quite some time to know if New York will become the first state with a data center moratorium.

In contrast to the anti-development posture of the data center moratorium bill, the state’s budget, signed by Hochul in late May, contained major reforms to New York’s State Environmental Quality Review Act (SEQRA). Modeled off the federal National Environmental Policy Act, SEQRA is an environmental review law that requires the completion of a lengthy environmental impact assessment prior to any discretionary government decision regarding development, such as a zoning change or special permit.

Including New York, 15 states and Washington, D.C., have a NEPA-like environmental review law, often making development much harder. The recent political debate over “affordability” has generated momentum to reform these laws; in June 2025, California majorly reformed the California Environmental Quality Act (CEQA), the strictest environmental review law in the nation, as part of an effort to address a housing shortage.

In 2026, Hochul began promoting her “Let Them Build” agenda, which included a request that the New York legislature include reforms to SEQRA in its annual budget. When NAIOP Upstate New York and NAIOP New York City Metro sent representatives to Albany earlier this year, they urged state legislators to support Hochul’s proposal. In a huge win for NAIOP and the broader development community, these reforms successfully passed as part of the budget. Now, residential developments of up to 500 units in New York City and 300 units in the rest of the state are exempt from SEQRA reviews if they are built on previously disturbed sites. This exemption also applies to certain water infrastructure projects. Additionally, stricter timelines have been placed on SEQRA review timelines, creating a more consistent environment for developers.

While these two bills only directly affect New York, many other states are currently discussing these same or similar issues right now. And as these bills demonstrate, the relevant policy solutions have the potential to either help or harm the commercial real estate development industry. If NAIOP members ensure to engage with their state and local governments, they can help ensure that more pursue the path of working with, not against, developers.

I never intended to work in commercial real estate. In college, I studied English literature (and I do still love reading poetry). I was fortunate enough to have a commercial real estate company take a chance on hiring me, and then arrogant enough to think that I would probably just do this a couple of years until I found a “real” job!

My boss encouraged me to join NAIOP just a few years into my career, and this helped me build a professional network in Colorado and, later, across the U.S.

How did you get involved in commercial real estate? Why do you find it engaging?

I love sharing with clients and users how the space they occupy can have a positive (or negative) impact on their lives and business. When we share with an investor how we take a “whole health” approach to our senior living communities, such that the building itself can improve quality of life and care; or I explain to an industrial tenant how modern column spacing can increase their warehouse efficiency by double digit percentages over dated Class C product; or work with an office client to show options that can increase employment recruitment and retention, helping their bottom line tremendously – my passion for our business reignites.

If we are trapped indoors nine hours out of 10, then those buildings need to work for us, not just be walls and a roof where we exist. That philosophy has kept me going for over 20 years; it turns out, I found the real job from the beginning!

What do you see as the biggest benefit of NAIOP?

Being a member of NAIOP is all about resources and connections. Our incredible national resources are further bolstered by an indispensable network of professionals with which you can have instant access to learn about best practices, new technologies and how to partner with cities to create better development policy. Those resources are truly invaluable.

How has NAIOP helped your career? Your business?

NAIOP has been an invaluable asset to my career and by business over the years. Having in-depth knowledge and proactive engagement in local public policy issues kept us at the forefront of changes in development practices and tax implications; our relationships forged through NAIOP have allowed our Denver-based organization, Confluent development, to grow toward development in nearly half the states in the country and in all four time zones.

Commercial real estate is an industry that is impacted by both national and local practices. While we are always a “boots on the ground” business, markets and municipalities are increasingly influenced by strategies in other regions. As a Colorado-based developer, we have gained tremendous benefit not only through the local relationships we have developed, but also through relationships at the federal level and local markets such as southern California, where public policy decisions have served as inspiration in our own local market. This combination of engagement has yielded tremendous opportunity for our organization.

How are Developing Leaders shaping both our association and our industry?

As one of the youngest NAIOP members to serve as chair, I have had the benefit of experiencing firsthand the engagement and enthusiasm of our Developing Leaders. In an industry that has historically been resistant to change, our DLs are ushering in a new way of thinking, leading all of us to embrace a combination of tested best practices with new innovations in the industry. I truly believe that commercial real estate, like many industries, will be required to embrace many new changes in operations and technologies to improve our efficiency and data resources, and our Developing Leaders will certainly lead the way in this regard.

Meet Celeste Tanner in this short video:

Industrial outdoor storage (IOS) has long been a familiar sight near ports, airports and industrial corridors. Yet despite its visibility, the sector remained largely overlooked by institutional investors for years. That is changing rapidly.

In a recent episode of NAIOP’s Inside CRE podcast, NAIOP President and CEO Marc Selvitelli, CAE, spoke with Leo Addimando, managing partner and cofounder of Alterra Property Group, about the evolution of IOS from an under-the-radar property type into one of commercial real estate’s fastest-growing sectors.

Defining a Once-ambiguous Sector

Alterra has been at the forefront of that transformation, acquiring more than 470 IOS properties nationwide. According to Addimando, one of the biggest reasons the sector remained overlooked for so long was that it lacked a clear identity.

“It was the largest category of real estate that had not been institutionalized and frankly had been hiding in plain sight,” he said.

For years, investors struggled to define what constituted IOS and how to evaluate it. The sector’s fragmented ownership structure, inconsistent zoning classifications and relatively small property sizes made it difficult for institutional capital to gain traction.

Today, however, a more standardized understanding of IOS is emerging. Addimando defines the asset class as properties ranging from one to 100 acres with limited building coverage and zoning that supports outdoor storage and operational uses.

Infrastructure Investment Fuels Growth

While logistics and transportation companies were historically the dominant users of IOS properties, demand patterns have shifted.

“Three or four years ago,” Addimando explained, “I would have told you it was two-thirds to three-quarters logistics- and transportation-related tenancy.”

Today, federal infrastructure spending, population growth in key markets and the rapid expansion of data centers are generating significant needs for construction equipment, utility contractors and service providers that rely on IOS facilities.

“The logistics folks are not growing right now, and the infrastructure folks are growing. So that’s where the demand comes from right now.”

The data center boom is proving particularly significant. Beyond the facilities themselves, supporting infrastructure for power, water and fiber networks is creating sustained demand for IOS properties across many markets.

Transportation Costs Drive Decision-making

Like every real estate sector, success in IOS begins with location. But the economics driving site selection are somewhat different.

According to Addimando, transportation expenses typically account for about half of an IOS tenant’s operating costs, while occupancy costs represent only a small fraction of the overall budget.

“When your transport costs are 50% of your cost base and your rent costs are 5%, how location-sensitive are you going to be? Very, very location sensitive.”

Proximity to customers, transportation networks and labor pools often outweigh land cost considerations. For many tenants, paying a premium for a well-located site is far more economical than absorbing higher transportation costs over time.

Zoning: The Critical Factor Investors Can’t Overlook

One of the most important lessons for investors entering the sector is understanding zoning. While environmental concerns often receive significant attention, Addimando argues that zoning presents greater risk.

Because few jurisdictions have zoning categories specifically designed for IOS, investors must carefully evaluate whether local regulations support long-term operational uses. Misjudging zoning requirements can significantly impact a property’s value and usability.

Early Innings of Institutional Adoption

Despite growing interest from large investors, Addimando believes IOS remains in the early stages of institutional adoption.

Major private equity firms, sovereign wealth funds and public REITs have begun exploring the sector, but its highly fragmented nature continues to present challenges. Building scale requires aggregating hundreds of smaller properties rather than acquiring a handful of large assets.

However, while challenges around scale and zoning remain, the sector’s fundamentals suggest IOS will play an increasingly central role in supporting infrastructure, logistics and emerging industries. What was once “hiding in plain sight” is now emerging as a recognizable and indispensable segment of the commercial real estate landscape.

Listen to the full episode of the Inside CRE podcast.

This post was created with the assistance of AI tools; all content was reviewed by the author.

Transportation and infrastructure spending have always been a focus of NAIOP’s advocacy efforts at the federal level. With surface transportation programs expiring later this year, getting Congress to reauthorize these programs in advance has been one of our top 2026 legislative priorities. A little more than two weeks ago on May 22, the House Transportation and Infrastructure Committee took an important step in that direction when it passed HR 8870, the “BUILD America 250 Act” by a strong bipartisan vote of 62-2.

NAIOP members know how important modern and efficient transportation systems are to the health of the commercial real estate industry, and of the importance of continued robust investment by the federal government. Transportation investment directly influences property values, development opportunities, tenant demand and regional economic growth. It can serve as a catalyst for commercial development in a number of ways:

• New highway interchanges can unlock previously inaccessible land for industrial and retail projects;
• Freight improvements can increase the attractiveness of logistics hubs and distribution centers; and
• Transit investments can support higher-density office, multifamily and mixed-use developments.

