What will you do differently in the second quarter to jump on these trends?
Let’s call a spade a spade—most of the real estate industry took a major blow in 2020 and early 2021. But the market is changing rapidly and in ways we never could have predicted in our pre-pandemic naivety. Right now, commercial real estate trends are looking up for ’22.
In fact, Dan Katz, News Director for Texas Public Radio, reported that 2021’s third quarter was “the biggest ever for commercial real estate nationally.” And indeed, we had watched as the vacancy levels for multifamily properties in major cities like New York and L.A. returned to pre-pandemic numbers by that time.
In general, we’re facing the end of the first quarter with optimism. But while these are good signs for the state of 2022’s CRE market, there are significant changes to real estate trends that we can’t afford to overlook.
Vacancy and Turnover in Multifamily Real Estate
According to Forbes, the “multifamily real estate market has made a faster recovery than expected [when] compared with other real estate sectors.” And it’s clear that this market is continuing to see expansion, with its sales volume up 35% from this time last year. It’s also maintaining low vacancy percentages, as well as consistent rental numbers.
For the most part, we owe this trend to an increase in the volume of people working from home or doing hybrid schedules, increasing the demand for multi-room apartment units. With the end of the eviction moratorium, those vacancies can seem ominous. But they are an opportunity to fill up your empty units with residents who are financially qualified.
The Industrial Market Boom – An Unexpected Surprise
Unlike other real estate sectors, the industrial market actually experienced a boom throughout 2020 and early 2021 because of an unprecedented expansion in e-commerce. There’s a good chance this trend will continue through the rest of the year, which is a positive sign for both the industry and local communities.
Time to Think Outside the Box (or the Cubicle)
Between some companies choosing to make their entire team remote and others dying to get back to the old cubicle, the fate of the traditional office space is still undetermined.
Forbes also said that, as of the end of 2021, “72% of companies anticipate modest office space reductions, and 9% of large companies plan to make their office space ‘significantly smaller’ in the next three years.” In general, it seems like the market for office spaces is trending down and will continue to do so for the next few years.
This might be the time to think outside the box when it comes to these spaces, keeping an eye out for unique buyers and tenant solutions.
Time to Cash in on Retail Markets
Similar to multifamily real estate, retail-based real estate has mostly recovered from the pandemic. With the increased demand for remote work locations and the expanding multifamily real estate industry in secondary markets, we’re certainly seeing an upward trend in demand.
If there’s anything we’re sure about it’s that the world of real estate can change on a dime. But for right now, we’re seeing some impressive outcomes. What will you do differently in the second quarter to jump on these trends?
Brooks, A. (2022). 2022 commercial real estate market trends: JPMorgan Chase. 2022 Commercial Real Estate Market Trends | JPMorgan Chase. Retrieved March 19, 2022, from https://www.jpmorgan.com/commercial-banking/insights/2022-commercial-rea… Cunningham, D. (2021, November 30). Council post: Commercial real estate trends and the call for creativity. Forbes. Retrieved March 19, 2022, from https://www.forbes.com/sites/forbesbusinesscouncil/2021/11/30/commercial… Katz, D. (2021, December 9). Texas commercial real estate market heats up ‘like nowhere else in the country’. Texas Public Radio. Retrieved March 19, 2022, from https://www.tpr.org/business/2021-12-08/texas-commercial-real-estate-mar…