Like all industries, the commercial real estate industry will evolve over the next few years and decades. Keeping up with those changes could determine your success or failure in the commercial real estate market.
Having access to updated data and predictive analytics will make it much easier for you to stay ahead of your competitors, no matter how the industry changes.
1) Office Space Leases Will Decline
Dozens of major corporations have committed to letting their employees work remotely long term. COVID-19 forced businesses to rethink how their teams work. Many of them have discovered that they can reach the same goals while spending less money on office space. If they can reduce the square feet that they pay for, then they will have lower overheads that eat into their profits.
Some of the companies committed to long-term remote work include:
Perhaps most surprisingly, Salesforce and REI recently completed large construction projects that would host thousands of employees. If they see a benefit in remote work, then many other companies will follow their lead.
2) Office Spaces That Thrive Will Have Innovative Designs for Multiple Tenants
Some businesses need to do work in person, so they can’t afford to let their staff members work remotely beyond short term circumstances. Plenty of them, however, worry about bringing their team members back too soon. At this point, no one knows how viruses and other issues will affect commercial real estate, that will include office space, retail space, and restaurants.
There is a strong chance that businesses that want to work from offices will also want innovative designs that protect health and lower costs without harming productivity. An open workspace, for example, no longer sounds like a great idea. Large conference rooms also feel frightening. No one knows when these feelings will recede.
Instead of waiting for people to feel emotionally prepared to work closely, a property management company can make adjustments that will welcome workers back into the office. This may involve creating office designs that serve multiple tenants while keeping employees separate.
Imagine co-working spaces with individual offices. Think of headquarters where meetings happen online instead of in large conference rooms. Investing in these asset types now could lead to significant profits in the near future.
3) More Buildings Will Combine Retail and Residential Spaces
As building owners look for more ways to keep their spaces filled, many of them will turn to multi-use options that combine retail and residential areas. Keeping businesses on the first floor will help ensure that owners can lease high-value spaces. Upper floors will likely remain dedicated to residential renters.
Combining retail and residential space is hardly a new concept. Most crowded cities like New York have followed this business model for decades. Those building owners did it out of necessity. As real estate investments begin to look more unsteady, owners and investors will also consider mixed-use necessary.
4) The Demand for Multifamily Units Will Grow Quickly
Within 10 years, all Baby Boomers will be 65 or older. Most of them will want to retire. Unfortunately, that will likely mean cutting expenses and finding new housing options intended for people with mobility issues.
The demographic shift could spur demand for multifamily units. Retirees can move into condos and apartments that cost less money than their single-family homes. Plus, they can avoid the expense and work of maintenance.
Depending on health issues, some Baby Boomers may prefer moving into assisted living facilities. Some will still want to maintain their independence for as long as possible. Regardless, it makes sense for commercial real estate industry professionals to pay close attention to these property types.
As time moves forward, even more people will want multifamily housing options. Beginners entering the commercial real estate industry should note that the number of people in America over 65 years old will double by 2060. That’s an opportunity in the making. Otherwise, agents and brokers will spend a lot of time pitching to clients that have no interest in spending more money on commercial properties. Interest Rates Will Play a Crucial Role in Commercial Real Estate
The Federal Reserve says that it will keep short-term interest rates extremely low (between 0% and 0.25%) until 2023. Low interest rates will make it easier for companies to purchase real estate. They could also help businesses improve their cash flows by refinancing for lower rates.
Low interest rates will always make some people and businesses feel confident about buying property. Others will not care how low the rates stay. Spending $5 million on a building still means spending $5 million. It certainly helps that borrowed money has low to no interest, but uncertain economic times should still make businesses nervous about spending large amounts of money.
Ideally, you will have access to CRE software that helps you identify companies willing to spend money buying or leasing properties.
Stay Ahead of Trends With Commercial Real Estate Software and Data
Every broker in the commercial real estate industry should watch these trends carefully. The problem is that no amount of research can ensure how businesses will respond in the future. You cannot rely on today’s data and surveys to tell you what companies will want to do a few years from now. Instead, you need up to date data that lets you make quick decisions before your competitors realize that they have opportunities.
ProspectNow updates its property, business, and LLC databases frequently to give you the latest information. You can search for properties by owner, property type, size, and whether they have entered the pre-foreclosure stage. That data gives you a significant advantage over your competitors because you can connect your clients to property owners who are ready to sell.
ProspectNow also uses predictive analytics to help you pinpoint the perfect time to approach business and property owners about making deals. When you look at a hundred lines of data, your brain can’t see the trends that matter. Machine learning and artificial intelligence, however, can spot trends and make connections within seconds.
You don’t have to rely on your gut. You can use real data to make informed decisions. In the end, you’ll save more time and earn more money, no matter how the commercial real estate industry evolves.
See the advantages of using ProspectNow by signing up for a free demo. During the demo, you will see features like owner contact info, true owner information, extensive search filters, and millions of properties likely to sell or refinance soon. Don’t wait for the future to tell you how to thrive. Start preparing now!