Industrial real estate may be among the sectors most directly affected by transportation policy decisions. The rapid growth of e-commerce, domestic manufacturing investment and supply chain reshoring has increased demand for warehouse and distribution facilities. Access to efficient freight corridors, intermodal facilities, ports and rail infrastructure has become a critical site-selection factor. The next iteration of transportation policy should aim to promote investments that enhance freight mobility and strengthen regional logistics markets across the country.

With housing supply and affordability currently being a top concern for policymakers, promoting transit-oriented development (TOD) has become an important public policy consideration for both political parties. Office-to-residential conversions are occurring in many cities, and creation of a federal incentive for adaptive reuse of commercial buildings for residential use is also a top NAIOP legislative priority, with NAIOP-supported bipartisan legislation having already been introduced in the House of Representatives. The policies are complementary, with many cities pursuing office conversions and mixed-use development projects centered around public transportation stations. Federal transit funding can support the expansion and modernization of rail and bus systems that attract both residents and employers.

The current five-year authorization for federal surface transportation programs, the Infrastructure Investment and Jobs Act (IIJA), expires on Sept. 30, 2026. Funding levels, improvements needed for program operations, and the timing of the reauthorizing legislation are all important factors that will be considered as the House and Senate move forward on legislation:

• Funding: The IIJA provided a total of $365 billion for highway programs, with $304 billion coming from Highway Trust Fund, with the rest subject to Congress having provided the funding in later appropriations. The BUILD America 250 Act is a five-year reauthorization through 2031, that invests in roads, bridges, transit and rail infrastructure, and would fund transportation programs through a combination of guaranteed Highway Trust Fund spending and authorized funding requiring annual congressional appropriations. It authorizes approximately $580 billion in transportation spending over five years, with approximately $474 billion coming from the Highway Trust Fund.

• Improvements: The reauthorization of transportation and infrastructure programs provides an opportunity to streamline project delivery while simultaneously reducing costs. Environmental reviews, permitting requirements and interagency coordination can significantly increase the time it takes to bring a project to completion, thereby increasing project costs and uncertainty. Reforms that accelerate infrastructure project timelines while maintaining appropriate environmental protections are needed.  Faster delivery of transportation projects can create more predictable development environments and support economic growth.

• Timing: Large-scale development projects often require years of planning, permitting, financing and construction. Developers, investors and local governments rely on predictable infrastructure funding to support long-term growth strategies. The sooner that long-term reauthorization legislation is enacted, the sooner state and local governments can begin planning longer-term infrastructure and transportation investments that can lead to greater economic benefits for their communities.

The Senate has yet to produce its own version of reauthorization legislation, and any policy differences with the House will need to be resolved before legislation gets signed by the president. How the Highway Trust Fund is financed in the future – currently, it is financed through taxes on gasoline – will surely be a source of debate due to declining fuel tax revenues and increasing vehicle efficiency. For its part, the House included a new revenue stream from electric vehicles. The Senate is likely to have different funding mechanisms.

In terms of timing, the good news is that the House committee passed its bill with a strong bipartisan vote more than four months before the current legislative authorization expires, with the House expected to pass the bill shortly. As such, they would be farther along than some previous reauthorizations.

But with congressional midterm elections occurring this November, and with Republicans having such slim majorities in both the House and Senate, Democrats may prefer waiting until after the elections to pass a transportation reauthorization bill so as not to provide Republicans with a substantial legislative victory. A short-term continuation of current programs would then be the likely scenario.

In either scenario,  NAIOP will be engaging with House and Senate members and their leadership throughout the legislative process, pushing for faster action and for policy changes that support responsible commercial real estate and economic development benefiting their communities.

As the “opportunity zones (OZ)” program enters a new phase, investors, developers and advisors are preparing for what many are calling “opportunity zones 2.0.” In a recent episode of NAIOP’s Inside CRE podcast, Angel Rice and Dave Sobochan of Cohen & Co., one of the top tax and accounting firms in the U.S., discussed how the program is evolving, where uncertainty remains, and what the transition means for commercial real estate.

A Program Designed to Unlock Capital

The original opportunity zone program was created to encourage investment in low-income and economically distressed communities by offering tax incentives to investors who reinvest capital gains into Qualified Opportunity Funds (QOFs).

Rice explained that Congress recognized that taxpayers had millions of dollars sitting in unrealized capital gains that were not being deployed because investors wanted to avoid triggering tax. The OZ program aimed to redirect that capital into communities that historically struggled to attract investment.

The program offers three core tax benefits:

• Deferral of capital gains taxes,
• A potential reduction in taxable gains after a five-year or seven-year hold, and
• Exclusion of appreciation on the OZ investment after 10 years

With OZ 2.0, the program is now permanent, with taxable gains eligible for a rolling five-year deferral period.

The Market is Strong, But in Transition

Despite regulatory uncertainty, the opportunity zone market remains active.

Sobochan described the program as “wildly successful,” noting that investment activity continued even before initial regulations were finalized. However, the market is now facing a complicated transition between OZ 1.0 and OZ 2.0.

“There’s really no bridge between OZ 1.0 and OZ 2.0,” Sobochan said, adding that investors are evaluating alternative structures to potentially get the benefits of both worlds.

Even so, developers are still moving projects forward. As Sobochan emphasized, “This is an incentive, so the deal must work on its own merits to attract investor attention. [The OZ program] becomes the icing on the cake.”

New Census Tracts Will Reshape the Map

One of the biggest changes under OZ 2.0 is the redesignation of opportunity zone census tracts.

Beginning in July 2026, governors will nominate eligible census tracts for certification under the new rules. Once finalized, the map will remain in place for 10 years.

Rice explained that the criteria are becoming more targeted. Median family income thresholds are lower than under OZ 1.0, and contiguous tracts adjacent to qualifying zones – that previously could qualify without meeting income standards themselves – will no longer receive special treatment.

“There will be some census tracts that get left out simply because of the numbers,” Rice said.

She also highlighted that Puerto Rico will lose its blanket OZ designation under the original program and will instead compete for designation under the same rules as every other jurisdiction.

Investors Are Getting More Creative

As the market adapts, sponsors and investors are exploring increasingly sophisticated planning strategies. One emerging trend involves creating taxable “inclusion events” before the end of 2026 so investors can potentially reinvest gains into new OZ 2.0 funds starting in 2027.

Another trend is the rise of secondary offerings, where investors purchase existing OZ fund interests from owners seeking to exit struggling projects.

“There are a wave of new investors looking to come in,” Sobochan said, particularly in projects that may be purchased at a discount and repositioned under the next phase of the program.

IRS Guidance Remains a Critical Unknown

A recurring theme throughout the discussion was the need for additional IRS and Treasury guidance.

Developers are seeking answers to important questions, including:

• What happens to projects still under construction after Dec. 31, 2028?
• Can existing OZ projects raise additional capital if their census tract is no longer redesignated?
• Will existing OZ 1.0 tracts remain viable during the transition period?

Rice noted that these issues are top priorities for the industry right now.

Long-term Outlook Remains Positive

Despite near-term uncertainty, both experts expect Opportunity Zones to become even more important over time. Because the program is now permanent, Sobochan believes more institutional investors will commit resources to understanding and utilizing OZ structures.

“I absolutely think it’s going to grow,” he said. “You’re going to see a wave of new investors, specifically on the institutional side.”

The conversation also highlighted the growing importance of collaboration between states, developers and local business communities when selecting future Opportunity Zone census tracts. States that align OZ designations with real development demand are likely to see stronger investment activity.

As the industry waits for further guidance, one thing is clear: Opportunity zones remain a major force in commercial real estate investment strategy, and the next chapter is already taking shape.

Listen to the full episode of the Inside CRE podcast.

This post was created with the assistance of AI tools; all content was reviewed by the author.

Anne Strauss-Wieder, senior freight and logistics researcher and lecturer at Rutgers University, issued a directive to attendees at a panel discussion on the evolution of supply chains at I.CON East in Jersey City, New Jersey, this week:

“I don’t want you to think about your occupier’s demands of you as building owners or developers. I want you to think about what demands are being placed on that potential occupier. Just think of how we buy and what we buy today, and how that’s rapidly evolving. There are a number of demands that customers are placing on the companies, and that affects what goes on in the building and what they’re shipping out.”

The term “rapidly evolving” also applies to the supply of materials, including where those goods are coming from, and the operating context for supply chains, said Strauss-Wieder, who moderated the panel. “One [thing] I’ll highlight is disruptions. Whether they’re caused by nature, whether they’re manmade, whether they’re a supplier, whether they’re transportation, whether they’re cyber, we’re having a lot more disruptive events today.”

In turn, these disruptive events have resulted in the diversification of production locations, ports and transportation providers, and distribution facilities as occupiers have learned it is unwise to operate without backups.

