July 2, 2024 at 6:00 am · Shelly Clark · Comments Off on In Maine, Evolution Drives Economic Prosperity

In Maine, Evolution Drives Economic Prosperity

By:  James W. Dinkle, Executive Director, FirstPark

Maine’s economy is strong, and the proof is in the proverbial pudding. In fact, our state economy is one of the strongest in the country.

According to the most recent data, Maine’s economic output grew faster than the rest of New England at the end of 2023, with a massive uptick in goods and services. In the fourth quarter of last year, the output of goods and services in Maine hit an annual growth rate of 4.4 percent—the highest in the region and even above the national average (3.4 percent).

Not only that, but take-home pay is increasing in Maine, with personal income seeing a 4.7 percent growth rate. In the income department, only Rhode Island finishes higher in New England.

Why the jump in economic output and personal income? There are many factors, but various sectors of the Maine economy are growing. Industry is thriving, including the manufacturing sector. The subsidies for US-based manufacturing via the Inflation Reduction Act puts Maine in a unique position to benefit from homegrown manufacturing for years to come.

One of the key factors is evolution on a statewide scale. Maine-based companies and entire industries are innovating, hiring, and expanding. From research and development to new sales and marketing techniques, economic growth is only possible when businesses large and small take advantage of new opportunities and find ways to enter new markets. Prospects become clients and customers, while new goods and services flood the marketplace. And that is happening here.

Maine is relentlessly competing for residents, especially business owners, entrepreneurs, and innovators who diversify and make our economy stronger.

While the state saw massive population growth because of the COVID-19 pandemic, it is important to keep selling the Maine way of life. This means selling places outside of Portland that are still viable destinations to live and work. People need to understand that our state is much, much more than “Vacationland,” although Mainers certainly find time to play, too.

As the saying goes, we are all in this together. I have worked in economic development at the state, regional and local levels for decades, and Maine has plenty to offer. Banding together, we can promote Maine’s strengths, such as quality of life, access to recreation, the four seasons and a bustling economy, too. Our state is a place for golf and skiing, but also business expansion, job creation and financial security. The same goes for offshore wind projects, sustainable energy initiatives and life sciences, plus shipping, receiving and manufacturing, to name just a few sectors.

Let’s not forget Maine’s potential. I serve as executive director of FirstPark in Oakland, so I see the value of “economic development” firsthand — not only the state’s recent accomplishments, but also the room for growth and business diversification. Fortunately, Maine’s collaborative spirit is tangible, with real estate developers and other constituencies often working together to fuel economic growth.

FirstPark came about through collaboration. Established in Oakland by the Kennebec Regional Development Authority (KRDA) — one of the state’s most unique economic development organizations — and supported by more than 20 member communities, FirstPark is a 285-acre campus that houses businesses of all sizes.

We currently have 148 acres of land available to be purchased, permitted by the Maine Department of Environmental Protection, Maine Department of Transportation, and Army Corps of Engineers. FirstPark is proud to offer 11 lots for sale, either individually or all together, with lot sizes ranging from seven acres to up to 50 acres. Businesses and buildings of all sizes are welcome, and the business park is not cost-prohibitive for start-up businesses and others looking to purchase land in Maine.

After all, Mainers are firm believers in entrepreneurship and proud supporters of local businesses. Some people may think that a small town like Oakland is cut off from the rest of the world, but Maine is more accessible than people tend to believe. Located 15 miles from the state capital, two miles west of the Kennebec River, and immediately adjacent to Interstate 95, FirstPark is conveniently connected to the rest of Maine and beyond. Whether businesses are trying to do work in Central Maine, the rest of New England or even Canada, there are easy transportation options in Oakland to take work anywhere.

The business park is more than a campus; we are a community. And that speaks to Maine in general. Our state has so much to offer when we work together as a community. If we sell the Maine way of life together, who could say “no” to that?

