Like many other industries, commercial real estate (CRE) has been affected deeply by the COVID-19 pandemic. The industry has undergone some major changes, and the trends that have emerged as a result could have a significant impact on real estate and investment deals.
While the current global health crisis is certainly the leading concern for CRE, there are other important factors that will be impacting commercial real estate in 2021 and beyond. Below, we’re listing four of the most important ones.
One of the biggest factors impacting commercial real estate has to be inflation. It is difficult to say whether the current high inflation is here to stay for years or if it’s temporary. According to economic forecasters, the economic recovery in the post-pandemic world could stimulate brisk increases in prices for a moment.
If the supply chain problem works itself out, then there is a possibility that the inflation could go down. One thing’s for certain – if it remains high or continues to rise, we can expect the Fed to raise rates.
Wider adoption and use of technology
The ongoing health crisis has certainly highlighted the power of data. The investors are taking advantage of the access they have to market intelligence. One way they’re using it is to operate freely regardless of their geographical regions or asset classes. This has resulted in a wider adoption and use of technology in the real estate industry.
What’s more, high-tech cities are rising in popularity and experiencing growth in population. According to a reputable Chandler AZ real estate agent, much of the population spike in certain areas is due to a number of innovative technology companies moving branches of their operations into towns. These include PayPal, Wells Fargo, and Bank of America, among many others. And while consumers get more control, the salespeople gain more flexibility with wider adoption of technology.
Higher demand for investment properties
Another major factor influencing the commercial real estate sector is the increasing demand for investment properties. This is especially true for secondary and tertiary markets. The market’s growth is expected to continue at the same rapid pace during the other half of the year.
The inflationary pressures combined with low lending rates are only going to fuel the demand, and the sizzling hot housing market is something investment property owners should definitely take advantage of.
Changing expectations of tenants and residents
Last but not least, another important factor worth mentioning when talking about commercial real estate in 2021 has to do with the expectations of tenants and residents and how they’re changing. The customer experience that they expect is shifting, and CRE leaders are expected to adapt to these changes and meet the demand of their consumers.
Aside from being drawn to tech cities and properties with digital features, tenants and residents are now expecting the places where they live and work to provide them with the same customer experience as they would usually get from a food delivery app. Those able to accommodate these demands quickly will reap most benefits and set themselves apart, ensuring greater sales and premiums.
Keeping pace with the growing industry trends is key to staying afloat in a competitive industry like commercial real estate. Not only will staying on top of emerging CRE trends help investors prepare for what lies ahead, but it will also help them navigate the ever-changing and ever-evolving real estate landscape with more ease and confidence.
This, in turn, will enable them to take advantage of the market’s opportunities while helping them successfully overcome its challenges.