Industry Forecast: What to Expect for Commercial Real Estate in 2019
With a growing economy that’s on track to have the longest period of expansion in decades, if not centuries, the strength of the U.S. commercial real estate market is likely to continue. A recently published report from Deloitte highlights what to expect within the industry throughout 2019, and agility is key. Investor confidence is strong, but there have been shifts in where that capital is going.
Here are three key takeaways to help prepare for 2019 and upcoming trends in commercial real estate.
Investor Capital Commitment Is on the Rise
The current trend of increased commercial real estate transactions in the U.S. is expected to continue in 2019. In fact, the United States is set to remain the leading commercial real estate market in the world. Deloitte’s survey respondents indicated a 13% increase in CRE capital commitments throughout the country over the next 18 months. This uptick is expected across investor categories, particularly for REITs and asset management divisions of banking or finance companies.
Mixed-Use Spaces and Other Nontraditional Assets Are Growing in Popularity
Some of the most sought-after property types include those that offer diversity and focus on the tenant experience. Spaces should be engaging and flexible to needs that change over time. Co-sharing workspaces are on the rise and can even be offered in vacant spaces typically reserved for other industries, such as retail. The most preferred nontraditional assets, however, include data centers and health care facilities, such as senior housing. When owners diversify their properties on this micro-level, they have the ability to minimize vacancies and strengthen their overall portfolios.
Technological Advancements Require Agile Responses
Predictive analytics and business intelligence are going to play a great role in CRE companies’ investment decisions, according to Deloitte. In fact, these two technologies are considered the biggest disruptors of the entire industry. Expect big data to play a greater role in analyzing comps and predicting future performance. In addition to helping with acquisition decisions, predictive analytics can even help decide the best to time to divest. Investors can also gain a real-time understanding of the current real estate market, as well as informed predictions on changes in local workforce and demographics.
Staying on top of upcoming trends helps you understand commercial real estate market shifts and strengthen your portfolio. No matter what your investment strategy may be, Nova Consulting can help inform your decision-making process and minimize risk across a variety of service categories.
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