Whats to come of retail and future proofing commercial real estate investments, thoughts?
This post is mostly context related to my specific situation (though im sure its a story seen in many cities across the country) and a call for discussion.

To preface I guess, it should be known that I've only worked in commercial real estate for about 5 years but in all that time I've only done business in a very small and massively successful market and its surrounding areas in a large metropolitan city. I grew up around these neighborhoods before I became involved in them professionally so I've come to know them pretty well.

This neighborhood has attracted significant investment in the last 2-3 years especially from out of town  investors, some international. I've seen some buyers make 200&amp;#37; returns on vacant properties without investing a dime in improvements or leasing. We have capital equity companies with more money than they can put out into the market inflating prices to new local records every year.

Now, this markets tenancy went from industrial warehouse/manufacturing in the early 2000's to art studios, to galleries and trendy coffee shops and boutique retailers and restaurants in the span of 10 years or so. The problem we're seeing now is that sale prices have gotten to unsustainable levels in the sense that the neighborhood cannot attract tenants that can sustain the rent that new investors have to ask in order to justify their purchase. My firm is sitting back and watching for now. There's talk about upcoming zoning changes that will take everything vertical so really people are buying into development opportunities possibly. My office has been wary of that approach and we're skeptical of the real estate trends both locally and generally that we're seeing. I know for a fact one the aforementioned capital equity had a fund specialized in this neighborhood with close to a billion in capital, and the manager  (very young and green) of this fund was under a lot of pressure to place the money into investments quickly. The latest record setting sale in this area is on a prime location that has not been able to attract a single tenant decent credit tenant at its asking price. Even in the case where I've seen investors try to provide value and develop, there have been tenants that have gone out of business due to the adjacent construction diverting car and foot traffic. 

Which brings me to my first point of discussion. Has anyone ever seen or heard of a neighborhood go from international attention to failure due to over zealous investors? I may be wrong but it's hard to imagine any kind of tenant that could sustain the leasing rates actually coming to our neck of the woods. Doesnt seem like we're there yet and I worry investors are jumping the gun. 

Anyway, these thoughts/opinions indicate the overall outlook in my office. Overall though, we've come to be of the mind that real estate has gotten expensive in general. Also, my employer is just about as successful as he feels the need to be and want's put more time into leisure and family. That being the case we've sold a lot locally, where we've counted on high appreciation on relatively management intensive properties, and bought into triple net properties with national tenants on long term leases with very fair cap rates. Zero hassle, steady income.

Thing is nowadays with e-commerce being so prevalent and companies like Amazon expanding their operations into just about every market, theres real concern about the survival of these tenants. Since we've invested in these triple net properties Amazon specifically has become direct competitors or has acquired potential competition to just about half of our tenants. Moreover. some of these locations have been built to suit for massive retailers and would be extremely difficult to re-lease should the current tenant default on their lease. This is a concern that is constantly on my mind, and I know it keeps my boss up at night. We're actually going through this now with high credit tenant that went out of business with ten years left on their lease and we cant find anyone to occupy the space. Luckily it was one of our  smaller, but by no means insignificant, investments. In any case, the thought of these businesses failing keeps my boss and I awake at night. We're leveraged so a big picture trend against retail could sink us. Admittedly it would have to be very drastic but it begs the question... what is a safe real estate investment with moderate yields that an investor can trust in a long term these days? People go to banks less and less and do a lot of banking online. Walmart is shifting  a lot of its focus to selling stuff online in anticipation of changes in consumer behaviour, and general or even specialized retailers are facing huge competition from online retailers and delivery services. (I think for now we're still comfortable with our fast food chains). Assuming the worst, what happens to all these retail locations...

We have sizeable property for sale under contract right now and I feel like if not for 1031 exchange I get the sense my boss would take his time placing his money in small value add/rehab/conversions just for the fun of it or possibly even invest in local tech startups. 

So my other point of discussion boils down to the fact that I have an opportunity to advise on how to invest a relatively large amount of capital and to influence the direction of our firm. We're looking for the security and yield of something comparable to a triple net ground lease at least until our local market corrects but we're concerned about future proofing. I've pitched trying to find a leaseback on a server farm/cloud campus somewhere but I don't really know how to start looking for something like that. 

SO! Coming from an admittedly limited background where I'm seeing both small boutique retail struggling and experiencing the decline of large scale brick and mortar in general, I'm curious to hear some outside thoughts on the future of commercial real estate. 
[{"id": "e1yc8na", "text": "Sounds sort of like arts District in LA,which is still going very strong but too much residential development Downtowm has slowed absorption.", "replies": [{"id": "e1zcqr8", "text": "This could also be Wynwood in Miami, which is going very strong and there are talks of zoning up", "replies": [{"id": "e2a4lry", "text": "Ditto, i was thinking wynwood too. it looked like a clusterfuck when i was there a couple of years ago: i didn't get it, none of the underlying economics made any sense to me... but what do i know!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e1z7b1s", "text": "are you in Austin Texas?", "replies": [], "depth": 1}, {"id": "e1z8ltj", "text": "Apartments are a good hedge IMO ", "replies": [], "depth": 1}, {"id": "e20smrm", "text": "&gt;what is a safe real estate investment with moderate yields that an investor can trust in a long term these days? \n\nMiddle market multifamily in a mature market where there is little new product competition on the horizon. If your property and the comps all show 90%+ occupancy, you get a clean property with no deferred maintenance and no environmental issues and you dont go above 65% LTV, I dont see a downside. Pretty much a slam dunk. Yeah cap rates might be 5-6%, but thats the price you pay for a low risk and sustainable cash flowing investment that can help you weather a storm during a downturn. \n\nIf your particularly attracted to retail, one thing that e commerce has not disrupted is the strip center/neigborhood shopping center where most of the tenants offer services. There is very little retail in these. The tenants are nail salons, pizza places, karate studios, gyms, etc. If you can get a grocery store in there to serve as an anchor, your golden as it drives traffic. ", "replies": [{"id": "e2a4yi6", "text": "+1 for middle market multifamily, I have a contract out for one right now - they're trading for caps way higher than a year ago, but they're consistent and I think economy proof. There's margin here because your spread is high\nI would also take advantage of IO financing right now. I'm looking for a hold against the bibs - if i have margin and have fixed roi, i am not going to focus on principal buydowns. ", "replies": [], "depth": 2}], "depth": 1}]