Space unlimited - The end of an age old tradition

The question of property ownership reaches back to the ancient philosophers, Plato and Aristotle, who held different opinions on the subject. Plato thought private property created divisive inequalities, while Aristotle felt private property enabled people to receive the full benefit of their labor. Whatever the case might be, the concept of property is central to the very ideas of ownership, wealth, and capitalism. After all, money is not actual property and it's value is only transparent. How many times have you heard your parents talking and utter a phrase like "...and that was in 1965 dollars, which is like a million dollars today..."? Real property however, be it gold or real estate has always been thought to "hold value" if not "increase in value". Value however is like money itself a variable concept. The value of something is only determined by what people who don't own it are willing to pay for it. The perfect example is the price of gold. Gold is no more rare or useful that it was five years ago but it's price has risen from $600 to $1600 (per oz.) in that time.

Why is that you ask? Short answer: Because people are willing to pay more for it and there is a limited supply of it. But what does this all mean for commercial real estate? Let's take a poll: what do the following businesses have in common?

• Record stores
• Video stores
• Book stores
• Video arcades stores

Yes, they've all been replace by their online equivalent. What's more is, it hasn't fully happened yet, but you can very likely add the following to the list:

• Office supply stores
• Electronics stores
• Other specialty/hobby/gaming stores
• Personal hygiene supply stores

And that will basically leave you with a large number of grocery stores, eateries, and clothing stores. Even the clothing outlets are mostly online now. They're becoming mostly a place where you can try things on then shop online for them.

And then the coup de grâce to the commercial real estate market is the advent of virtual private networks that allow employees to mostly work from home, eliminating the need for billions of square feet of office space around the world. 

So basically now we're down to food places, and living places. What is going to fill the void left behind in commercial real estate? Sure, there will be tons of warehouses, call centers, and server farms, but those can basically be anywhere now. With ever increasing supply and little demand for commercial space, unless a big game-changer enters the market with a large demand for space, I predict a lot of conversions of commercial into residential real estate, along with a flood of bankruptcies and foreclosures in the next 10-20 years. 

As usual, I'm sure I've taken some wild assumptions and completely missed something somewhere, so I invite you to continue this conversation as I certainly hope I'm wrong.