The Future of Commercial Real Estate
The future of commercial real estate is always a hot topic of discussion. In the current market, there are so many factors to consider – from the impact of COVID on the industry to the rise of the sharing economy and the changing workforce.
This blog post will look at some key trends likely to shape commercial real estate in the rest of 2022 and beyond. We will also explore some of the challenges that businesses will face in the coming years when it comes to the office sector and working remotely.
Table of Contents
What’s the future of commercial real estate?
Commercial real estate impacts the economy and vice versa. This past year, the Pandemic has hugely impacted commercial real estate. The shift to Work-from-home has led to many businesses rethinking their office space requirements. Most companies have decided to get less office space or move to cheaper locations, while others are considering alternatives to the traditional office space altogether.
One trend likely to continue in the coming years is the rise of coworking space. These shared office spaces offer a flexible and cost-effective alternative to traditional office leases. They also provide a community feel that can benefit small businesses and startups.
What are the challenges for the commercial real estate business in 2022?
The commercial real estate industry is facing several challenges in the coming years. One of the biggest is the rise of the sharing economy. This greatly impacts the hospitality sector, with businesses like Airbnb offering alternatives to traditional hotel stays. This will likely lead to more people working from home in the future, which could reduce the demand for office space.
Another issue that the industry is grappling with is the changing workforce. The rise of the gig economy and the growth of the millennial generation is leading to a more flexible workforce. This is having an impact on office demand and the way that businesses are using their office space, with many companies now opting for coworking spaces and serviced offices.
Another big challenge facing commercial real estate in the coming years is the impact of climate change. Businesses must adapt their industrial spaces and operations to deal with more extreme weather events, such as floods and heatwaves. They will also need to address the issue of emissions from their buildings.
What submarkets have suffered most from the Pandemic?
Retail, hospitality, and entertainment have all been hit hard by the pandemic restrictions. The lockdown and social distancing measures put in place to curb the spread of the virus have led to many property owners in these sectors having to close their doors and slow down their operations.
Industrial Real Estate Will Keep Growing
Industrial demand in the real estate sector is expected to continue growing in the coming years, thanks to the continued rise of e-commerce. This growth will lead to an increase in demand for warehouse space and logistics facilities.
The industrial sector is expected to rebound quickly from the Pandemic as businesses adapt to the new normal of increased online shopping.
The need for affordable housing still far outpaces the supply.
The effects of the Pandemic have led to an increase in the demand for affordable housing. Many people have been forced to move out of their homes and into cheaper accommodations.
The high cost of rent is pricing many people out of the market, this will likely continue in the coming years.
Post-pandemic commercial real estate industry trends
The shift to remote work has led to many businesses rethinking their office space requirements, with some companies downsizing their offices or moving to cheaper locations. The rise of the sharing economy is also impacting businesses such as Airbnb which offer alternatives to traditional hotel stays.
According to JP Morgan, “The future of offices is still largely unknown. Across industries, however, employers are embracing hybrid work. Even tech giants many of which were committed to 100% remote work are leasing office properties in major U.S. cities. Current employment numbers have led other, more traditional businesses to use hybrid work as a recruitment and retention tool.”
Despite the challenges, the commercial real estate industry is still expected to grow in the coming years. This growth will be driven by the continued demand for office space from businesses and the increasing popularity of coworking spaces and serviced offices. However, the industry will need to adapt to the changing landscape to succeed in the commercial real estate future.
According to Bisnow, “Office occupancy in 10 major U.S. markets for the seven days ending July 20 of 2022 came in at 44.7%, an uptick of 0.6 percentage points from the week before. That slight increase was enough to push the number to the highest it has been since before the Pandemic.”
Should you sell your commercial real estate property in 2022?
The answer to this question depends on several factors, including the state of the economy and the commercial real estate market. The commercial real estate market is expected to rebound in the coming years after being hit hard by the Pandemic. Prices are expected to start rising again as the economy recovers, so you could get a good price for your property if you sell now. If you’re considering selling your property, 2022 could be a good time to do it.
If you are considering selling your property, it is important to seek the advice of a qualified commercial real estate professional. They will be able to provide you with the most up-to-date market information and help you to make the best decision for your particular situation.
The commercial real estate industry is facing several challenges, but it is still expected to grow in the coming years. The key to success will be adaptability, as the industry needs to evolve to meet the changing needs of businesses and consumers.
If you’re considering selling your commercial real estate property, 2022 could be a good time to do it. Prices are expected to start rising again as the economy recovers. Seek the advice of a qualified professional before making any decisions.
About The Author
Please note that Point Acquisitions is not a tax expert or tax advisor. The information on our blogs and pages is for general informational purposes only and should not be relied upon as legal, tax, or accounting advice. Any information provided does not constitute professional advice or create an attorney-client or any other professional relationship. We recommend that you consult with your tax advisor or seek professional advice before making any decisions based on the information provided on our blogs and pages. Point Acquisitions is not responsible for any actions taken based on the information provided on our blogs and pages.
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