After nearly five fallow years, developers start to see (a few)opportunities beyond the obvious ones for apartments. In anygateway market, building an efficient floor-plate, LEED gold orplatinum office tower will command attention from tenants who startto pay up for the chance to reduce their operating costs. They canlower utility bills, gain greater flexibility and decrease futureexpenses in altering layouts, win kudos and possibly attract youngtalent for using environmentally correct space, and buy into thenotion that more natural light and fresher air creates healthier,more productive work environments. These new wave buildingssuccessfully leech tenants out of last generation space and can becheaper to build than buying existing trophy product at current caprates.
The only losers here are outdated, brown buildings which cannothold onto tenants. It's another sign that pricing for existingtrophy product in these 24-hour markets may have peaked or at leastleveled off.
Logistics and distribution space—again in the prime gatewaydistribution hubs—also may be ripe for selective new development asmajor e-commerce purveyors ramp up shipping activities nearpopulation centers in capturing greater retail market shares.
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