How CRE Trends Have Changed Over the Past 2 Years
The last two years have seen numerous changes for Commercial Real Estate (CRE). New technologies, businesses, policies, and other industries have expanded the ways CRE is used. Keeping up with the changes and new considerations required will give you the advantage you need to stay ahead and get the most from your investment.
The following are the most noticeable trends that have surfaced over the past 2 years:
How CRE Trends Have Changed
- Emergence and popularity of eCommerce. This has helped the CRE market recover financially, due to the recession and pandemic, and has allowed it to thrive. Its most significant demand was seen from 2016 to the present and will likely become a new standard. This has shown an increase in warehouse and third-party logistics space. With the rapid increase in online use, many people rely on virtual shopping instead of visiting a store.
- Profitability. A major positive has been the increase in returns as we have seen a surge of 2% up to 4% quarterly on commercial property. This type of increase is something that all those in the CRE market want when considering the bottom line.
- Occupancy and rental rates. As a result of an increase in occupancy and rental rates, billions of square feet of commercial real estate have been added to the market. As of 2019, the average asking net worth has stayed well above 7%. With vacancy rates diminishing, the CRE market is moving forward at a fast pace, which is promising.
- Design and space. With the rising needs of eCommerce, the CRE market is creating new designs with this in mind. As technology advances quickly, renters and buyers need a space for their sorting and shipping solutions to keep up with the high demand. This can mean higher ceilings for vertical racking systems or improved electrical systems, and better structures for enhanced cooling for storage. These new designs are now being built with this new technology in mind.
- Along with new tech and its demands comes a new, higher cost for these trends. The price per square foot has increased consistently with cap rates showing a decline in the past 5 years. This higher demand for better commercial property has elevated costs for renters and buyers.
As you can see, the CRE market continues to be a strong one for investment, especially if you know what to look for. Consulting with an expert is the best way to interpret the ever-changing trends of this industry.
At Level Realty, we’re focused on not only adapting to these new trends but help you find the property you need in this ever-changing landscape of the real estate. We offer investment sales for clients and customers with all their property acquisition and disposition needs. Since nothing is truly one size fits all, we offer commercial leasing strategies and programs specifically designed for your specialized criteria. Contact us now to get started!
Sources:
https://www.cre.org/external-affairs/2019-20-top-ten-issues-affecting-real-estate/
https://www.ccim.com/cire-magazine/articles/2020/summer/the-only-constant-is-change/
https://rethinkcrm.com/blog/changing-cre-landscape/
https://www.nolo.com/legal-encyclopedia/pros-cons-investing-commercial-real-estate.html
https://www.sciencedirect.com/science/article/abs/pii/S0264275115300044
https://www.diva-portal.org/smash/get/diva2:1335017/FULLTEXT01.pdf
