Mobile Vending: Gift or Curse for Brick & Mortar Retail?

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by Lenny Pierce, Research Analyst

Once associated with cheap tacos prepared under questionable cleanliness standards, food trucks are now a trusted staple of gourmet lunch fare across the country—a trend that has some restaurant owners concerned. The combination of a food truck’s mobility along with its lower overhead costs could be making food trucks a real threat to restaurants employing bigger staffs who work longer hours, all the while paying those pesky property taxes or rent. With the food truck trend growing steadily in popularity, restaurant owners around the country are already expressing their distaste for the new lunchtime phenomenon.

“Businesses pick locations and business models around certain peak times…food trucks can poach that business and then pick up and leave,” Restaurant General Manager Gavin Coleman told the Wall Street Journal. Coleman manages The Dubliner, an Irish pub in Washington DC. Coleman added that in addition to competing with his pub for foot traffic, the food trucks also eat up much of the parking spaces for would-be customers when they line up on the curb.

In an effort to protect brick and mortar establishments, a handful of cities have regulations in place to restrict the operations of food trucks. Three weeks after opening her truck Duck N Roll in Chicago back in 2011, Amy Le received a ticket for operating 150 feet away from a wine bar. The law stated that food trucks must operate at least 200 feet from any restaurant. Le was naturally displeased, telling the WSJ, “It is a free market. Let the consumers decide when and where they want to eat.”

The new form of retail isn’t limited to food, either. Instead of ovens and fryolators, Nashville’s Trunk is filled with men’s and women’s clothing and accessories. Selling these items out of the back of a truck means Trunk can bounce around to different events around the city where potential customers will likely congregate. Kaelah Flynn, owner of another Nashville fashion truck called Honeybean Mobile Boutique, hopes that similar retail trucks could combine forces to assemble temporary shopping areas, much like food trucks build temporary food courts. “It would be great to build a small community of fashion trucks kind of like how food trucks are now,” Flynn told the Nashville Business Journal.

Despite growing concern, many think that mobile vendors—be it hamburgers or handbags—shouldn’t be considered meaningful threats to their stationary counterparts. Brad Daniel, owner of Bow Chow food cart in Missoula, MT, told Montana Kaimin that “if established restaurants are threatened by small-scale food vendors then they’re doing something wrong…we’re definitely smaller, but they have the infrastructure and finances to compete with us.”

To quell fears of retail disruption even further, many mobile vending operations serve as incubating stages for future brick and mortar locations. Boston’s own Chicken & Rice Guys are only a few months away from opening a brick and mortar location while maintaining an impressive fleet of four trucks. Popular Brookline eatery Rami’s, a Mediterranean restaurant at 324 Harvard Street, has gone the other way—adding a truck under its name that will serve the Boston and Cambridge areas. Flynn plans on making this same transition with Honeybean.

So is mobile vending truly affecting the way that retail establishments are approaching their real estate needs? The answer is yes, but only in small bursts for now. It will likely displace a very small number of brick and mortar shops, but as evidenced by Rami’s, Chicken & Rice Guys, and Clover (another Boston eatery with both restaurants and trucks) there remains an inherent value to a permanent locale for one’s brand. It seems mobile vending may not just be a way for consumers to diversify their lunch break, but a way for retail establishments to diversify their business models.

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3Q14 MarketView Reports Released

by Suzanne Duca, Director of Research

Boston Office (click to download):
The Downtown Boston Office market continued to tighten during the third quarter, experiencing 847,000 sq. ft. of positive absorption. This brings downtown Boston’s 2014 year-to-date absorption to over 1,500,000 sq. ft. Boston’s central market especially benefited from the tightening East Cambridge market, with two tenants over 100,000 sq. ft. announcing plans to move across the river.

Cambridge Office/Lab (click to download): 
The Cambridge Office market continues to be one of the tightest submarkets in the country, despite what the overall 3Q 2014 statistics might say. With several large givebacks of space from tenants relocating to downtown Boston, the 388,000 sq. ft. of negative absorption recorded this quarter will serve as a needed relief valve to the office market. The Cambridge Lab market saw its third consecutive quarter of positive absorption, posting 49,000 sq. ft. of positive growth driven by a handful of newly public biotech companies.

Suburban Boston Office (click to download):  
The Suburban Boston Office market was driven by robust demand and organic growth from small, mid and large users in Q3 2014, posting almost 550,000 sq. ft. of positive absorption. New leases outpaced renewal activity with six tenants finalizing deals totaling more than 100,000 sq. ft. each in Q3 2014. As a result, vacancy decreased by 30 basis points quarter-over-quarter to 17.0%.

