Commercial real estate (CRE) is booming across the country. CRE properties have sold at record levels with the support of private capital. But will rising interest rates slow the market? Over the past year, commercial real estate has been one of the strongest sectors in everyone’s real estate portfolio’s, but the fluctuation of the economic market could cool the market off. The real estate market is heavily dependent on market trends, and the following trends are predicted to affect the over the next couple of years.
Brick and Mortar Resurgence
Large retailers may be shutting their doors and leaving shopping centers empty, but they won’t stay empty forever. Many online retailers` are jumping at the chance to fill these spaces and establish a brick and mortar footprint for the first time. More companies will join the likes of Amazon, Casper, and Athleta and make a move to the vacant spaces creating a need for new commercial properties. Online companies considering the jump to a brick and mortar location should make their decision quickly because these spots will fill up quickly and will almost double in rent once they become few and far between.
Commercial Real Estate Tech
As technology continues to grow, it is important for commercial real estate to integrate as much of that technology into their properties as they can. Global companies are heavily investing in real estate tech companies and allowing startups to branch out into more innovative technologies that simplify property management and research. New technology is developed every single day that could be beneficial to the CRE market. Competitors looking to seize the opportunity to use new tech will also start to make a major push into the market.
The Millennial Migration
Most major metropolitan areas have seen a huge shift in the housing market among millennials. As the generation approaches their 30s, they are moving out of cities and looking to start lives in the suburbs and creating “urban-burbs.” They are bringing trendy retailers out of the city and creating a push for them to open storefronts in the suburbs establishing a need for more commercial spaces. Companies are even establishing offices outside of the city to attract a larger millennial workforce while also saving less on the rental costs of city office spaces.