The current state of the commercial real estate (CRE) sector reflects a complex interplay of economic forces, investor sentiment, and evolving business practices. Of course, the most vital aspects of commercial real estate are location and profitability. However, the changing environment and resident preferences require CRE to prioritize security.
Leaders in the commercial real estate industry including retail, multifamily residential, industrial, and office must understand how vacancy rates, retail trends, and economic factors drive the need for security to help protect investments as well as employee, tenant, resident, and customer safety.
Vacancy Rates and Security
At 18.1%, the office vacancy rate climbed 100 basis points year-over-year according to an article on CommercialEdge. The article contains a chart showing the total vacancy rates by market.
Austin, Denver, and Dallas have vacancy rates exceeding 20%. Price per square foot is $140 in Miami and $242 in Manhattan. Another CommercialEdge story confirms national industrial in-place rent has gone up 7.4% year-over-year.
Not only is the office vacancy rate high but also the demand for industrial sector spaces. The National Association of Realtors (NAR) market insights confirm that the industrial sector’s net absorption levels fell to numbers not seen in more than ten years.
It should surprise no one as high interest rates and hybrid work — which is the combination of working from home and going to the office — are largely responsible for the vacancy rates. Moreover, the U.S. economy continues to falter. The high interest rates are driving up defaults and commercial real estate delinquency rates.
The one thing the commercial real estate market has going for it is strong job growth. While strong job growth has eased some of the challenges, the labor market is cooling according to Investopedia.
Could the Federal Reserve cut interest rates to counter the slowdown in the job market? Doing so could either ease the pressure on borrowers or hurt commercial real estate. The only certainty is commercial real estate remains largely uncertain.
Vacancy rates are a boon and bust for commercial real estate. The advantage of higher vacancy rates is the potential for new residents, tenants, and redevelopment.
On the flip side, commercial real estate becomes more vulnerable as it drives up security risks. High vacancy rates cause buildings to look emptier, which makes them a target for theft, vandalism, and squatting. When thieves, drug dealers, and squatters spot a quiet space with little to no traffic, they take advantage.
Mitigating the security risks requires commercial real estate management to rethink their security strategies. Addressing low occupancy while ensuring the implementation of robust security measures calls for investing in video surveillance, remote monitoring, access control systems, and secure locks. These security layers help counter vandalism and unauthorized access while protecting assets.
Retail Trends to Know About
Retail property has yet to return to pre-pandemic levels. Compared to a year ago, net absorption is significantly lower at 30% as reported by NAR’s market insights. The shift comes from the move toward e-commerce.
Brick-and-mortar stores still have a key role. Customers want to browse and interact with products. To stay relevant, retailers must explore how they can integrate e-commerce into their business. Retailers that extend their fulfillment processes and convert their in-person shopping experiences into a dual one consisting of online and in-person shopping experiences have the greatest chance of success.
Retail stores tend to increase their inventory to support online order fulfillment. This increases the risk of theft and mismanagement. To adapt to this new way of operations, retail stores are investing in advanced technologies to help deter crimes and the risk of mismanagement.
These technologies include high-definition video surveillance cameras with artificial intelligence monitoring, smart access controls, cybersecurity, and stout inventory tracking and management systems. The inventory tracking and management systems help them improve their inventory management to avoid overstocking and understocking.
The integration of cyber and physical security technologies is a game changer. It reassures customers that they’re protected both while in the store and making their purchases. For example, the use of surveillance cameras equipped with artificial intelligence and offsite human monitoring operators can help detect suspicious behaviors to proactively identify potential safety problems.
Economic Pressures
As previously mentioned, commercial real estate is in a precarious position. They face high interest rates which can put them at a greater risk of defaulting. One of the side effects of an economic downturn is often higher crime rates. As individuals who have lost their jobs struggle to make ends meet, they may turn to crime.
Additionally, empty properties attract the criminal element and unhoused persons. They can cause a blight on the building if they break windows to enter the building to sleep and conduct illegal businesses, spray graffiti on the exterior walls, and destroy the overall aesthetic.