Suburban Boston Industrial (click to download):  
The Greater Boston Industrial market saw 751,000 sq. ft. of positive absorption in 3Q 2014. This pushed vacancy down 90 basis points quarter-over-quarter to 14.6%, its lowest point since the fourth quarter of 2007. The first new industrial construction in years is underway as The Maggiore Companies is building a 200,000 sq. ft. warehouse at Myles Standish Industrial Park in Taunton.

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DisruptCRE 2014: Event Recap

by Lenny Pierce, Research Analyst

Last Thursday afternoon, the Seaport’s District Hall hosted DisruptCRE, a “first-of-its-kind commercial real estate/technology event designed to connect disruptive ideas with capital and commercial real estate professionals.” The event consisted of four panels that focused on the major players in the modern disruption of commercial real estate, new theories regarding workspace utilization, crowdfunding as it applies to real estate projects, and the energy use and sustainability of modern buildings. A thematic through-line of the afternoon was the idea that there currently exists a major gap between the current MO of commercial real estate and the emerging technologies that could change it for the better.

The first panel, Meet the Disruptors: Innovators Driving Change, featured notable thought leaders in the modern disruption of commercial real estate, including CBRE’s own Elie Finegold. Duke Long, who has been disrupting real estate long before it was cool to be disruptive, moderated the panel. These “disruptors” stressed how technology has the power to facilitate networking between real estate professionals and how the mobility it affords these professionals will only work to streamline their operations.

The energy efficiency of buildings was discussed in a panel titled The Science of Building Systems. Panelists identified data-driven operation cost tracking and increasing pre-fabricated building materials as major forces that could make the construction and operation of buildings far more efficient going forward. The panelists also discussed some avenues for utilizing the heat generated from data centers—a resource that is routinely wasted. Buildings across the world have started to pump in heat from neighboring data centers in an effort to minimize their heating bills. In 2011, Microsoft even proposed applying this concept to heating homes in a paper titled The Data Furnace: Heating Up With Cloud Computing.

DistruptCRE_outside the boxParticipants on the Inside the Box: ReThinking Space panel discussed the increasing density of workspaces—a trend that will only gain momentum since at present only 40% of space in the typical office is actually used for working. These guests also spoke to the decreasing value of privacy in the modern office, noting that the collaboration afforded by an open work environment is more useful than any exclusivity individual employees might lose. Naturally, any business will have the periodic need for privacy, meaning that a workspace completely devoid of closed quarters is unlikely. That, along with the constant struggle against corporate inertia, will likely mean a happy medium will be landed on that allows for both dynamics.

DisruptCRE_crowdfunding2The Crowdfunding: A Tectonic Shift in Real Estate Investing panelists discussed the latest emerging avenue for investing in real estate—crowdfunding. Panelists Benjie Moll and Bonnie Burgett, founders of “democratized” real estate investment platforms (Arx Urban Capital and Sourced Capital, respectively), discussed the challenges to crowdfunding real estate projects, including the lack of face-to-face interaction with actual real estate professionals. Ultimately. they felt that minor anxiety-inducing kinks like this are outweighed by the inherent value of an investment space so perfectly catered to young entrepreneurs—a group that has traditionally had difficulty securing funding through traditional methods. An institutional investor might be wary of an innovative real estate project managed by a 26-year-old, but a similarly “green” 26-year-old investor may not be. Could the best way to combat skepticism be to stop talking to skeptics?

The event closed with a series of 20 super-condensed business pitches from tech startups in the commercial real estate industry. Very much in keeping with the theme of efficiency, each pitch had to stay under 45 seconds, forcing the representatives to boil their business models to 4-5 sentences.

For more information about DisruptCRE 2014, visit

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CBRE First Half 2014 Cap Rate Survey

CBRECapRateSurveyWe are pleased to present the CBRE Cap Rate Survey for the first half of 2014, which highlights investment trends for all property types in each of the key markets across the U.S. This survey reflects the knowledge and collaboration of CBRE’s Capital Markets, Valuation & Advisory Services and Research professionals who provided their estimation of cap rate ranges for the first half of the year, based on recent interactions that our professionals have had with active investors in their market.

We hope that this report will help provide you with perspective about the market as we see it today. Given the ongoing volatility in the market, we realize that cap rates are rapidly shifting and difficult to pinpoint. Accordingly, please keep in mind that these figures are estimates only, and actual cap rates for a given asset will vary depending on any number of extenuating factors. If you have a question regarding a specific property, or if you would like to discuss this information further, please feel free to contact us and we will connect you with the appropriate real estate professional.  Please visit the links below for more information:

Click here to download the survey.

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As Promised, 3Q14 Hartford Stats

by Suzanne Duca, Director of Research

The third quarter 2014 statistics for the Hartford market have been published by the CBRE/NE Creative+Analytics team. Click the links below to download quick reference guides.

Click here for 3Q14 Hartford Office Statistics

Click here for 3Q14 Hartford Industrial Statistics

Be on the lookout for our MarketView reports later this month!

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