Jim Dinkle serves as Executive Director of FirstPark in Oakland, ME.  https://firstpark.com/

June 18, 2024 at 6:00 am · Shelly Clark · Comments Off on Bad for Business…

Bad for Business…

By: Justin Lamontagne, CCIM, SIOR, Partner | Designated Broker, The Dunham Group

The year was 2011, and a young, ambitious broker received a lead on a 30,000 SF industrial tenant in search of a simple warehouse with a few overhead doors and a loading dock. The broker swiftly compiled an inventory of 7-8 attractive options in the Greater Portland area and scheduled a property tour. Three months later, after some healthy negotiations and back-and-forth, a new lease was executed, leaving everyone satisfied with the experience and end-result.

Fast forward to today, the same broker with an identical requirement, cautiously explains to their tenant-client that the overall vacancy rate in Greater Portland is an unthinkable 0.66%. The inventory list and tour schedule are so limited that it now includes raw land, office buildings, and properties 30 miles from the preferred location. The tenant can’t believe there are no options for them to grow in Southern Maine, leading them to ask the broker for referrals out of state.

This dramatic anecdote is becoming all too common in today’s industrial sector. In simple terms, the lack of industrial supply in Southern Maine is detrimental to our economy. Analyzing this year’s Southern Maine Industrial Market Survey results, it’s shocking to note that of the 19 million SF in Greater Portland, a mere 125,000 SF is vacant. Even with sublet opportunities adding another 112,000 SF, the total available rate is a paltry 1.25%.

Expanding the geography of this year’s report to other parts of Southern Maine revealed that the supply/demand imbalance permeates throughout the region from York County to Androscoggin. Only Lewiston, among the 15 towns and cities, has what could be considered a “healthy” industrial market, where tenants might have some leverage. However, even there, the numbers are somewhat misleading, with virtually all inventory accounted for by 5-6 very large empty buildings. Indeed, a recent survey in Lewiston for a 7k SF industrial client uncovered exactly one suitable option, proving their reported 10%+- vacancy rate is deceivingly high.

So, what’s an industrial business to do? While new construction and land development remain options, they are costly and time-consuming endeavors. Therefore, I predict we’ll see more creative repurposing of office and retail spaces. This trend has already begun with some small success stories. And in 2024 we will have no choice but to consider if the interiors of empty office buildings or retail buildings can be gutted and otherwise retrofitted to accommodate industrial end-users. This concept’s success will depend on several factors falling into place, not the least of which is zoning. But for lower-impact tenants not requiring traditional taller ceilings and multiple loading docks, a single-story office building could serve as a decent warehouse with the right modifications.

Not surprisingly, industrial values, both for sale and lease, continue to appreciate dramatically. For the first time, average sale prices have surpassed $100/sf, reaching $104 based on over 25 industrial sales in the Greater Portland area. Smaller buildings under 10k SF regularly see prices at or above $150/sf, equaling replacement value. This proves that the often complicated and slow process of new construction is deterring end-users. And it further indicates that “shovel-ready” industrial land sites like the Innovation District at Scarborough Downs are the most successful model.

Lease prices are also on the rise, though not as dramatically as sale values. A 3% increase was calculated in 2023, but I anticipate a more significant increase in 2024. Most listed spaces on the market are now asking well above $10/sf NNN, reaching as high as $13-14/sf for smaller units, surpassing rates for Class B and low-A office spaces in many cases. This has led to sticker shock for industrial tenants, especially those new to the market or accustomed to years of rates near $5-6/sf. This push-back from tenants is partially accounting for the slower pace in lease rate increases. Unfortunately for them, basic supply and demand economic principles will usurp any heartburn tenants have looking at their real estate budgets.

My crystal ball isn’t insightful enough to project how to fix this problem. All I can do is identify the critical issue and hope that conditions improve for our local industrial businesses. And I can always fondly reminisce about the good ‘ole days of long inventory lists and property tours.

Original article located at https://www.dunham-group.com/uploads/2024-southern-maine-industrial-market-survey_digital_.pdf

May 14, 2024 at 6:00 am · Shelly Clark · Comments Off on The Greater Portland Retail Forecast for 2024

The Greater Portland Retail Forecast for 2024

On February 29th, 2024, Peter Harrington of Malone Commercial Brokers presented “The Greater Portland retail forecast for 2024” at the Maine Real Estate & Development Association’s (MEREDA’s) 2024 Annual Forecast Conference. The following is an overview of what Harrington presented.

