With interest rates expected to go up and rising construction costs, commercial real estate investors may look to emerging markets that will provide sustained growth. Some of the CRE markets that are thriving in 2019 include:

Industrial Real Estate

As the retail industry continues to be compressed, more businesses are opting for e-commerce. Some retail establishments are getting rid of their brick and mortar locations and opting for electronic stores since many customers prefer online shopping. This increases the need for warehouse, shipping and logistics buildings.

Retail

Although retail has slowed down in recent years, customers are seeing some previously online-only retailers opening up brick and mortar locations, such as Amazon Books. Additionally, retailers will be looking for a better and more efficient presence in the brick and mortar space.

Technology

The technology market continues to observe sustained growth. Many CRE investors are interested in building and construction technology, coupled with more transparent reporting of analytics. Machine learning and other technology continues to improve the overall design, organization and management of firms. Demand for smart buildings is higher. Some of the core technologies that tenants want include tech-enabled security, property access, safety and building efficiency. Many workers are moving away from traditional jobs, the demand for co-working spaces is also higher. Artificial intelligence in these properties is also increasing.

Green Building

There is also a renewed focus on sustainability due to reports on climate change and environmental concerns. Many CRE investors are considering the environmental impact when constructing properties and are incorporating green practices as a model for their business.

Secondary and Suburban Markets

A move to secondary and suburban markets began in 2016 when residents in expensive primary markets like Los Angeles and New York City began to relocate to thriving secondary markets. Approximately 2.6 million Americans moved from large cities to suburbs within the last two years. Smaller markets like Phoenix, Charleston and Boise are expected to grow at a much faster rate than some of the largest primary markets. Millennials are particularly drawn to these markets due to job growth and a lower cost of living. Millennials can often secure larger properties and more affordable housing when they move to these secondary markets. Commercial real estate investors can watch migration patterns to smaller areas, which will foretell the expected demand for retail development and employment centers. Additionally, residents in these communities want to receive higher-end amenities, so CRE investors that anticipate these needs can experience a competitive advantage over others.

Get Help from Arthur Nachman
If you would like to invest in any of these thriving markets in 2019, 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.