Obsolete design, purposes, industries, and scale mean commercial real estate is seeing a surge in a change of use.
Car Dealerships, a Thing of the Past?
Empty and half-empty dealerships are a sign of the times. Supply chain issues are the cause; they simply can’t get the inventory. This unusual situation coincides with a new era of work. We can work from home, drive electric cars, and desire minimal commute time. Who will buy the mega-dealerships of yesteryear on thousands of paved streets along the city’s main avenues, especially near downtown? What will become of them? These properties are ideal for a change of use. Today we buy a car and everything else online. My best guess is that these are the prime targets for mixed-use development: housing, retail, medical boutiques, and offices.
Big banks converted into drive-thru pharmacies and pot shops
Not all major banks are destined to become drive-thru dispensaries, but like many retail businesses, banks are shifting to the digital market and no longer need physical locations. The appeal of these properties is the potential for kiosks and drive-thru service. Mobile orders, drive-thru, and pickup—that’s the perfect formula for a marijuana dispensary or pharmacy.This article was written last year, but Alex’s thoughts remain the same, even now, in the face of an impending recession.
Gone are the days of snacking on cookies, drinking a cup of coffee and reading the newspaper in the bank foyer. The change of use will be a less personal affair. Push a button, get what you want: urgent care, medications, something for dinner, or perhaps a new car. Larger bank branches with anywhere from 8,000 to 25,000 square feet are also suitable for mixed-use retail and office space.
Office space: HQ shake-up
Before the pandemic, I wrote about how showrooms capture the essence of the new office, an occasional meeting place rather than the old institution-style cube farms. Now, after more than a year of remote working, Zoom calls, and limited travel, we are sprinting toward the future of work. That includes not only touchless fixtures and better ventilation but also lower workforce density with hybrid schedules.
The new trend is to move away from grouping employees together at giant corporate headquarters. The smaller regional hub offices are the new go-to in commercial office design. Fortunately, the Mid-Willamette Valley is in a great place to benefit from this change, both geographically and in terms of workforce affordability.
From hospitality to housing
So where is everybody going to live? There are few modern housing options in downtown Salem, and near zero vacancies for what we do have. The growing rental shortage in Oregon, from Portland to Eugene to Salem to Bend, means there is an urgent need for something different than what we have now.
Meanwhile, urban-center hospitality properties, such as hotels and motels, took a financial beating in 2020-2021 due to the pandemic and reduced business travel. The Red Lions, Best Westerns, and Super 8s of yesteryear are already targets for conversion as cities grapple with houselessness and the high costs of new construction. Expect more hotels and motels to become various forms of transitional or permanent workforce housing.
This article was written last year, but Alex’s thoughts remain the same, even now, in the face of an impending recession.
