With 2019 behind us, the future looks bright for the commercial real estate industry in this new milestone year. Factors supporting this outlook include strong property fundamentals, resilient economic activity and new digital technologies, but what do these things mean for CRE investors? Here are four trends you can expect to see in the industry this year.
Mixed-Used Developments Will Become More Prevalent
The term “mixed-use” may not sound familiar, but the development itself is anything but new. Defined as a type of development that blends residential, commercial, cultural, institutional, or entertainment uses into one space, mixed-use developments first started in urban areas in the 1900s. These developments allowed Americans to live and work in walkable areas. After the invention of the automobile, Americans no longer felt the need to live and work in in the urban bubble and the demand for mix-used properties decreased. Now nearly a century later, we’re seeing a shift back to favor mixed with many Millennials and Baby Boomers looking to limit commute times and live in areas where they can travel everywhere on foot.
Adaptive Reuse Will Support Growth in Industrial Real Estate
It’s no secret that the growing popularity of e-commerce has transformed the way people shop, leaving many storefronts and buildings vacant. But while the retail sector has taken a hit, this change serves as a great opportunity for the industrial sector, thanks to adaptive reuse. Adaptive reuse is defined as the practice of taking an existing building and repurposing it for a different use. As e-commerce operations continue to grow, so does the demand for warehouse space and distribution centers. Adaptive reuse provides many opportunities to refurbish vacant assets into these necessary facilities.
Technology Tenants Will Dominate Demand For Office Space
The rapid advances in technology have grown exceptionally over the past few decades. With no signs of slowing down, technology has become an integral part in many of our personal and professional lives. As new companies begin to pop-up and larger companies continue to expand, the tech sector has contributed to a large-part of the demand for office space and experts say it will continue to do so into 2020. In fact, tech companies accounted for a record 21 percent of major office-leasing activity in the US and Canada in 2019. This is a major contrast to previous office cycles where leasing was primarily driven by financial services.
Multifamily Demand Will Remain Robust
The top four markets for strong multifamily performance in 2020 are Austin, Atlanta, Boston and right here in Phoenix. With home prices at an all time high, many Millennials are moving towards homeownership at a modest pace, creating a growing demand for multifamily properties. Relative to other commercial investing options, multifamily investments offer liquidity, a steady stream of diversified renters on short-term leases and lower capital costs required for upkeep. Due to these factors, experts say multifamily property demand will remain stable well into 2020 and years to come.
Ready to find your next real estate investment and capitalize on one of these trends in 2020? Contact Andrea Davis today to seize the best market opportunity for your company.
About Andrea Davis
Andrea Davis, CCIM, has practiced commercial real estate for over twenty years. Davis’s breadth of knowledge stretches from developers to landlords to buyer/tenant representation and investments. Within the commercial real estate industry, Davis has won numerous awards. The Phoenix Business Journal ranked Andrea Davis CRE in the top 10 of Ranking Arizona for the category of Office Brokerage. Her book, SimpLEASEity™, focuses on leasing and is the first in a series of commercial real estate guidebooks. Her next book, Simply Own It, the American Dream, is forthcoming this year.