Factors That Could Affect the Commercial Real Estate Market
Have you considered investing in commercial real estate, or are you a current investor? Economic challenges and changing trends can be unnerving when you are making such significant investments. However, if you know the factors and trends that could impact your investment, you have a better idea where profits can be found. Therefore, these are a few factors that could impact the market.
Technology Adoption Growth
It seems as if new technologies are released every day. The commercial real estate market is no different. Like many other real estate investors, you may consider adopting technologies that help you better manage your properties.
Not only can new software packages quickly, efficiently, and accurately analyze each of your investments’ performance, but they can also be used to identify the needs and desires of your tenants. In addition, many new technological offerings, such as smart metering, can actually help lower costs.
Industrial Sector Growth
E-commerce is experiencing exponential growth as more retailers are moving online, which has expanded the need for warehousing and distribution space. Therefore, industrial property investments are on the rise. Although retail stores still experience significant traffic and revenue, online sales increased to 17% in 2016, and this e-commerce growth trend is expected to continue.
Increased Demand for Community Spaces
Event and community spaces have increased in demand. Individuals, especially those in multifamily properties, desire venues where they can congregate. These spaces should be flexible in their use, so the building or neighborhood can host a variety of events, from farmer’s markets to flea markets.
Co-Working Is on the Rise
Co-working spaces are in high demand. These properties offer multiple companies and individuals the space they need to do their work. You may find tenants who want to lease small spaces initially, but they may increase their space needs as their businesses grow. You could also attract service providers that serve these companies and individuals within the building.
Like many co-working space investors, you should leverage or balance your co-working spaces to reduce your risk. Although the rent you receive from these tenants tends to be higher than rent for other types of properties, protect yourself from failing deals.
Overall Growth Is Still Strong
Over the last few years, economies around the world have experienced slowed growth. However, the U.S. real estate market has stayed strong. This growth is expected to continue as long as interest rates remain low.
As you review your current commercial real estate investments and analyze new purchases, consider the factors that could affect your bottom line.