An orange is a great representation of how you might look at the commercial real estate market. As a whole, this sunny-colored fruit represents all of the business that you could do, but when we peel it and open it up the individual segments are clearly distinct from one another – like the sub-markets, business needs and industries that are associated with each of your prospective and current clients. In theory, each of the businesses in a segment have similar needs and wants. 

The main reason commercial real estate companies divide markets into these smaller groups is so that the marketing team and sales team can better allocate valuable resources. That means rather than trying to create commercial real estate flyers, direct mail or develop email marketing that’s attractive to every business, marketers can use a more tailored approach and create appeal with specific businesses. That’s a big win, particularly in an industry that is so rooted in personal relationships. 

Like your commercial real estate marketing plan, market segmentation is not a do once and forget about it kind of thing. Continually changing technologies, emerging industries and a war for talent, are disruptive forces that are bound to affect the commercial real estate market just as they will in every other market.  In fact, Deloitte in their 2016 Commercial Real Estate Industry Outlook states “…disruptive forces have the potential to redefine the current property market segmentation of primary, secondary, and tertiary, and consequently, valuation. Incumbents will have to be smart about their location strategy as property location will be more important than ever.“ There you have it, one of the biggest names industry analysis is saying that segmentation strategies will be turned upside down.
So how do you stay one step ahead of these changes? Let both industry trends and general market trends serve as your guideposts for segmenting the market. Here’s a few examples of recent headlines indicating trends that may provide clues for building segmentation into your commercial real estate marketing plan.

“Off-Price Retail Awakens the Force with Shoppers”
With growing competition from online retailers, traditional brick and mortar retailers will likely seek lower cost, “off-avenue” space to support the sale of off-price apparel and home products. Additionally, retailers that are trying to create a blended online/offline approach may look for neighborhood warehouse space to support distribution needs.

“Millennials and fledgling entrepreneurs class A compromise in class B properties”
By 2030, the dominant players in the workforce will be millennials (people born between 1981 and 2000) and their need for more open, collaborative work environments will be fully present. Not only will you need to recognize this distinct segment, but you’ll need to adjust your marketing communications plan to one that is heavily centered on social media and search engine optimization. 

“Boutique fitness muscles in on prime real estate”
More than 54 million Americans have a membership to a fitness center of some sort. That’s a statistic certainly likely to make any investor take notice. Couple that with the fact changing workforces and all-the-time work environments are creating demand for fitness centers in prime commercial real estate locations and you’ve got another segment among those looking to invest in this industry or among growing businesses looking to attract top talent by being proximate to fitness amenities. 
One caveat to this whole idea of segmentation, is that you shouldn’t try to chase down every possible trend as a new market segment. Think broadly about these ideas, for example does combining the millennial trend and the fitness trend make more sense as one segment? Once your segment is identified, however, target your commercial real estate marketing plan accordingly.