Nolan Lewin, executive director of the Rutgers Food Innovation Center, noted that food supply chains now carry a very significant risk. “We only have to look at the news to understand why that is. There are situations going on in the Middle East, in Asia, in Africa, all over the world, where we used to get a lot of products.”

Resilience is replacing optimization, Lewin said. “‘Just in time’ doesn’t always work anymore for a lot of different businesses, including the food business. You need some way of falling back on other resources, building relationships with suppliers, with transportation folks. Because if you can’t get a truck to bring you product because they’re booked up doing something else, our production in the food world can stop pretty quickly.”

Among the major supply chain shifts he’s noticing are more regionalization and nearshoring. “That means basically we want to look in our own backyard here in the United States for as much product as we can to ensure there’s an unrestricted flow of that ingredient source” for clients that want to develop products at the Food Innovation Center.

Federal Business Centers Inc., a fourth-generation family-owned commercial real estate company, focuses exclusively on Raritan Center, a business park in New Jersey that it developed after purchasing the former arsenal site from the U.S. government in the 1960s. Today, Raritan Center has about 80 buildings totaling approximately 10 million square feet, including office space, flex space and warehouse/distribution space.

Federal Business Centers is developing a multimodal aspect to Raritan Center, partnering with a short-line rail carrier to service the center. According to Patrick Connelly, the company’s chief operating officer, about 12,000 rail cars come to and from Raritan Center per year.

“I would say about 70% of those are in the plastics world, so bulk plastic products come in by rail in various aspects of what we do. We do a lot of building products. Home Depot is there as well. And then lastly, food. Arizona Beverage has a bottling plant. So sweetener is brought in, [and] they participate in the plastic use because they do the bottling there as well. We also have flour as a raw commodity. We’ve had produce a little bit. And now we’re starting to see some food production, food manufacturing taking place for us.”

The former U.S. Army port at Raritan Center that was once used to send munitions over the Atlantic Ocean during World War I and World War II is too shallow for today’s shipping. “But the way to the future for us would be barge services,” Connelly said. “We’re working with the state agencies, federal agencies … and looking to create more synergy between the port, the rail and the trucking.”

Ultimately, he said, “we’re really looking to just improve ways in and out of our buildings for the occupiers … and also just reacting to what’s in the greater supply chain.”

Matt Schlindwein, managing partner in charge of development and creation of assets at Greek Real Estate Partners, noted the first question tenants in the industrial market used to ask was about the availability of labor. Now it’s about the availability of power.

“And a lot of the tenants that are asking about the availability of power don’t even necessarily need the power [right now],” he said. “They just want to know that there’s a pathway to get the power should they need it in the future.”

“I think a lot of it is just sometimes educating our users and making sure they know what they really do need to use and what their future needs might be and trying to do those projections. Because the one thing that we also run up against is, although we’re willing to speculate on power requirements, the utilities are not. They’re not in the business of speculation.

“We’re trying to play the game where we want to give the tenants the ability to have that flexibility that they need, all while working with the utility to not be the boy who cried wolf.”

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

There is over 20 billion square feet of industrial real estate in the United States, according to Jack Fraker, president, global head of industrial and logistics capital markets at Newmark. But while the one-million-square-foot deals generate the most headlines and excitement, “the vast majority of the U.S. inventory is smaller buildings; small-bay buildings.”

At I.CON East this week in Jersey City, New Jersey, Fraker invited three panelists to share insights into how their companies have found success in the small-bay market and why this often-overlooked sector shows such strong fundamentals.

Brian Whitmer, co-founder and managing partner at Doors & Spaces, said the company was founded specifically to buy and build small-bay product, with its average tenant size under 3,000 square feet. “As we’ve come to understand the small-bay space, there’s a break point at which the tenant is either covered by the brokerage community or they’re not. And if you’re a tenant that’s sub-3,000 square feet, you’re going to have to go through social media, you’re going to go through Facebook, and you’re going to go through nontraditional real estate channels to source your space. And that’s where we’ve had our biggest impact and, I think, our competitive advantage.”

WareSpace, founded in 2021, focuses on what Jeff Jenkins, vice president of acquisitions, termed “microindustrial,” with the average suite size about 800 square feet. The company caters to small businesses that need small, flexible warehouse space. “We’re not ground-up developers. We buy existing boxes that are usually functionally obsolete because most of our tenants [are] coming out of their home or their garage” to build up their business.

Greek Real Estate Partners, founded in 1934, specializes exclusively in industrial, although not specifically in small-bay. “But small-bay makes up a very important part of our own investment portfolio,” said David Greek, managing partner at the company. “It’s something we’ve been involved with for a very long time and have developed some management techniques and leasing techniques within these spaces that keep them well occupied and great investments in the long term.”

Much of Greek Real Estate Partners’ small-bay portfolio is made up of assets that were single-tenant, Class A warehouses 30 to 40 years ago. As the utility of the buildings have changed, the company has divided them up into smaller spaces and leased them to multiple tenants, typically at a minimum size of 5,000 square feet and ideally closer to 10,000. “You’re looking at it from a perspective of buying older, dysfunctional assets … But the key is really keeping occupancy high. That is one of the secret sauces of making sure these assets perform in the long run.”

Whitmer said Doors & Spaces takes a commodity approach to small-bay. “You’re not working with a large corporate company that’s looking out 24 months or committing to a build-to-suit. These tenants need it, and they need it now, because they’re expanding out of a garage or wherever it is … So we’re either buying that profile or we’re building that profile.”

Jenkins said WareSpace is “focusing a little bit more on adaptive reuse. We’re trying to be the largest buyer of single-story office call centers in the country. And we’ve found success adaptively reusing those functionally obsolete buildings beyond just industrial buildings. And these office call centers … tend to be in locations that are also tangential to retail and nicer suburbs or closer to our tenant base.”

Each of the panelists mentioned the stability and strong fundamentals that small-bay offers. “The occupancy rate generally, if managed well, stays consistent and stays relatively high,” Greek said. “You might be underwriting 5% or 10% continual vacancy because of the constant tenant turnover and the number of tenants in your building. But unlike [developing] big box, there’s never that binary of either I have cash flow or I don’t. So it is, in the long run, a much more stable, much better cash-flowing investment than investing in a one-million-square-foot big box distribution center.”

• Among the other insights and takeaways shared by the panelists:
• Small-bay’s resilience stems from hyperlocal demand, flexible short-term leasing and diversified tenant bases that stabilize cash flow.
• Small businesses often prioritize proximity and convenience, supporting “stickiness” despite shorter leasing terms.
• Success in the market is operationally intensive and often requires hands-on management and tenant education.
• There is support for small-bay from capital markets when lenders understand the model.
• The use of AI is helping to streamline and qualify tenant leads, but it is not replacing the importance of human relationships.

Ultimately, small-bay’s blend of flexibility, diversification and steady demand positions it as one of the most resilient and compelling investment strategies in today’s market.

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

Two headlines, two very different conclusions. One reads, “Manufacturing Roaring Back,” the other, “U.S. Manufacturing Renaissance Missing in Action.”

So, which is it? Is U.S. manufacturing momentum rhetoric or reality?

That’s the question Greg Healey, executive vice president, head of industrial services in North America for Savills, and Mark Russo, vice president of industrial research for Savills, explored with attendees at I.CON East this week in Jersey City, New Jersey.

“We are, in fact, in a boom in terms of building new manufacturing plants,” Russo said, “and these are expensive advanced manufacturing plants, running 57% above the 10-year average.”

At the same time, he said, several metrics suggest that the U.S. is not growing its industrial production in terms of output.

Why is that? One answer is that there is a timeline factor at play.

Savills tracks not just announcements of new manufacturing projects but also whether those projects make it to completion. Do they get revised up or revised down, put on hold indefinitely or canceled outright?

Russo said that of the manufacturing investments announced in the past five years, only one-third have made it to completion and started production thus far. “That includes EV battery plants, chip plants that were big announcements four years ago.”

Another factor is that it’s very expensive to build advanced manufacturing facilities. “So maybe we’re producing some expensive smaller items like chips, EV batteries, but we’re not by and large producing a lot of consumer goods. That’s part of what’s underpinning those mixed headlines” about manufacturing’s performance.

In tracking stalled manufacturing projects, Savills has noted an above-historical-average amount of projects being canceled or put on hold, although data has been heading in the right direction over the past 18 months. Russo noted that another metric Savills uses, called a stall rate, got as high as 70% in late 2024. “What this means is that for every 10 new manufacturing jobs that were being announced, seven were put on hold,” he explained. “That is coming down very significantly and thankfully moving in the right direction. But this has become an important indicator.”

