The market has seen several setbacks since the start of the pandemic in 2020 but the commercial real estate industry has been standing tall and strong. Although there were some negative forecasts and surprises surrounding the office and retail commercial real estate market, it continues to perform well. The commercial real estate outlook is bright, with a few notable exceptions. As we move into a new quarter, here are a few commercial real estate market trends to watch out for.
Commercial Real Estate Trends to Watch
Before you consider investing in commercial real estate, take a look at these trends that will rule the market in the coming year.
The multifamily market has recovered significantly from the days of the pandemic and vacancies have hit a significant number in the past few quarters. The good news is that the vacancies have gone back to the levels that were seen in 2019.
Impact of E-commerce
All of us are aware that e-commerce has impacted brick-and-mortar retail but the effects haven’t been so significant. The retail vacancies have ticked downward throughout the year but they continue to show growth.
Recovery is on the Coasts
A lot of people have moved to hotspots in the Central U.S. like Austin, Nashville, Texas, and more but there are several multifamily properties in New York, Los Angeles, and other coastal cities that have already returned to the pre-pandemic levels by now. The lodging in areas that are heavily dependent on tourism is slowly recovering.
We Are Working Remotely For The Near Future
The future of the office remains unknown and many employees are adopting remote work. Some of the tech giants have committed to 100% remote work and companies are leasing their properties in major U.S. cities.
Upgraded Rental Spaces
The high cost of single-family homes with the renters spending more time at home has led to a surge in the demand for large, high-end units. Many renters are upgrading from one-bedroom spaces to two-bedroom spaces so that there is enough place to work.
Time To Address The Missing Middle
There is not enough workforce housing in the U.S. and this is where municipalities need to work. They need to offer incentives and the industry could benefit from public-private partnerships to ensure that the workforce has adequate housing space.
Opportunities in the Commercial Real Estate Market
Let’s take a look at the opportunities and benefits of commercial real estate investing.
- Efficient And Affordable Workforce Housing
With mixed-income housing developments, there is an opportunity to increase the supply of affordable housing. The right public-private partnerships can make it possible to increase housing density.
- Better Infrastructure
A move to build and update infrastructure can lead to better roads and bridges that will help shorten the commutes and allow for quick e-commerce deliveries. This will ultimately benefit the economy.
- Technology Upgrades
The adoption of electronic payment has grown over the past few years and this has led to a rise in electronic rent payments. Even the residents’ demand for electronic payment is rising and it is time for owners to embrace digital rent collection alternatives.
There is tremendous potential for the commercial real estate sector to contribute to the growth and development of the economy in 2023. If these opportunities are considered and worked upon, they can benefit people and the real estate sector.
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