Looking back at 2023, the retail scene in the greater Portland area remained resilient though we did see a slight uptick in the overall vacancy rate from 4.23% to 4.33%. A large portion of the vacancies in the market can be attributed to a few spaces. In Portland, where the vacancy rate stood at 3.9%, lease rates displayed quite a range, spanning from $8 to $40 per s/f for triple net spaces and $25 to $35 per s/f for modified gross spaces. Notably, the Old Port, which can be difficult to track due to the number of retail spaces, showed a vacancy rate of around 2%, with lease rates ranging from $40 to $75 per s/f on a modified gross basis.

There weren’t as many retail buildings sold in 2023, but one notable transaction was the sale of the West Elm building on Middle St. for $5.2 million, which included approximately 3,700 s/f of unfinished space on the lower level.

Scarborough stood out with an impressively low vacancy rate of 0.9%. Scarborough also saw the opening of the first Costco in Maine. Additionally, the ongoing development of the town center at the Downs project promises an enticing blend of retail, dining options, and recreational facilities.

In South Portland, a 5.1% vacancy rate persisted, primarily attributed to the former Sears space. However, the Maine Mall managed to achieve pre-pandemic sales levels despite operating with reduced hours. New tenants such as Box Lunch, Peapod Jewelry, Carters, and Miniso added vibrancy to their retail landscape.

Westbrook had seemingly high vacancy rates at 14.7%, which is mostly due to the former Shaw’s vacancy. The Rock Row development has continued to captivate interest, buoyed by attractions like REI, Market Basket, Chick-fil-A, and Cowbell Rock Row. On the downtown front, Westbrook exhibited strong occupancy and ongoing residential expansions.

Meanwhile, Falmouth maintained a steady vacancy rate of approximately 2%, with ongoing construction at the shops at Falmouth Sq. — a 20,980 s/f retail space that has already secured substantial interest, alongside plans for upper-floor condos ranging from $550,000 to $1 million.

Southern Maine is still a strong destination for tourists as well as locals. We’re seeing tremendous demand for space on the peninsula in Portland. Madewell opened at 75 Market St. a little over a year ago, it’s one of the top stores they have. Construction is underway to convert former retail banking and office space at One Canal Plaza to high-end retail offerings.

There are two ongoing historic rehabilitation projects by East Brown Cow, which will help contribute to the vibrancy of retail offerings in the area. One is on the corner of Middle St. and Exchange St.; all retail spaces at this location have been leased. The other rehab is at 121 Middle St. Both will be stunning properties when completed. A few weeks ago, we orchestrated a lease with Free People at 121 Middle St., which will be their first store in Maine. A 2,470± s/f retail space still remains next to this exciting new tenant. We are continuing to see the best-of-breed retailers realizing the value of Portland and continuing to expand here, complementing the locally-owned, award-winning restaurants, shops, and breweries.

One potentially adverse factor that could impact retail in 2024 is that interest rates are still high. This could lead to a slowdown in some of the retail that’s directly related to housing in the U.S. Weather has been another factor. There have been major weather events coast to coast which have affected retail a little bit since the beginning of the year.

Despite these factors, we think 2024 will be another good year for retail. It’s, as always, based on the U.S. consumer. Due to the strong wage growth, and additional jobs being added, the U.S. economy continues to expand. Without new retail space being added, overall vacancy rates will remain low.

Retail is a sector that everyone thought would no longer be as viable with the onslaught of online shopping. This has proven to be incorrect. People are still going out and shopping in physical stores. I don’t see that trend ending in the U.S. anytime soon. Frankly, it’s what a lot of people like to do, it’s about the experience.

Original article published March 1, 2024, https://www.malonecb.com/news-feed/2024/4/3/the-greater-portland-retail-forecast-for-2024

April 23, 2024 at 6:00 am · Shelly Clark · Comments Off on RECAP OF FEBRUARY 29, 2024 MEREDA REGIONAL FORECAST

RECAP OF FEBRUARY 29, 2024 MEREDA REGIONAL FORECAST

By Chris Paszyc, CCIM, SIOR | The Boulos Company – Partner, Broker

On February 29th Chris Paszyc participated on the “Regional Outlook” Panel at the Maine Real Estate & Development Association’s (MEREDA’s) 2024 Annual Forecast Conference. Below is a recap from his presentation.