This damage affects property values and repels potential stakeholders and residents. It also affects neighborhood properties and residents. Investing in security systems can help maintain property value and attract tenants.
Gain a Competitive Advantage by Integrating Security Technologies
Investing in security technologies that consist of multiple layers of security can be an effective approach. But it needs policies to support it.
Develop and maintain security policies
Creating, implementing, and maintaining strong security policies is imperative. A well-crafted set of security policies can act as a proactive shield, safeguarding sensitive information, critical assets, employees, customers, and the overall integrity of the organization.
Begin by conducting a thorough security risk assessment to identify potential vulnerabilities, assess the impact of security breaches, and understand the specific risks relevant to the business. This assessment lays the foundation for tailoring policies that address the organization’s unique challenges.
Security policies should be clear, comprehensive, and easily accessible to all employees. Use plain language to explain the dos and don’ts outlining acceptable technology use, data handling procedures, and the consequences of policy violations. Make sure to regularly update these policies to align with evolving threats and industry best practices.
Effective policy implementation depends on employee awareness and understanding. Conduct regular training sessions to educate employees about security best practices, the importance of adhering to policies, and the role each individual plays in maintaining a secure environment.
Establish a routine for conducting regular security audits and compliance checks. These assessments help identify gaps or deviations from established policies, allowing for timely corrections and improvements. Regular audits also demonstrate a commitment to compliance and security to stakeholders.
Develop and communicate a robust incident response plan within the security policies. Clearly define the steps to be taken in the event of a security incident to help ensure a quick and coordinated response that minimizes potential damage.
Security is always evolving. Therefore, prioritize continuous monitoring systems to stay on top of emerging threats and technological advancements. Be prepared to adapt and update security policies in response to changing circumstances.
Add smart video surveillance with remote monitoring services
The type of video surveillance and associated services can make or break a security system. Most traditional security cameras don’t cut it. A traditional security system involves installing unmonitored cameras around the commercial property. Therefore, it doesn’t have the ability to detect potential crime or even notify someone of a crime in action. That’s why it’s a reactive security measure. Its only job is to record the crime.
However, video surveillance technology has advanced to the point that it’s one of the most effective and proactive security solutions available. The key component is the combination of human monitoring and advanced technology. This integrated security system allows multiple eyes to watch over a commercial property without the need to physically station someone on-site.
So, how do video analytics and monitoring operators catch a crime before or as it happens without being physically on-site? The trained security personnel monitor the cameras in real time. This combination of technology and human vigilance achieves far more together than either could alone.
Artificial intelligence scans all cameras, looking for preprogrammed scenarios to identify anomalies. While this technology excels in detection, it does not know how to respond when something happens. It’s also not perfect at detecting actual problems.
This is where the human monitoring operators come in. Anytime the technology detects suspicious behavior, the monitoring operator can respond by following protocols. They may issue a verbal warning through a remote speaker system, contact law enforcement and provide real-time updates on the suspect’s movements, create a report for management, or all of the above.
All footage is saved as recordings, serving as evidence that can help identify people, vehicles, and other relevant information. Another advantage of this security technology is that it helps with liability claims. These claims are hard to win without evidence such as video surveillance footage.
Be Prepared for the Unpredictable Economy
At a time of technological progress and escalating security risks, commercial real estate must adopt innovative solutions to redefine their approach to business security. The amalgamation of these diverse business security elements results in a powerful security framework.
Additionally, commercial real estate stakeholders must stay informed and agile. This means being ready to adjust strategies in response to fickle market conditions. Navigating the challenges and opportunities that lie ahead demands commercial real estate rank cyber and physical security right up there with profitability.
As the commercial real estate sector works to predict and deter emerging threats, the use of the right security measures allows them to adapt and remain resilient in today’s volatile landscape. With a holistic approach to security technology, commercial properties can better protect their people and assets.
To learn more about commercial real estate security for retail properties, multifamily residential, office buildings, and the industrial sector, contact us.
