Industry Trends Task Force Explores “Integral Development” and Opportunities for Future Research
More than two dozen NAIOP Research Foundation Governors, Visionaries and Distinguished Fellows came together in Miami Beach, Florida, during the CRE.Converge conference for the semi-annual Industry Trends Task Force. Task force members gathered to hear from expert industry speakers, and to discuss topics that stand to affect the commercial real estate industry in the near to long term.
Chair Bilijack Bell, partner at Wilson, Hull, and Neal, welcomed speakers Ed Klimek, AIA, NCARB, Partner, KSS Architects, and Margaret Greg, Architectural Designer, KSS Architects. Klimek and Greg discussed how the pandemic, shifting lifestyles and demographic trends are accelerating new forms of development.
With the increasing demands of e-commerce and the need to be closer to population centers, mixed-use developments with manufacturing and distribution components are beginning to appear in urban centers and inner suburbs. This non-traditional combination of uses creates an internally efficient ecosystem while serving the adjacent communities. Klimek and Greg emphasized that this approach, also called “integral development,” is in its infancy but may grow into a more common asset type.
As an early example of integral development, Greg cited Ponce City Market in Atlanta. Built in the 1920s, it functioned as a Sears warehouse and later as Atlanta’s city hall. In 2011, it was transformed into a mixed-use building despite it being in a blighted industrial area. The adaptive reuse of the building not only spurred community reinvestment but its various components aligned with the infrastructure to serve residents and workers. Greg emphasized that Ponce Central Market, with its retail, restaurant, office, residential, delivery and open space uses, is not just “in” the community but a symbiotic part of it.
Klimek gave an overview of a somewhat similar project KSS is designing in Brooklyn. He noted that city regulators are particularly interested in how economic development serves its citizens and one of the goals of the project is to provide jobs and amenities to the surrounding community. The project totals 1.7 million square feet and has significant distribution components: 500,000 square feet dedicated to United Parcel Service and 200,000 square feet of industrial space that will include a waterfront dock for deliveries and a multi-story warehouse. Other uses include ghost kitchens, creative office, film production studios and recreation space.
Klimek believes that integral development will catch on, citing two additional projects KSS is now designing. He concluded that the basic concept behind integral development is to serve the surrounding community while providing many uses, including distribution, manufacturing and creative space.
After Klimek’s presentation, participants broke out into groups and were asked to report back on topics that the NAIOP Research Foundation could address:
- Public-Private Partnerships: Best practices and inventive deals.
The Office of the Future: What will it look like and what types of amenities should be available? How will demand be impacted and what does the future hold for coworking?
- Follow Up on Existing Reports: Consider updating past research reports to see what can be added to keep them current. Continue the work on the Development Approvals Index report as permit approval times are still a concern and it would be interesting to compare cities. Update the Two-Dimensional Approach to Evaluating Commercial Real Estate Markets report to include other markets if possible.
Affordable Housing: Housing is out of reach for many working families and this affects labor availability. What are examples of successful programs? It would be interesting to know more about single-family rental communities that are beginning to be developed.
Diversity, Equity and Inclusion: What are some of the best practices in the industry? Which firms are addressing this issue and what can we learn?
Climate Change and CRE: What are the impacts of climate change on costs, valuation and investment decisions?
COVID’s Impact on Labor: How will remote work and reluctance to return to work impact CRE? Not just for office but for warehouse uses as well.
An Exploration of ESG Investing: What does it mean for CRE and what are some examples of how industry firms are employing it?
Supply Chain Disruptions: How is it impacting costs of materials and delaying projects? What are the impacts on industrial real estate, especially around the ports?
Integral Development: What does the future hold for mixed-use developments with a distribution component?
Economic Development: Connect with economic development representatives and speak with them about what they are looking for from developers and vice-versa.
Some of those topics will be further investigated by academic and industry researchers through grants made by the NAIOP Research Foundation.
Learn more about the Foundation’s research.