Russo said there is interesting data to show what underpins companies’ decisions to grow their domestic manufacturing footprints (reshoring). The top factors have remained the same for the past 10 years: government incentives, proximity either to customers or part of a manufacturing ecosystem, and a skilled workforce. In 2025, tariffs were cited as a factor more frequently than any other time going back through 15 years of data, but it was still only 10th on the list. Russo said having a sustained policy on tariffs could cause that factor to rise in importance in future years.

As for tariffs’ wider impact, Russo pointed to an analysis suggesting they are an overall net positive over the long term on manufacturing output in the economy. But it’s a bit of a mixed bag too. “The traditional manufacturing sectors stand to gain the most, at least from the most recent iteration of this policy. But the advanced industries stand to be hurt by it. Why is that? It’s about the complexity of the manufacturing process, about the critical inputs, that are often imported.”

The One Big Beautiful Bill Act also poses pluses and minuses for manufacturing. Rules around 100% rapid depreciation creates some incentive to invest in manufacturing production facilities, and increased defense spending has been underpinning growth in aerospace and defense manufacturing activity. “But it has definitely been a setback for the clean tech supply chain,” Russo said.

Geopolitical risk is also driving the aerospace and defense sectors, with venture capital funding running 300% above the five-year norm. In addition, 40% of new manufacturing announcements over the past year were in aerospace and defense.

The second largest bucket for manufacturing announcements involves AI and energy infrastructure. “These are manufacturing projects related to the build-out of data centers,” Russo said. “Anything from data center hardware to infrastructure needed to supply electricity to expand the power grid.”

“Life sciences is also an emerging area of manufacturing, with tariffs impacting that, as well as the growth of new drugs like GLP-1.”

Russo said that more than 50% of manufacturing projects over the past five years have been awarded to five states: North Carolina, Texas, Arizona, Tennessee and South Carolina.

“Those are places that are winning on a number of factors,” Russo said. “They have land. They have land at the right price. They have the right labor pool. They have the labor pool at the right price. They have the infrastructure, and they have an existing manufacturing base that could provide some synergies. And last but not least, they really have the state and local governments that are pro-business, that are providing robust incentives.”

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

What does it take to deliver one of the largest cross-laminated timber (CLT) warehouses under construction in the U.S.? A powerhouse panel at I.CON East this week in Jersey City, New Jersey, broke down the strategy behind a 2.4 million-square-foot, robotics-ready distribution facility. The panelists shared how collaboration across the capital stack is redefining what’s possible in large-format industrial development. 

Moderator Kelly Beaudreau-Hwang, RA, senior project manager/principal, BL Companies, led the discussion with panelists Clint Kehres, vice president of field operations, The Whiting-Turner Contracting Company, and Joseph Swain, AIA, LEED AP BD+C, associate principal, Mithun. 

The trio worked together on the case study project in Texas, considered one of the largest mass timber warehouses in the U.S. It took the team a year from breaking ground to project delivery. Kehres and Swain both said they found the project to be a novel and rewarding experience. 

“One of the biggest things that I took away from it was the amount of upfront coordination needed,” Kehres said. Whiting-Turner Contracting Company started holding mass timber coordination meetings with the mass timber contractor, the design team and the general contractor. The meetings quickly expanded to include contractors who worked on windows, structural steel, dock equipment and roofing. 

“Pretty soon, every contractor on the project was in these mass timber coordination meetings; because the mass timber is part of the exterior wall and therefore part of the structure, everybody touches it,” Kehres said. 

The warehouse itself consists of almost two miles of perimeter wall between 45 feet and 60 feet tall, Swain said. It has a cross-laminated timber skin that is three ply and four inches thick. “Everything is determined by the dock doors,” he said. “And you just have a ton of coordination between how those windows get inserted because the windows actually are part of also the cladding system, how the dock doors connect, how the wood connects to the steel.” 

“I’ve worked in mass timber a lot, but I’m relatively new to using mass timber in an industrial application,” Swain said. He was able to apply his experience in managing coordination across mass timber project teams and his knowledge of industrial-specific components, such as dock doors. 

“Every dock door represents money to the tenant of the building,” Beaudreau-Hwang said, making the amount of material between the doors a significant consideration in the design. “It’s crucial that we maintain a specific count of dock doors.” 

“We did a lot of BIM modeling and clash detection right from the get-go because there were so many components that we had to think about in the exterior wall of this facility,” she said.  

“All in all, everything came out and fit together well because we modeled everything so extensively at the front end,” Kehres added. 

The 400-square-foot office block of the property is a fully mass timber structure that is integrated into the warehouse component, although it’s structurally separate. “That structure is fully mass timber post and beam CLT floors and roof,” Swain said, “and those solid walls are acting as shear for wind loads, so those are structurally integrated and anchored down into the foundation.”  

The tenant’s corporate sustainability goals were the driving force behind using mass timber in this project, but the sustainability efforts did not stop there. The development team worked to minimize the carbon footprint of everything from the amount of concrete used for paving to the recycling of wood, steel, cardboard, concrete, asphalt and other materials diverted from a landfill.  

A secondary driver for the client in using mass timber for this project was employee well-being and retention, with Beaudreau-Hwang noting the term “biophilia,” the innate desire for humans to be in touch with nature through our surroundings. 

“The wood gives you a different kind of inner feeling versus the traditional warehouse where you’re just seeing steel, concrete and metal,” Beaudreau-Hwang said. Improving the employee experience in these buildings is a strong aspect of why this tenant considered going the CLT route, she said. 

This facility operates around the clock with 1,000 employees in the building. Research shows that the use of these natural materials lowers stress levels of the people working inside, according to Beaudreau-Hwang. If that gives employees a little more satisfaction in their workplace and affects the retention rate year after year by a couple of percentage points, that would be considered a win for the tenant, she said.  

“I’ve been working on industrial distribution facilities for the last 10 years now, and it was really fun to be on a project where we’re using some new materials and we’re exploring new ways to improve the look and feel of these buildings,” Beaudreau-Hwang said.  

“That’s the feedback we get when we go into some towns where we’re trying to get approvals for warehouses where they don’t want just these big concrete boxes in their towns,” she said, “And finding new ways to put these buildings up and make them more interesting and more enjoyable to look at and to be inside is a very cool thing for us to start seeing more and more of in the industry.” 

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

Can industrial architecture be creative, contextual and cost-effective at the same time?  

Ten years ago, this was the challenge accepted by Steven Harper, AIA, co-founder and managing partner at Modellus Novus, and Mac Carbonell, founder and creative director at Verdant, in their team’s adaptive reuse of the Crye Precision headquarters at the Brooklyn Navy Yard.  

At the I.CON East conference this week in Jersey City, New Jersey, the pair demonstrated how constraints – including landmark status, operating costs, horticultural interest and mechanical, electrical and plumbing (MEP) demands – sparked innovation. Disciplined planning, landscape integration and precise logistical coordination transformed a 100,000-square-foot former shipbuilding facility into a modern industrial workplace with a strong sense of identity. 

There is a growing trend among clients who want to live their brand and create a “feeling” in their workspaces. Harper’s experience with this at Modellus Novus started with Crye Precision. The textile manufacturer’s founder wanted to create a distinctive space that would serve as a manufacturing, design, and client-facing workspace for the company. Starting with a 1900s ship-building structure in poor condition, the team’s mantra was, “Don’t mess it up.” The challenge was how to incorporate a 21st-century building without losing the original character.  

The client had previously leased several spaces across different areas of the Brooklyn Navy Yard. Harper gained a deep understanding of Crye Precision’s operations and created a design to maximize the flow of their process, from raw materials to finished products. This included a first floor to deliver raw materials to manufacturing, a mezzanine level for design and expansion, and an MEP structure built behind the current building. Harper pointed out that this kept the space open to air and light and was cost-efficient.  

They installed many sliding doors to accommodate employees’ rolling carts, and because the client needed to retool their sewing rooms for each customer’s order, tables were designed to be flexible, and compressor lines dropped down from the ceiling. 

They also painted two yellow lines across the floor space, “as a call back to the train tracks that ran through the space previously,” and to achieve historical building tax credits. 

With the client’s needs met, Harper was able to focus on a design element to add distinction. He tapped Carbonell’s firm to handle horticulture. 

“What was exciting about this project horticulturally was that the client wanted to push [the limits],” said Carbonell. Challenges included getting the height and lighting right for trees in the building. First, they conducted a preliminary study, which led to the introduction of stadium lighting 25 feet above the ground to support plants. They also built a mini model with plants in a room for six months to make sure they didn’t live out a horticulture design firm’s biggest fear – that the plants would die.  

The Navy yard is built on landfill; they tested the ground for contaminants, excavated, poured a foot of gravel (and deeper for trees), and brought in new soil. 