AUGUSTA

The office market in Augusta has proved to be resilient and often surprising, bucking regional and national trends.  Office leasing and sales have held up well despite the work-from-home movement.  Furthermore, rents have seen an uptick in the past 12-18 months.  Augusta also had one of the largest investment sales to occur in Maine at Central Maine Commerce Center, which sold for $18.5 million in 2023.

On the residential front, Augusta’s City Council has a stated goal to encourage new and varied types of housing development.  This has led to a variety of single-and-multifamily project to be permitted.  However, many of them have yet to be constructed.  Given the difficulty and costs associated with debt, equity and construction pricing juxtaposed with market rents, it may be a while before we see shovels in the ground.  The leadership at Augusta also want to see industrial development, as their vacancy rate is practically zero.  Again, given the high costs of new development versus market rents, it will be difficult to move new developments forward.

WATERVILLE

Waterville continues to excite!  According to a recent tally by the Central Maine Growth Council, downtown initiatives investment now total over $100 million.  Some exciting projects on the slate for 2024-2025 include the Head of Falls Village on Front Street, spearheaded by a partnership of Todd Alexander at Renewal Housing and Josh Benthien at Northland.  This is the new 63 units planned, with a project budget of $36 million.  Demo and site remediation to start Spring 2024.  In addition, North River has 145 new units planned at Lockwood Mills – 65 units of workforce and market rate in Phase 1, with 80 more planned in Phase 2.  There’s also 120,000 sf of new industrial planned for the new Trafton Rd exit, a new Reny’s and a new $60 million performing arts center at Colby.

LEWISTON/AUBURN

In Lewiston/Auburn, there’s demand for housing – a market study states there is demand for 2,600 new market rate units, with downtown capturing 560 of those units.  There are numerous housing projects in various stages of development:

• Jason Levesque and Joe Mannisto have 320 units with approvals near Central Maine Medical Center in Lewiston
• The Residences at Great Falls on the Androscoggin have 244 units approved
• Dave Gendron has site plan approval for over 200 units in Lewiston, and John Gendron has 96 now permitted, with plans for over 1,100 in Auburn
• In all, Auburn as 475 new units in the pipeline for since 2020

However, the office market outlook for L/A is uncertain.  There are a number large office buildings currently not utilized.  In all, we estimate over 700,000 sf currently sitting idle or underutilized.  The alternatives are industrial conversion, housing or retail.  Or smaller subdivided office, just not likely with the existing tenants.

Industrial continues to dominate with very little functional vacancy.  Dave Gendron has started construction on another spec multi-tenanted flex industrial building in Auburn and permitting another in Lewiston after recently filling the last remaining vacancy.

In conclusion, Auburn is vying to become one of Maine’s federally designated Tech Hubs for advancement of innovative forest bioproducts with a large industrial project in the works around Exit 75.  That will be making headlines in 2024.

THE “DARK HORSE”

My “dark horse” bet for 2024 is the Jay Paper Mill redevelopment.  Developers are going thru SLODA to subdivide the land and buildings to make available for lease and purchase opportunities.  They’re also going thru with a gas turbine and solar facility taking advantage of the 150MW interconnect.  Recently, they announced a deal to sell a 60-acre parcel to construct a 300,000 sf plant that will manufacture oriented stand board (OSB).  However, it’s just the start for this 1,000 acre site with 900,000 sf of existing high-bay industrial space.

In summary, Central Maine remains an integral component of Maine’s commercial real estate landscape.

