Changes You Need to be Prepared in Commercial Real Estate in 2020

What Changes You Need to be Prepared for in Commercial Real Estate in 2020

What Changes You Need to be Prepared for in Commercial Real Estate in 2020

2020 Commercial Real Estate changes

Commercial real estate investors must always be aware of changing trends in the market. They realize significant profits when they can anticipate emerging demands in the market and have cultivated their properties to commercial tenants. Here are a few changes that you should be prepared for in CRE in the next year.

Focus on Employee Experience

While the current focus for employment centers has been on cost savings and space efficiency, an emerging trend is to focus the property on the employee experience. Millennials are currently the largest group of employees and many of them report that their working environment is important when they choose an employer. Commercial spaces should be built to inspire creativity and encourage collaboration.

Impact of Technology

Technology will continue to directly impact CRE, from determining the most practical use of space, valuing property and operating the building. Additionally, technology may limit the importance of location on the CRE market. Many buildings have outdated technology that is far behind newer construction. Building control systems related to HVAC, lighting, elevator service and parking were previously manual systems, but new technology allows these systems to now be operated on computer servers and remote Internet access.

Tenants want the latest technology at their fingertips, so many CRE investors are in the process of integrating and automating as many systems as possible. However, CRE investors must also be sure to address the cybersecurity concerns of integrating this technology. CRE investors must learn to adapt quickly to emerging technologies.

Technology is also an important consideration in the employment context. Intelligent apps, virtual personal assistants and augmented reality can provide more customized and responsive workplaces.
Technology also changes consumer behavior. For example, ecommerce has decreased the retail industry while increasing industrial real estate since it is needed for warehouses and logistics centers. Ultimately, technology will also affect supply chains through the use of automated vehicles, warehouse space demand that may be aided by robotics, data proliferation and property security.

Population Migration

One of the larger trends that will affect many real estate markets in 2020 is population migration, namely people moving from large expensive cities to secondary markets. There are many reasons why people move, including business conditions, technology, tax policies, climate change, natural disasters, wanting to be closer to family, job opportunities, etc. CRE investors must be aware of these demographics so that they invest in an area where they will see their money grow instead of investing in shrinking markets.
In recent years, coastal cities, the region from Boston to Washington, D.C. and the Pacific Northwest have realized tremendous growth. However, secondary cities have also realized an uptick in population, including Nashville, Atlanta, Charlotte, Charleston, Greenville and Raleigh-Durham. Millennials are flocking in droves to smaller cities and the suburbs due to getting more property for their dollar and experiencing a lower cost of living.

What to Keep in Mind

Since millennials will make up a major component of the CRE market, many of the expected trends will center around this demographic. Digital natives will have their demands met with access to technology, human resources, real estate and support services that are tailored to their particular needs.

Get Help from Arthur Nachman

If you would like to invest in any of these thriving markets in 2020, it is best to contact an experienced professional who can guide you through the process and protect your interests during the transaction. Contact Arthur Nachman to schedule a consultation to learn more about how he can help your investment strategy.

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