The plant life chosen was a broad selection of mostly tropical plants that thrived in 60-80-degree temperatures. To flourish, they had the client agree that they would not leave their front bay doors open. And finally, to deal with pests, especially rats, which are common to the shipyard, the client got a cat. 

The forest is meant to be seasonal, with leaves falling in autumn and plants flourishing in spring. Carbonell hired a gardener who maintains the forest and installed an irrigation and misting system. With a client budget of approximately $40,000 per year, the building’s horticultural elements have flourished over the last decade. 

The forest is a “wow” factor when clients come to the building, beginning with a walk through the forest to reach a concrete reception desk. Clients are welcomed and then ascend to the second floor via elevator or stairs, which are a catwalk among the tall trees. Harper’s team built an island conference room – a minimal glass box set above and between the forest and the production side of the building. 

The building was completed on time and under budget, and it won a 2020 AIA New York Design Award. The project itself came in at about $140 a square foot in 2016 dollars, and the horticulture element was in the single digits as a percentage of the overall construction budget.  

“I think that they feel like it was a really worthwhile investment just to add a couple of percentage points onto the total, to have something really sort of remarkable and differentiating both for their team and for their guests,” Harper concluded. He added that employee retention at Crye has been incredible. 

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

In her keynote at NAIOP’s I.CON East this week in Jersey City, New Jersey, Cushman & Wakefield Head of Quantitative Insights and Principal Economist Rebecca Rockey argued that AI, demographic shifts and growing geoeconomic fragmentation are rewiring the global economy, as nations and firms re-evaluate the tensions between pure efficiency and resilience – a transition with major implications for industrial real estate and supply chains.

“We are now well into a regime shift in the global economy that will not be undone,” she said. This shift started with President Donald Trump’s first term, continued through President Joe Biden’s term, and persists in Trump’s second term. And it is not just happening in the U.S.

This period in the global manufacturing landscape is also colliding with the rise of AI and the potential for automation, Rockey said. At the same time, a “silver tsunami” is facing most regions of the world as record numbers of baby boomers retire from the workforce without skilled labor ready to take their place.

“This convergence of factors means that there are structural shifts that are going to dominate the landscape, both on the economic side and on the property market side,” Rockey said. “There are foundational things that will change; understanding them and integrating them into strategic frameworks for thinking about capital deployment is going to be essential, and I would argue a differentiator for investors over the next decade.”

“The near-term cycle matters,” Rockey acknowledged. “I don’t want to downplay that, but we are in a shift away from decades and decades of certain trends, and that results in underlying structural momentum which had not existed, [and which] started in Trump’s first term.”

Economic growth is uneven, Rockey said, whether you look at it by sector, by market, or income group. “Some markets are expanding, some industries are expanding, some are in contraction.”

Economic growth is being driven by three “A’s,” she said: Asset Values, Affluence (the share of spending by upper income households in the U.S. population) and AI, which itself is symbolic of the broader government focus on expanding the productive capacity of the U.S. economy.

Since the advent of ChatGPT, the value of the entire U.S. equity market has risen by $32 trillion, Rockey noted. “For some perspective, our national debt is $39 trillion,” she added. For every dollar of additional wealth from higher asset values, U.S. consumers tend to spend about three more cents. In other words, people spend more when they feel wealthier, even if they are not flush with cash.

“So, if you do the math in any given year since COVID-19, this [wealth effect] has added roughly 30 basis points at a minimum to headline GDP growth,” Rockey said. “And in some years like 2024, potentially up to 70 basis points of headline economic growth came from the consumption effects that high asset value had on consumer behavior.”

“The top income deciles in the U.S. economy are accounting for a historically large share of spending,” Rockey said, noting the disparity of income distribution across the country. “This is an uneven economy, but affluent households are not as price-sensitive the way that lower income households are, so when gas goes up to $4.50 a gallon, their behavior does not change in the same ways that a broader base of consumption would change.”

“We can’t not talk about AI,” Rockey said, while also stressing that the rapid rise of AI needs to be considered in context. Rockey said that starting with Trump’s first term, the U.S. government has, for the first time in decades, been actively trying to strengthen America’s ability to produce things. This can be through the tax code, incentives, federal spending, tariffs and trade agreements.  

“AI is just another line item in the supply side of the U.S. economy that allows us to be more productive,” Rockey said, “Productivity is the engine of growth that results in higher well-being.”

“I think that there’s a little bit more underlying resilience to the economy than we sometimes give it credit for,” she said, although she noted that her firm has downgraded its projection for growth specifically due to the ongoing conflict in Iran.

“I think it’s still reasonable under a pretty wide set of baseline assumptions to assume that we’ll get a [GDP] growth year in the 2%-2.5% range,” Rockey said, “And that’s a pretty decent year.”

Starting even before COVID-19, we’ve moved from an era solely focused on efficiency to one where we’re focused on resilience because of supply-side shocks to the economy, Rockey said. The shocks in those years have been many: along with COVID-19, there’s been the Russia-Ukraine war, significant trade and immigration policy changes, and more recently, the conflict in Iran.   

“And the Federal Reserve’s toolkit is really designed for demand-side shocks, which have been predominant over the last several decades [relative to supply-side shocks]. This is a new world of more frequent disruptive supply side shocks and a period of time where resilience is going to matter more, and the calculus therefore changes.”

“I think the macro story in industrial real estate has been pretty consistent across the last few years,” Rockey said. “We knew in the aftermath of COVID-19, particularly as rates started to rise, that demand was going to cool off. It would also cool off because a nontrivial share of pandemic demand was pulled forward from future years – a giveback was inevitable.”

“We had rates go up, so we had interest-rate-sensitive spending start to pull back at faster paces,” Rockey said, “And ultimately, we had a huge amount of construction that was coming, so we knew vacancy was going to go up from its cyclical low (2.8%), which was unprecedented in our data.”

“Ultimately, there’s going to be shifting structural demand that originates from the forces that I talked about, in particular, global supply chains and manufacturing, and the effects are not just national,” she said. “You’re going to hear me talk about different geographic corridors in the country because these are a starting point for understanding relative competitive advantages, and from there we can go down to the city, the submarket, or asset level.”

Regions in North America that score highly on factors such as highway and rail access, affordable and available infrastructure, labor availability and related metrics include Texas, the Southeast, the Midwest, the Intermountain West and Rocky Mountain Corridor, and Mexico.

Different parts of the country offer different strategic advantages; parts of California might have higher tax rates, higher cost of labor and higher energy costs, but they also benefit from access to goods coming from Asia and proximity to large population centers (and therefore labor). The West Coast generally boasts pockets of highly skilled workers that are difficult to find elsewhere at scale.

Labor is a crucial consideration for industrial real estate; not only does labor typically make up 50% of operating expenses, but the industrial workforce is old – and getting older.

“About a quarter of the industrial workforce is eligible, or will be eligible in the next few years, to retire,” Rockey said. One result of this is that companies are focusing more on fully autonomous warehouses and integrating them strategically into their supply chain.

“There is an economic imperative to do this,” she said.

Rockey said that automation is “moving from a ‘nice to have’ to a necessity, and that’s really kicking into high gear.” Automation, of course, has different needs than a traditional warehouse, with significantly more power requirements, heavier floor loads and potentially a longer horizon for return on capital expenditures.

From a portfolio perspective, integrating more automation-ready facilities can help balance risk. In addition, the diversification of the industrial tenant base can allow for what Rockey calls “thematic occupancy:” analyzing who tenants are, what their industries are, noting any cyclicality in those industries, and deciding if that exposure is the preferred strategic approach.  

Ultimately, Rockey emphasized that the winners of the next decade will be those who build resilient, strategically flexible portfolios aligned with the dramatic reshaping of the global economy.

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

The consensus among a panel of experts discussing capital markets and industrial investment trends at I.CON East this week in Jersey City, New Jersey, is that the industrial market remains healthy and full of opportunities. 

Moderator Eric Foster, co-lead of industrial capital markets at Avison Young, led the discussion, asking panelists to share their perspectives on “where people are spending money, and how they’re sometimes maybe not spending money, in the industrial asset landscape.” 

Craig Cowie, senior managing director at Affinius Capital, said that industrial has repriced aggressively and quickly. “We’re seeing development spreads that are really, really healthy on a relative basis.” He noted that it’s been tougher to compete on acquisitions compared to ground-up development, “but we’re seeing exceptionally healthy flow on what I would call infill bespoke opportunities for industrial. So it’s not one-size-fits all. It’s not one major market, but we’re finding incredible opportunities and pulling the trigger where we can.” 

Similarly, Brian Tilton, managing director, portfolio management at Nuveen, said his company is “seeing compelling opportunities to pursue development across our buckets of capital” that invest in industrial. He noted Nuveen recently closed on two infill, airport-adjacent development sites where they tore down Class C office buildings and are building LEED-certified, Class A multitenant light industrial. 

