Risk is a great word because it is both scary and full of positive potential. It can mean almost anything to anyone. Depending on the day of the week it could be either positive or negative. It could be proactive or reactive. It could even be controllable or non-controllable.
CRE occupiers (not to be confused with Service Providers, Investors or Managers) take space for one reason and one reason alone: to manage business risk.
It is fundamentally true that occupiers lease space so that employees can have a place to sit or customers can shop for goods or so that they have a place to ship goods from. But those are not the primary reasons.
Theoretically, no business NEEDS to have large, dedicated space for its employees. It is possible to have a 100% work-from-home or short-term rental flexible working model. The reason businesses take space is that many employees want to see that the company is investing in them. The space is there to mitigate the risk of not being able to hire and retain talent.
Your retail location could be anywhere in the world or even completely virtual on the web. You choose to locate where you do because you believe it mitigates the risk of being unknown and not selling enough to meet costs.
Distribution is even more fickle. You may definitely need warehousing space but the actual design of your network (small regional locations versus national hubs, etc) is entirely a risk management design. It’s about balancing your investment today against the probability that you will need to invest in something new tomorrow.
Risk management is the only game for real estate occupiers. Those on the other side of the CRE table know it and play to it. They’ll encourage you to take that extra 10% of space because it will mitigate risk. They’ll encourage you to lease for 7 years instead of 4 because of market risks. They’ll play to every risk fear you have to get you to give up your flexibility. The best defense you have is to anticipate it and think about the risks first and have a solid risk management approach already outlines.