February 20, 2024 at 6:00 am · Shelly Clark · Comments Off on Factors Affecting the Value of a Company

Factors Affecting the Value of a Company

By: BerryDunn Professionals, Casey Karlsen, Senior Manager | CFA, ASA and Seth Webber, Principal | CFA, ASA, CEPA

Consider the value of the following two hypothetical companies. Anita owns A+ Manufacturing, a car parts manufacturer that employs 100 people. Roger owns a very similar company, D- Manufacturing, which also manufactures car parts and employs 100 people. These companies are both almost identical, and last year, they generated the same amount of revenue and income. A key difference, however, is in the management styles of the owners. Roger is extremely disorganized and has difficulty with record retention, locating information, and tracking and analyzing data. He is relatively inexperienced as a manager. Anita, meanwhile, is very punctual and organized and has 15 years of management experience. She relies heavily on tracking operational and financial data and makes this information readily available to managers and their teams. She believes in an organized, clean workplace, and her strong leadership and carefully maintained culture have resulted in employee tenure that is much higher than industry standards. Which company is more valuable?

Despite being identical in terms of service offering and size, most people would identify A+ Manufacturing as being more valuable. Alarm bells start to ring in a valuation analyst’s head when learning about the sloppy management style, lack of experience, and poor use of data at D- Manufacturing. The difference in value should be substantial. Despite generating the same amount of profit last year, A+ Manufacturing could be worth twice as much as D- Manufacturing because these risk factors may jeopardize future profits.

In addition to the risk factors from the above example, there are many other drivers of business value.

Valuation formula
In its simplest form, the valuation of a business can be reduced to the following formula based on earnings before interest, taxes, depreciation, and amortization (EBITDA). Factors that affect value do so by affecting the valuation multiple. Companies such as D- Manufacturing would be worth a lower multiple of EBITDA, and a higher multiple would be justified for less risky companies such as A+ Manufacturing.

Estimating an EBITDA multiple
A generic multiple often thrown around is 5x EBITDA. EBITDA multiples from the DealStats database have historically been in this range, but have come down in the last few years, as shown in the accompanying chart.1

Median Selling Price/EBITDA with Trailing Three-Quarter Average

EBITDA multiples vary widely by industry. For example, in the DealStats database, the median EBITDA multiple for retail trade was 3.7x compared to 6.1x for manufacturing companies.2 The chart below presents EBITDA multiples by industry from the DealStats database.

Selling Price/EBITDA Interquartile Range by Industry Sector (Private Targets)

Even within a specific industry, multiples can vary dramatically. For example, from the chart above, the median wholesale trade multiple was slightly above 5.0x, but the 75th percentile multiple for this industry was nearly 10.0x.

Factors affecting EBITDA multiples
Differences in valuation multiples from company to company reflect differences in risk profiles. High-risk companies command lower multiples than safe investments. The following chart illustrates how certain operational risk factors may affect the valuation multiple.

Other factors that affect valuation multiples include the following:

Access to capital
Supplier concentration
Supplier pricing advantage
Product or service diversification
Life cycle of current products or services
Geographical distribution
Currency risk
Internal controls
Business owner reliance
Legal/litigation issues
Years in operation
Location
Demographics
Availability of labor
Employee stability
Internal and external culture
Economic factors
Industry and government regulations
Political factors
Fixed asset age and condition
Strength of intangible assets
Distribution system
IT systems
Technology life cycle

One model to assess risk and select an appropriate multiple is the exit and succession planning software prepared by MAUS Business Systems (“MAUS”). The MAUS Business Attractiveness model assists analysts in assessing and diagramming the risk profile of a company. This model was developed to assess business attractiveness to potential acquirers based on common risk factors. Analysts can use this software as part of their assessment of an appropriate valuation multiple. This model is also a helpful communication tool because it provides a visual representation of a company’s risk profile and highlights the areas in which a company can improve.

Using this model, analysts assess a company’s risk profile regarding several key factors. MAUS then generates a report that includes a series of diagrams like the one below. Business attractiveness factors are positioned around the outside of a polygon. If a company performs well regarding a particular factor, a point is plotted toward the outside of the polygon. If the company performs poorly, a point is plotted toward the center of the shape. The points are then connected to visualize a company’s risk profile.

Business Risk & Value Factors

The larger the colored shape is in the MAUS diagram, the higher the valuation multiple should be. However, these factors do not all affect the multiple equally. The valuation multiple may be highly responsive to some factors and less responsive to others. Additionally, each factor may not have a linear effect on the valuation multiple. For these reasons, formula-based estimates of valuation multiples are often inaccurate, although a great place to start for a ballpark indication of value. For matters of importance where accuracy is paramount, we strongly recommend consulting with a valuation professional. In addition to valuation expertise, an outside party provides an independent, unbiased assessment of value.