Andrew Goodman, senior managing director, Link Logistics Real Estate, said he considers the market “very healthy, very functional. We are buying and selling a lot.” In terms of current capital market activity, “there’s a lot of equity out there that continues to want to be deployed into real estate, into logistics. Debt is readily available, all different types of debt … so capitalizing deals is really not an issue.” 

On the deployment side, Goodman noted that “it’s really been a basis play many times because as rents reset and many markets reset and recalibrate, you are able to get in at a per-square-foot value that’s below replacement cost, that feels good historically, and has good leasing demand.” 

Foster noted there had been a general lack of development over the past couple of years. “What I am seeing and what we’re forecasting is a real potential landlord’s market getting even stronger.” He asked what Tilton expects for future rents and vacancies as he underwrites assets. “Do you think we’re going to be back to the days where you could really push rents, and a lot of space will be absorbed in the next year or so?” 

“From an underwriting standpoint, we tend to be fairly conservative across the board, across strategies,” Tilton said. “Our team has not materially changed their underwriting over the past six to 12 months. … We tend to underwrite 3% rent growth but spend a lot of time focusing [on] utilizing our dataset to try to identify where current spot rents are and where we think we’re going to be relative to market at exit.” 

“On the coast, it’s more dependent on where in-place rents are relative to market. … But where we’ve been focusing on recycling capital has been to those interior, noncoastal markets.” 

Foster also asked about tenant demand and whether tenants are changing their logistics plans, especially given the impact of artificial intelligence and the growth of manufacturing in the United States. 

“What we’re noticing,” Cowie said, “is a small deceleration in 3PL [third-party logistics] and a reacceleration of corporate, which I think speaks to the earnings growth,” which he noted is anywhere between 14% and 18% for the S&P 500. “And what we’re starting to see is that earnings acceleration equals confidence and [encourages] corporates to commit … longer term.” 

He added that they’re also observing e-commerce tenants coming back in terms of net-new development. “So, broadly speaking, we’re feeling pretty good on the tenant side of things.” 

Goodman noted many large tenants that had tabled leasing conversations a year ago during the tariff turmoil have since reengaged. Other factors driving demand are the rise in onshoring and nearshoring, as well as data center construction. 

“The infrastructure to support that is massive, so all of that has a flywheel effect,” he said. “We’re seeing very strong activity in our portfolio.” 

He also noted that a significant amount of tenant demand is coming from both the bulk side – assets 400,000 square feet and larger – and the small-bay side. “The middle tranche, there are some supply issues, some availability issues, so it’s a little softer, but I think we’ll work our way out of that.” 

And then there is the Amazon effect. “It’s not all about Amazon, but they do set the tone,” Goodman said. “They have more than doubled their footprint since 2020.” He cited a stat he recently read saying that 66% of homes were within an hour drive of an Amazon delivery hub in 2020. “It’s now 86%. So that is very real. And those tailwinds are real.” 

Returning to the topic of data centers, Tilton said that Nuveen Real Estate isn’t investing in them through its industrial platform (although its parent company has significant exposure to them). “But I think we are benefiting from the adjacent component manufacturers who need space to be close to the data centers. We’re also seeing the data centers clearly compete for land and help to hold up potential industrial land values.” 

Goodman noted that access to power has become a central focus not just for data centers, but also for industrial tenants, especially those involved in advanced manufacturing. “We are combing through our portfolio to see where we could access more power to offer that to our tenants to create a leasing advantage. I don’t consider Link to be in the data center business, but we are touching it in a very real way in terms of power and access to power.” 

Cowie said Affinius Capital has the same number of people devoted to data centers as it does to its industrial business. The company has developed about 400 megawatts thus far and has another 600 to 800 megawatts under control. He said the data center business is like a “rocket ship,” but projects need to have a clear path to power by 2028 or perhaps early 2029 “or you’re effectively going to go to the back of the queue in terms of the engagement by that tenant on your dirt or on your project.” 

At this point, he doesn’t see the data center boom competing with capital for the industrial market. “I think the capital that wants to go into data centers is looking for something different to what I would call sort of traditional vanilla food groups of industrial housing and maybe storage, etc. … But where we are going to see it is an equity gap in the debt capital markets. The volume of capital raised by hyperscalers and data center developers is going to chew up capacity in that sector. And I think bank balance sheets are going to become really strained if they’re not there already, unless they’re recycling capital. 

“With the amount of capital needed to develop data centers and AI, we’re watching the debt capital markets aspect really closely.” 

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

At I.CON East this week, tour attendees got an up-close look at how the New York City Economic Development Corporation (NYCEDC) plans to modernize the Brooklyn Marine Terminal (BMT), transforming it into a key component of the city’s “Harbor of the Future,” while also addressing a critical land-based concern: more housing at a range of affordability levels. 

NYCEDC assumed operational control of the 122-acre site in 2024 from the Port Authority of New York and New Jersey. The Port of New York and New Jersey, comprising multiple sites, is the nation’s second busiest port for loaded containers, but BMT serves a small niche segment of the market, handling under 1.5% of container volume. David Lowin, senior vice president of development in NYCEDC’s asset management group, said that while BMT no longer fit into the Port Authority’s long-term plans, it offered a “generational opportunity” for the city.  

He explained that BMT is something of an outlier from other terminals in the area. For one, it is the only such facility east of Manhattan. For another, it is surrounded by a residential neighborhood (Red Hook) and doesn’t have any connection to rail. Much of the acreage is not intensely used, and only 51% is occupied by maritime-dependent uses: the Brooklyn Cruise Terminal and the Red Hook Container Terminal. Its existing finger piers are either out of service or nearing the end of their useful life. 

Still, Lowin emphasized that the vision for BMT is not to displace its maritime uses, but rather to reinvest in them while dedicating its unused land to residential and mixed-use assets. 

Among the goals he highlighted for BMT were: 

• Reinvesting in the port, including addressing a significant amount of deferred maintenance and supporting its long-term financial sustainability. 

• Modernizing and electrifying the port while decreasing its use of diesel. 

• Maximizing the number of containers entering and leaving the port via water while reducing truck traffic on the surrounding streets. 

• Taking advantage of unused land to create mixed uses such as hospitality, retail and light industry that benefit the community. 

• Increasing the density of the site so that ferry service can increase from once per hour to three times per hour. 

• Improving resiliency by preparing the site and adjoining neighborhoods for sea-level rise and climate change. 

Another major component of the new vision for BMT is the creation of 6,000 housing units, including 2,400 affordable units, across two separate sites that are currently partially vacant or underused: Atlantic Basin and BMT North.  

“This is one of the few opportunities that still exist in the city for creating housing at scale,” Lowin said. The mixed-use residential development will also create open space and public waterfront access. 

Plans are to transform Atlantic Basin into a newly activated and modern working waterfront. Preliminary concepts include enhanced ferry service, a new cruise terminal, and a workforce training and experiential learning center. BMT North is envisioned as a pedestrian-forward neighborhood with transit focused on Columbia Street, including a dedicated neighborhood busway. 

Other planned uses include 250,000 square feet of community facility space, 275,000 square feet of commercial space, 275,000 square feet of light industrial/industrial space, and up to 400 hotel rooms. 

BMT is also envisioned as the entry point into a broader “Blue Highways” freight system. Under this plan, food-grade containers would come into BMT on container vessels from international ports and then be transferred onto barges for delivery to a large food distribution center at Hunts Point in the South Bronx, greatly reducing emissions and traffic from truck deliveries. According to NYCEDC, there are opportunities for Blue Highways activities at more than 25 locations along the city’s waterfront. It is also exploring the potential use of private landing sites in partnership with industry along the Bronx and Queens waterfronts. 

According to figures from NYCEDC, the new vision for BMT is expected to generate $18 billion in economic impact. In addition, it is expected to create 37,000 temporary construction jobs and 2,000 permanent operational jobs.  

While leading tour attendees on a van tour of BMT, Lowin noted that the site is currently limited by its infrastructure. But that is changing. Currently, $418 million of public capital has been secured from a combination of city, state and federal funds to revitalize and modernize the container port. The future 60-acre port will feature flex maritime space, including additional container storage, bulk cargo, construction staging and Blue Highway space. 

The goal: to set a new standard for modern maritime. 

Touring a ghost kitchen may not sound glamorous – until you step inside and realize you’re looking at cutting-edge food delivery infrastructure. 

During I.CON East this week in Jersey City, New Jersey, attendees were able to tour CloudKitchen’s 17,000-square-foot Union City, New Jersey, facility. CloudKitchens provides commercial kitchen space for delivery-only restaurants, ranging from household names like Starbucks to local mom-and-pop shops looking to expand their business. More than 500 facilities worldwide are part of a portfolio that also includes food production facilities operated by ProFood Properties, which focus on single tenants and large-format food production. 

