Biggest 2019 Trends in Commercial Real Estate
As we approach the ending of 2018, it’s time to look ahead to the biggest 2019 trends in commercial real estate. As we would expect, the real estate market experienced fluctuations throughout 2018. Despite a flurry of new home constructions occurring and prices rising throughout the United States, large corporations including Toys ‘R Us and Sears experienced closing leaving thousands of commercial vacancies. While this is bad for retail chains, these closures leave a plethora of commercial real estate opportunities for the next wave of retail investors. With that in mind, we’re going to look at what we can expect to occur for the biggest 2019 trends in commercial real estate. 1: Invest in Urban Communities For those who have an interest in investing in 2019, it’s ideal to look at urban communities. When you look at locations where people want to relocate or where there are already high populations, there’s a greater chance for success. For example, areas where the highest market share includes: Chicago Los Angeles New York Philadelphia Washington, D.C.
2: Slowly Evolving Regulatory Environment Though changes are occurring in the federal administration, professional commercial real estate investors shouldn’t expect much to change in the near future regarding the regulatory environment. Over the past decade, new rules have made regulatory compliance constraining. Of the most significant changes include loan pricing transitioning to LIBOR, as well as other instruments. As soon as next year, many loans could be based on SOFR, so investors should pay attention to these transitions. 3: Technology-driven Commercial Building Real estate is lagging regarding the technologically driven society in which we’re living and working. However, in 2019, it could experience changes. The main reason is that people are using more ride-sharing services. Commercial real estate investors can embrace this by expanding parking lot availability. In doing so, retail investors can accommodate delivery drivers. The growing trend could see a need for supplying two-thirds of the parking spots for Lyft and Uber drivers. 4: Thinking Outside of the “Big Box” Instead of using vacant “big box” stores for another chain store, commercial real estate investors have a myriad of opportunities. Therefore, it’s essential for them to think creatively regarding these investments. For example, they could convert the space into:
Call centers Medical buildings Fitness centers Working office spaces Entertainment centers Training facilities Hotels
Because space is already vacant, commercial real estate investors know the big box store already experienced hurdles that caused them to shut down. These other options have ample space, a substantial amount of parking, convenient locations, are easily accessible, have good lighting, and simple footprints from which the contractors can work. 5: The Need for Warehousing With more consumers using e-commerce than ever before, 2019 isn’t going to be any different. Therefore, instead of investing in retail commercial real estate, it’s ideal to look at commercial warehousing. Online retailers are going to need a place to store merchandise before it sells. Investors will find this is especially true for large online retailers. We know brick-and-mortar stores aren’t going anywhere anytime soon. Many of these retailers are combining their store locations with online presences. In doing so, there’s a growing need for storage and warehousing. That’s where commercial real estate trends are growing. What Do These Trends in Commercial Real Estate Mean? It’s critical to look at the biggest 2019 trends in commercial real estate as a means of determining investment strategies. By doing your due diligence, it’s possible to become more successful in your investment pursuits. For those who are looking to invest in commercial real estate, speak to the professionals at Harkins Commercial Real Estate for guidance.