Conclusion
The value of a business can be affected dramatically by its risk profile. Analysts value businesses based on a number of different factors that affect value.

Learn what risk factors your company may have and how those affect your business value by downloading our value driver matrix.

1,2 DealStats Value Index 4Q 2023, Business Valuation Resources, LLC (www.bvresources.com).

Original article published on 01.24.24, and reprinted with permission by BerryDunn, https://www.berrydunn.com/business-value

January 23, 2024 at 6:00 am · Shelly Clark · Comments Off on OSHA Recordkeeping Requirements

OSHA Recordkeeping Requirements

OSHA Injury and Illness Recordkeeping and Reporting – Post Form 300A by February 1

Brought to you by the Safety & Risk Consulting Team at Clark Insurance & Marsh McLennan Agency

Many employers having more than 10 employees are required to keep a record of work-related injuries and illnesses, (OSHA Logs). All establishments subject to this requirement must complete and post the OSHA Annual Summary Form 300A, even if no work-related injuries or illnesses occurred during the calendar year.

Are you partially exempt from the recordkeeping and reporting requirements?

Employers in certain low risk industries are exempt from these requirements unless OSHA, the BLS, or the Division of Occupational Safety and Health asks them to do so. Follow these steps to determine if you qualify for the partial exemption:

• Determine your NAICS, and identify the first 4 numbers.
• Review the Exception Table – If your first 4 numbers appear on the table, your company is exempt unless otherwise required.

Posting Requirement – By February 1 of each year you must:

• Review the 300 Log to verify the entries are complete and accurate.
• Complete the Summary Form 300A utilizing the information recorded on the 300 Log.
• A company executive must certify and date the 300A Summary Form.
• Post the Annual Summary from February 1 to April 30 of the year following the year covered.
o You must post a copy in each establishment in a conspicuous place or places where notices to employees are customarily posted.
o You must ensure the posted 300A is not altered, defaced, or covered by other material.

Electronic Submission Requirements (if applicable):

The electronic filing requirement applies to the below listed establishments:

• Establishments with 20 to 249 employees in specific industries with higher instances of injuries or illnesses must submit the information from the Form 300A electronically. Review a Full List of these industries.
• Establishments with 250 or more employees required to keep OSHA injury and illness records must submit the information from the Form 300A electronically.
• Upon notification, you must electronically submit the requested information from your OSHA injury and illness records to OSHA or OSHA’s designee.

Note: Employers can find instructions for registering and recording the 300A data on OSHA’s ITA webpage. Establishments have to submit the required information by March 2 of the year after the calendar year covered.

***NEW Additional Requirements for Employers with over 100 Employees

On July 17, 2023, OSHA announced a final rule that will require certain employers in designated high-hazard industries to electronically submit additional injury and illness information than what is currently requires but employers are already required to keep. This rule became effective on January 1, 2024, and applies to your 2023 submission.

The final rule includes the following submission requirements:

• Establishments with 100 or more employees in certain high-hazard industries must electronically submit information from their Form 300, Log of Work-Related Injuries and Illnesses, and Form 301, Injury and Illness Incident Report, to OSHA once a year. These submissions are in addition to the submission of Form 300A, Summary of Work-Related Injuries and Illnesses; and
• Establishments are required to include their legal company name when making electronic submissions to OSHA from their injury and illness records to improve data quality.

The final rule retains the current requirements for electronic submission of Form 300A information from establishments with 20-249 employees in certain high-hazard industries and establishments with 250 or more employees in industries that must routinely keep OSHA injury and illness records.

Resources

OSHA Recordkeeping – Overview | Occupational Safety and Health Administration
Cal/OSHA – Brief Guide to Recordkeeping Requirements
________________________________________

*If you have 10 employees or less, you are exempt, unless requested by OSHA or the Bureau of Labor Statistics (BLS) to maintain these logs.