According to Statista, revenue in the U.S. online food delivery market is projected to reach $473.49 billion in 2026. An estimated 60% of U.S. adults order takeout or food delivery at least once a week, with the COVID-19 pandemic accelerating growth in the use of food delivery services. 

 CloudKitchen aims to create a plug-and-play setup for restaurants; the company provides space, onboarding services, on-site technicians for mechanical support, basic equipment, proprietary technology platforms and access to local markets that might not otherwise be available. The company’s staff includes a large component of architects and engineers able to customize kitchens to meet tenant needs. The company’s goal is to take care of the real estate side of the equation so that their tenants can focus on the food side. 

CloudKitchen combined three former electrical supply/wholesaler buildings for their Union City location, which opened for production in 2024. The facility hosts 32 tenants, with some operating at all hours of the day, serving a wide range of cuisines. The location of the facility enables a tenant restaurant to reach 206,000 residents and 90,000 workers within a 15-minute delivery radius.  

The process is deceptively simple: A consumer places their order through their favorite delivery app; the order gets routed to the delivery person and CloudKitchen restaurant, and the race is on. When the delivery person arrives at the CloudKitchen lobby, they simply display the order information on their phone to CloudKitchen’s camera, and the corresponding locker holding that order opens. In and out – simple as that. 

Behind the scenes, CloudKitchen leverages software to closely track and analyze their operators’ habits and needs, adjusting as necessary. BMS (Battery Management System) sensors track each kitchen’s temperature, moisture level and even patterns of activity, such as typical hours of operation. That data is then charted daily to maximize the optimal use of the facility’s power and air flow. CloudKitchen tries to anticipate their operators’ challenges and help them be successful.   

Air flow is top of mind for the CloudKitchen engineers; they closely track and modify the air going in and out of the building, and in and out of each kitchen. Whether it’s a noodle company or a char-grilled chicken sandwich restaurant, the facility needs to carefully calibrate the temperatures, moisture and air flow to match the individual needs of each operator. 

Each location of a CloudKitchen facility offers unique opportunities and challenges – ones that the team relishes solving. Adapting a former industrial building for the Union City facility provided built-in advantages such as a roof that could support heavy-duty ventilation systems but also required updates to electrical systems and duct work. 

As food delivery continues to reshape consumer behavior, facilities like these may become as essential to cities as warehouses, office towers and apartment buildings. 

This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON East 2026. Learn more about JLL at www.us.jll.com or www.jll.ca.

The capital chasing data centers today is staggering. But as panelists at NAIOP’s I.CON Data Centers conference this week in New Jersey pointed out, the bigger story is what it takes to deploy that capital successfully.

Led by moderator Tyler McGrail, executive managing director, Newmark, panelists were Robert Filley, senior managing director, Institutional Property Advisors; Jonathan Quinn, director, Capital Markets, Panattoni Development Company; and Sara Wayson, head of data centers, U.S., Mapletree.

Forecasts say the United States could add between 80 and 130 gigawatts of new power capacity tied to data center demand over the next several years – requiring an estimated $1.5 trillion to $2 trillion in equity and debt capital.

But despite the flood of money entering the sector, the panel agreed that capital is no longer indiscriminate. Investors, lenders and developers are becoming far more selective about where they place bets, how partnerships are structured, and which projects are truly financeable.

And increasingly, the difference between projects that move forward and those that stall comes down to one word repeated throughout the session: Power.

Just a few years ago, a compelling narrative around a site – future demand, conceptual infrastructure plans, strategic geography – could generate investor interest. Today, panelists said, capital providers want tangible proof in the forms of load studies, utility engagement, water solutions, community outreach, permitting strategies and infrastructure plans.

“If you’ve got a [data center] site, you are now in the infrastructure business,” Filley said.

That evolution is reshaping how projects are underwritten from the earliest stages. Developers are spending six months to a year preparing sites before formally bringing them to market, often investing millions upfront simply to create a credible development story.

Filley described how even private landowners are increasingly pulled into sophisticated early-stage capitalization structures. In some cases, “phase one” equity partners are funding predevelopment work – including power studies, environmental diligence and entitlement efforts – long before a project is ready for institutional capital.

“It’s not a little bit of capital,” he said. “It can be $5 million to $15 million to get to the point where you’re actually ready to go.”

That front-loaded diligence is also changing investor behavior. Historically, many institutional groups waited until projects were fully de-risked – after construction, leasing and utility procurement – before deploying capital. Today, investors are entering much earlier in the process.

“What we’re noticing is a lot of groups are coming to the table even prior to that point,” said Quinn. “They’re willing to take that risk that maybe historically they had shied away from.”

The result is a new generation of partnership models where investors and developers are increasingly working collaboratively through entitlement, utility coordination and infrastructure development.

But that shift can also create friction. As capital providers move upstream into the development process, developers are navigating more negotiation around control rights, milestones and utility risk. Investors want greater visibility into schedules, permitting and infrastructure timelines, while developers are being asked to carry more exposure if utility delivery slips.

“A lot of tenants are starting to take more of an active approach,” Quinn said. “They’re looking to the owner to ultimately take on that utility risk and take on that delay.”

That dynamic is particularly important in a market where timelines continue to stretch. What once qualified as a “quick path to power” has fundamentally changed.

“A quicker path to power two years ago was 12 to 18 months,” said Wayson. “Now, if I can get power in 36 months, then I’ve still got a great site.”

At the same time, tenant demand remains remarkably strong across multiple segments of the market – not just among hyperscalers. Wayson observed that midsize colocation and retail operators are still expanding aggressively, often competing for 20 to 50 megawatts of capacity while hyperscalers pursue much larger deployments.

That demand is also influencing how owners think about long-term portfolio strategy. Existing leases signed years ago are now colliding with today’s infrastructure realities, forcing owners to modernize buildings, secure additional power and reposition older facilities for evolving tenant needs.

In many cases, tenants themselves are becoming capital partners, investing heavily into infrastructure upgrades while seeking longer lease terms to protect those investments.

The discussion also highlighted the growing divide between established data center markets and emerging ones.

Northern Virginia continues to dominate because of its proven ecosystem, infrastructure redundancy and connectivity advantages, said Filley. But as power constraints intensify, developers and investors are aggressively exploring secondary and tertiary markets across the Southeast and Midwest.

“There’s a rush for power,” Filley said. “It’s speed to power.”

Still, panelists cautioned that not every “next market” will succeed.

Panelists agreed that many emerging markets carry risks that are still not fully understood – including long-term political support, taxation structures, infrastructure limitations and community acceptance. That uncertainty is forcing investors to think beyond immediate demand and ask harder questions about long-term viability.

“We’re looking at, ‘What do I see in five years?’” Wayson said. “If for some reason I have a tenant leave, can I release that because it’s still in a market people want to be in?”

The panelists repeatedly returned to flexibility as one of the most important characteristics for success moving forward.

That flexibility may become even more important as financing structures continue evolving and as second-generation data centers create entirely new pricing dynamics across the market, particularly as older infrastructure depreciates and operators compete on cost.

Even so, infrastructure concerns remain front and center, with Filley noting the vulnerability of aging utility systems supporting highly secure digital infrastructure.

Capital and demand remain, the panelists agreed, but the projects that secure financing – and ultimately succeed – will likely be the ones that can demonstrate not only access to power, but also the ability to navigate entitlement risk, utility coordination, infrastructure delivery and long-term operational relevance.

By Marie Ruff

Hyperscalers, cloud providers and enterprise users are becoming more precise in how they evaluate data center opportunities. In a session at NAIOP’s inaugural I.CON Data Centers conference this week in Jersey City, New Jersey, panelists shared what differentiates successful projects and how developers can align strategy with evolving user expectations.

The session was moderated by Randy Borron, SIOR, vice chairman, Cushman & Wakefield; panelists included Todd Johnson, director of development, mission critical, Ryan Companies US, Inc.; Ryan McGrath, Northeast critical facility practice area leader, Gensler; and Marie Purkert, national client leadership team, Kimley-Horn.

The Explosive Growth of Data Center Development

“I think we can refer to this as a once-in-a-generation infrastructure expansion,” said Borron. “Globally, the [data center] market now exceeds $340 billion and is growing at double-digit numbers – don’t write that down because it’s going to change tomorrow.”

Data center growth is being driven by AI workloads that are fundamentally changing how data centers are sized, located, powered and designed, Borron added. The U.S. accounts for more than half the global hyperscale capacity and demand continues to outpace supply; in 2025 alone, the U.S. market absorbed 2.5 GW of capacity.

“The evolution of data center development is just a hockey stick [indicating a long period of slow growth followed by a sudden, dramatic spike] in the last three, possibly four, years since ChatGPT [emerged],” said Johnson.

