With the year coming to a close, it is time to look toward the new year to determine the changing landscape of commercial real estate. Some predictions for CRE in 2019 include:
High Commercial Asset Pricing
Commercial properties have been steadily rising over the last few years, and this trend is expected to continue. Apartments, industrial and suburban office properties realized significant gains over last year at 11.6%, 6.5% and 6% respectively. Although these prices are at record levels, they are maintaining these higher values.
More Automated Transactions
Fintech is expected to continue to disrupt the commercial real estate market with sizable investments expected to follow it. This helps establish more automated and efficient transactions.
New Real Estate Construction May Decrease
The labor force availability in construction and skilled trades is low, expecting to contribute to a decrease in construction and an increase in cost.
Certain Markets Expected to Be Market Drivers
Due to the high cost of focusing on urban developments, many investors will look for other markets. Smaller U.S cities are an optimal choice for many investors because many businesses are locating there for reduction in costs and availability of labor. Millennials continue to return to these locations, bypassing the denser urban areas. Many of these areas are in college towns. They are often coveted for residential purposes, which help to populate the area and increase the need for commercial work and industrial space.
More Amenities Will Be Added to Properties
Apartment and multifamily developers and landlords will vie for the attention of tenants by adding newer amenities to their properties. These amenities include communal gardens, coworking spaces, dog runs and movie theaters. Smart home options and service-economy firms may also be rolled out to appeal to more tenants.
Commercial Spaces Will Be Revamped
With a greater number of startups, ecommerce sites and other small businesses, the need for large open spaces is decreasing. However, these commercial spaces still need to be occupied. CRE investors will revamp these spaces to provide more efficient uses of space, such as coworking spaces and smaller spaces.
Additionally, buildings will be adapted to meet the needs of new tenants, such as urgent-care medical facilities, financial service firms, entertainment venues and fitness providers.
Developers Will Focus on Greater Sustainability
Given serious reports regarding climate change and the danger to the environment, developers will refocus their attention on renewable goods and other sustainable options. More developers will embrace green practices and incorporate them as part of their core investment approach.
Parking Lots Will Need to Be Adjusted to Make Way for Technology
Older parking lot structures may need to be modified to meet the technological needs of today and emerging trends. For example, multifamily units may need to install plugs and other mechanics to provide for hybrid cars. Rideshare apps will increase the use of more delivery drivers picking up goods from commercial locations. Parking spaces may need to be reserved for these unique needs. Working with a knowledgeable commercial real estate broker who keeps a pulse on the latest trends can help explain other emerging trends.
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