If you have any questions or need assistance email us at RiskControl@MarshMMA.com

Article originally published on January 9, 2024 c8974405-c063-4824-8e0a-1c5ac8462903.pdf (constantcontact.com)

January 16, 2024 at 8:00 am · Shelly Clark · Comments Off on Construction Technology Trends

Construction Technology Trends

By David V. Jean, CPA, CCIFP, CExP |Principal, Albin Randall & Bennett

Contractors have always had to keep a close watch on technology trends to stay on the leading edge of the industry. But, historically, they have had more time for strategic planning ahead of adopting new technology. Since the pandemic, taking part in the digital transformation is a high-stakes, high-velocity endeavor. Leveraging the latest technology has become a necessary part of driving growth, increasing efficiency, boosting production, mitigating risks, and evolving with the changing needs of the industry and market. Here’s a look at some of the top technology trends in the construction industry.

Enterprise Integration
In today’s remote atmosphere, enterprise integration helps contractors access pertinent data and connect via user-friendly applications across various devices. In an era of 5G wireless connectivity, contractors can connect the office to the field. Project meetings can take place virtually to move forward without the need to gather in person.

When contractors use automated and cloud-based solutions, such as job costing, risk assessment, asset management, project management, or customer relationship management software, they can access the information they need anywhere, anytime. By automating the request for information (RFI) process, construction firms can reduce bottlenecks, paperwork, and travel while accelerating decision-making and progress.

Internet of Things (IoT)
Equipment loss and safety issues are significant liabilities in construction. Through IoT, contractors can install network-connected sensors to their equipment to perform real-time inspections and performance assessments, ensure on-site accountability, and take accurate measurements using smart devices.

These sensors may also be used in wearable safety equipment. Contractors often use drones for aerial imaging, but AI-powered image recognition can help contractors identify at-risk materials or high-risk trends in worker behavior.

Data Analytics
Data analytics is a game-changer in the construction industry. Access to data goes hand-in-hand with enterprise integration and IoT. By employing automated solutions, contractors can improve transparency significantly, which provides advantages now and in the future. For example, job costing software allows contractors to track projects in real-time to make adjustments before taking a loss. Because it compiles historical data on actual costs over time, this software also allows contractors to analyze future job profitability and make estimates with greater accuracy and less risk.

Through IoT, they can gather valuable insights on worker safety and accountability, job site and material risks, and equipment performance. Predictive analysis technology uses AI, statistics, forecasting analytics, performance management, trend analysis, and simulation modeling. In combination with IoT sensor data, this technology can help contractors with predictive maintenance.

Augmented Reality (AR)
Contractors can use AR applications for training purposes or to detect errors before breaking ground. AR applications can show machine operators fuel levels or alert them of maintenance issues in real-time. AR applications for wearable smart devices, such as smart glasses and smart helmets, allow users to superimpose safety warnings or data points (such as temperature or pressure), and assembly and repair instructions directly onto the job site.

3D-modeling applications help contractors transform plans into three-dimensional holograms. Using a smartphone or tablet, contractors can use building site monitoring applications to overlay 3D buildings in the planning process to avoid errors, unexpected costs, and rework.

Robotics
Robots are often used to perform repetitive tasks, such as bricklaying or painting. They can also help contractors complete work during labor shortages and perform work in dangerous environments to reduce injuries.

Cobots, which are AI-enabled robots designed to work alongside workers, are less costly, easier to program, and more versatile. Cobots can improve quality and consistency by applying pressure, welding, fastening, or making cuts in the exact same way across every run, which means they can improve your products and processes. According to Interact Analysis, by 2028, annual cobot revenues will reach nearly $2 billion.

Modular & Industrialized Construction
Labor shortages and the increase in cost and demand for resources have shifted the industry toward an innovative manufacturing approach. In modular construction, project components are produced offsite on a large scale and shipped to the job site for assembly. Because of its effectiveness and efficiency, modular construction is an increasingly popular option. According to MarketsandMarkets, the modular construction market will reach over $100 billion by 2025.

Industrialized construction (IC) is an expansion of modular construction movement. In IC, contractors use digital twins, which are exact replicas of physical assets, processes and systems, to support building maintenance and operations. Digital twins work as prototypes, collecting real-world information to prevent costly rework and mistakes. Contractors also use 5D Building Information Modeling (BIM) technology to create digital representations of physical buildings. These technologies limit downtown and accelerate and automate traditional design, production, and operational processes.