“In terms of the [data center] developer, they need to be in a position to have a bare minimum of due diligence done on a site in order to attract users,” he said. “We call it ‘stories’ because it really is just what you can gather on the surface about what the potential is on site from a power perspective or an entitlements perspective.”

While the Big 5 hyperscalers [which typically include Amazon, Microsoft, Google (Alphabet), Meta and Oracle] all have submission portals, don’t stop there if you’re trying to get them to look at your site, said Johnson. Getting in front of the transaction manager themselves is key.

“If you want to get into the Big 5, find out who the person is in your area by networking, and/or partnering with someone who has those relationships,” Johnson said. “But be careful because someone might say they have those relationships and they don’t have them.”

“As a developer, you may have experience in developing properties, but [users] want to see that you have expertise in [the data center] space, so partnering with people who have done it before is really how you instill confidence in potential users,” McGrath said. “They’re not looking to trust Joe Developer to build them a $1 billion site.”

“I do think finding those key partners early is very important to getting credibility … once you do a few, maybe that lets you spin off by yourself,” McGrath said. It also builds credibility when you can say that not only do you have a site and think you can get 100 MW on it, but that you have a site and already have 100 MW on it and a signed agreement with a power authority.

Power, Flexibility and Scalability

Next, Borron turned to that critical component of power availability, asking the panel, “How are users evaluating power risk today, and how is that reshaping the site selection and entitlement strategy?”

“Power has been something that we have had at the forefront of this discussion now for the last couple of years,” Purkert said. Key questions to consider include: What conversations have you had already with the utilities that are serving that piece of property? Where is that transmission line coming in? What is the time frame to get those that connectivity to your site?

“And in addition, what flexibility do you have on your site right now when it comes to power? Do you have that natural gas line? What is your risk aversion to things like hydrogen fuel cells? Are you willing to look at microgrid and on-site [power] generation?”

“You have to come to the table willing to talk about different solutions, whether you’re the design partner and/or the developer in that space,” Purkert said. “You really need to look at everything in order to figure out what’s going to work for your schedule, and also what’s going to work for the end product.”

When it comes to power, the idea that tier-one markets still reign supreme is inaccurate, Purkert said. “Any market now where you’re able to advance and get that signature early or that commitment right away [for power from the utility company] is now becoming a new tier-one market.”

Incorporating Flexibility in Design

“The expectations around density, scalability, AI workloads, and the cooling technology that goes along with that are reshaping design in a big way,” Borron noted. “What are the hardest aspects? What are the trade-offs that you go through there?”

Chip technology is changing rapidly, sometimes every two or three years, McGrath said, which changes the required density for the data centers.

“With all the changing technology, the ask that we’re getting is, ‘How can you be flexible and how can we offer late-binding decision-making,” he said.

Designers might decide to overbuild a little on the building shell, or provide more open space in the halls, or incorporate the ability to have multiple rack positionings. “Things like that that allow for us to accommodate whatever the chip technology is.” Data center design needs to incorporate flexibility and anticipate technological change before it even happens.

Balancing Speed to Market with Community Integration

“The reality is that now we are operating in an industry that has shielded itself a little bit from communities in the past,” Purkert said. “And now we’re entering an age where transparency is key to getting those permits, that community buy-in and ultimately have a successful project.”

“It’s also important to be good stewards of the communities in which we’re operating; many of us are also living in those communities, and we want to see them continue to prosper,” she said.

As part of their ongoing state-level advocacy work, NAIOP members from chapters in Ohio, Michigan and North Carolina engaged policymakers at their state capitals this week. NAIOP members from these states traveled to their respective state capitols to engage and educate lawmakers about the key role of commercial real estate development in spurring economic growth and job creation.

Nearly 80 members from the four Ohio chapters traveled to Columbus for meetings with lawmakers and administration officials to advocate for policies that promote smart economic growth, streamline regulatory processes and fund state programs supporting transformative development across the state. These state programs include the Transformational Mixed-Use Development Program, Opportunity Zone Tax Credit, Brownfield Remediation Program, and Historic Preservation Tax Credit. In addition, NAIOP of Ohio is supporting legislation that modernizes development processes, establishes timelines for local land use decisions, and ensures more predictability to annexation processes and Community Reinvestment Area approval processes.

The Annual Meeting and Legislative Day booklet also included a review of data center development in Ohio. The state alliance recognizes data center’s role as part of the state’s economic infrastructure and as drivers of innovation across multiple sectors of the state’s economy. NAIOP of Ohio supports “a balanced, informed and forward-looking policy framework that allows Ohio to remain competitive while responsibly addressing community, infrastructure and environmental considerations.”

In the mid-Atlantic, members from the three North Carolina chapters – Charlotte, North Carolina Piedmont Triad and Raleigh Durham – traveled to Raleigh this week to advance their 2026 legislative priorities within the state capitol. Their legislative day included meetings with House Speaker Dustin Hall, Senate President Phil Berger and other state lawmakers. NAIOP of North Carolina supports policies that support the state’s continued economic growth, invests in workforce development, funds needed transportation and infrastructure improvements, and provides more transparency and predictability to regulatory processes.

It is worth noting that there are efforts in Ohio to reduce and eliminate property taxes to provide owners with economic relief. However, some policymakers are concerned that the elimination of property taxes will result in increased taxes and fees in other sectors to make up for the lost revenue and maintain a balanced budget. Proponents in Ohio have pledged to continue their effort next year if the necessary requirements are not met for the initiative to qualify for the November ballot.

The core mission of NAIOP of Detroit, one of NAIOP’s newest chapters, is for the state to provide a foundation for continued commercial real estate development and strengthen Michigan’s competitiveness in attracting and retaining private sector investments. This includes effective advocacy at each level of government to ensure public policies are enacted to support growth.

The chapter took its first steps towards this objective with members traveling to Lansing for the initial introduction of NAIOP to lawmakers and the industry’s contribution to the state economy and workforce. The meetings established a relationship within the state capitol that will lead to future policy discussions impacting the development industry.

Legislative days at the state capitol provide valuable opportunities for NAIOP members to build relationships and discuss the issues impacting commercial real estate development directly with state decisionmakers. Member engagement in the legislative process ensures the industry’s voice is heard and taken into consideration.

At NAIOP’s recent National Forums Symposium, held in Salt Lake City, participants stepped out of the meeting rooms and into the streets for a firsthand look at one of the city’s most significant redevelopment stories. A walking tour of the Gateway District offered commercial real estate professionals a closer view of how a legacy retail center has been repositioned into a vibrant, experience-driven mixed-use destination.

The walking tour, led by Andy Moffitt of Newmark’s Mountain West team, focused on the Gateway District, a downtown asset that has evolved well beyond its original role as a traditional retail center. Today, the district spans more than 1 million square feet and combines retail, dining, office, residential and hospitality uses into a highly walkable, transit-oriented environment that reflects how downtown Salt Lake City is continuing to change.

A central highlight of the tour was the adaptive reuse of the historic Union Pacific Depot, now home to the Asher Adams Hotel. Senior Group Sales Manager Olivia Ikimau led the group through the boutique hotel, which has become both an anchor and a symbol of the broader Gateway reinvention. Located at South Temple Street and 400 West, the project has brought new activity and energy to a site that carries deep historical importance for the city.

Completed in 1909, the depot served as Salt Lake City’s primary railroad station for decades and was an essential gateway to the region. Its architectural character and civic presence led to landmark designation in the early 1970s and inclusion on the National Register of Historic Places. Though restored during the Gateway’s original redevelopment in the late 1990s, the building and surrounding district struggled after the opening of City Creek Center. Retail traffic declined sharply, and the depot’s grand hall became little more than a pass-through space.

Since acquiring the Gateway in 2016, Vestar has pursued a strategy to reposition the district around entertainment, dining, creative office and experiential retail rather than traditional enclosed shopping. The Asher Adams Hotel reflects that approach, preserving the depot’s French Renaissance architectural details while giving the building a new and economically viable use. Original design elements such as arched openings, decorative pilasters, and classical moldings remain central to the space, reinforcing the project’s balance of history and modern hospitality.

The tour also placed the Gateway within the broader context of Salt Lake City’s growth. More than $10 billion have been invested across the metro area between the airport and the University of Utah in recent years. The region has added more than 10,000 housing units over the past decade, contributing to increased density shaped by geographic constraints from the lake and surrounding mountains. Infrastructure investment, downtown development and preparations for the 2034 Winter Olympics continue to drive momentum.

For the tour attendees, the Gateway District offered a clear example of how underperforming retail environments can be reimagined through thoughtful redevelopment, placemaking and adaptive reuse. The walking tour underscored that in growing urban markets like Salt Lake City, honoring historic assets while responding to changing tenant demand can create destinations that feel both rooted and forward-looking.