Contractors are also turning to IC to reduce costs associated with waste. The price of plastic products, steel mill and other metal products, and number two diesel has increased significantly, and the price of lumber is back on the rise. By using innovative materials in their IC processes, contractors can align themselves with industry trends that employ sustainable and green construction methods, use fewer resources, and result in a lower carbon footprint.

Contact ARB
ARB’s Construction Advisory Services Team is dedicated to helping contractors maximize both the financial and operational aspects of their businesses, so we stay up-to-date on construction technology trends and other issues affecting your industry. We provide industry-specialized accounting, tax, and advisory services for construction start-ups, established firms, and the contractors that own them.

I help contractors with software selection and implementation, profitability analyses, forecasts, projections, job costing, and more. Contact me today if you have any questions or would like to discuss your company’s tax, accounting, and business advisory needs.

Article originally published on March 7, 2022  Construction Technology Trends | What’s Ahead for 2022? (arbcpa.com)

November 28, 2023 at 6:00 am · Shelly Clark · Comments Off on Coworking in Modern Business: Evolving Trend or Here to Stay

Coworking in Modern Business: Evolving Trend or Here to Stay

By Cameron Foster, Associate Broker, The Boulos Company

Merriam-Webster defines coworking as the practice of working within a shared building, where multiple tenants rent working spaces such as desks or offices and enjoy access to communal facilities. According to Google, the first coworking space started in 1995 in Berlin, Germany. It was called “C Base” and was primarily used by hackers. The goal was to share space and knowledge to work on coding projects. In the United States coworking first started in August of 2005 when Brad Neuberg set up the first-ever coworking space in San Francisco, known as the “Spiral Muse.”

Since then, the trend has grown, along with the internet boom, cellular communication, and the connectedness of modern global businesses. The ability to increase staff, revenue, and global presence without purchasing real estate or committing to a long-term lease has been a huge win for some businesses. This, coupled with 21st-century technological advancements, the ever-inventive entrepreneurial spirit, and customers demanding more, has led to an interesting industry story.

The business idea came from a problem. The founders of these companies saw a need in the marketplace for “shared space” as small companies grew, launched their businesses, and started to hire. The goal was to create an option between working out of an entrepreneur’s basement and signing a multi-year commercial lease with a landlord. The use of coworking is also beneficial for businesses that are slowing down their operations. As a sole proprietor, you can rent a desk or an office to maintain a professional address at a coworking space, keep your business running, and maintain flexibility. Coworking can offer limitless advantages for early-stage and end-stage companies. Coexisting with other businesses can create an incubator of ideas and can also be a great networking opportunity, growing the professional and personal relationships of the business owner.

When it comes to catching the wave— or seismic shift—in how people work, this is a developing story. The Pandemic caught everyone off guard and spurred more companies to adopt work-from-home or hybrid models. Naturally, this creates a tougher road ahead for coworking businesses. WeWork was hit the hardest. Post-pandemic the company has shut down forty (40) locations.

In 2022, the Real Deal named the top ten coworking operators in the United States. All ten companies were established within the last thirty years, and they all share the same model: providing shared office space services for workers and companies looking for ready-to-operate space with low commitments in prominent locations.

https://therealdeal.com/new-york/2022/12/30/the-10-largest-co-working-operators-of-2022/

The office market is currently caught between companies that would like to return to the workplace and a tight labor market. If employees would rather work from home, and small businesses can continue to effectively scale, hire, train, and grow in revenue remotely, this will exacerbate the issue for coworking companies.

So, fad or future? I think coworking is here to stay as it serves a vital need for growing businesses and folks at the end of their business cycles looking for space to slow down operations. Much of the story is yet to be told.

If you are a tenant or a landlord and you have a question about whether coworking makes sense for your strategic real estate plan, please contact us at The Boulos Company.

Article originally published on October 31, 2023, https://boulos.com/coworking-space-in-modern-business-from-hackers-hub-to-business-necessity-is-it-a-fad-or-the-future/?mc_cid=ef0a973a8e&mc_eid=87a9b15008