10 Developments in the World of Commercial Real Estate
While the post-pandemic recovery saw increased funding for the commercial real estate industry, it’s slowly losing momentum. With that said, encroaching climate change, the push towards a new digital age, and remote work have led to several developments in the industry.
10 Trends Impacting the Commercial Real Estate Industry
Trends come and go, but many recent developments in the commercial real estate industry are here to stay.
Here are 10 developments impacting the commercial real estate industry in 2023.
1. Vacant Malls Will be Replaced and Repurposed
While strip malls are still outpacing traditional malls, most of these vacant buildings will be replaced or repurposed shortly. Investors plan to turn them into mixed-used properties, which will include retail, residential, and office space, or industrial properties and fulfillment centers.
2. Advanced Real Estate Development Software
Companies can use software to help them with different aspects of commercial real estate, such as accounting and proactive intelligence. Commercial real estate was in desperate need of solid software and technology, and it looks like they’re finally getting it.
3. Multifamily Markets are Seeing a Massive Rebound
Before the pandemic, investing in multifamily markets was almost always a sure thing. During the pandemic, people left the city for cheaper suburban markets. Now, we’re seeing an increase in the market need for duplexes, bungalow courts, townhouses, apartments, and condominiums.
4. A Switch to Greener Buildings and Technology
Green buildings are the future of the commercial real estate. According to the World Economic Forum, buildings contribute to 38% of all energy-related greenhouse gas emissions. While this statistic is alarming, it’s encouraged real estate companies to invest in green technology.
5. Ghost Kitchens are Impacting Restaurants and Retail
Restaurants had to shutter their doors on and off for the last 3 years, but even when they were open, seating restrictions and low consumer confidence restricted cash flow. This led to the rise of ghost kitchens, which require low-cost facilities that are designed to cook and deliver food.
6. Single-Family Home Rentals Become Very Popular
Investors are seeing a rise in single-family home rentals, which offers a lot of opportunities for business growth. Thanks to several rent-to-own programs and an increase in remote work, commercial investors are able to market single-family homes as an extension of the office.
7. Office Demand is Seeing a Moderate Recovery
The need to market certain properties as “remote ready” is only relevant due to the high amount of remote workers. While office demand is recovering, it won't peek to pre-COVID numbers. But, smaller highrises and coworking spaces could entice business owners to lease office space.
8. Commercial Real Estate Infiltrates the Metaverse
As the Metaverse community continues to expand, more commercial real estate companies will sell properties on the virtual marketplace. This is good news for developers and investors. Real estate agents will be able to sell to a new market, while investors can rent out space to tenants.
9. Cybersecurity and Data Security Takes Center Stage
Data is a central pillar of the commercial real estate industry, but new and exciting tools are emphasizing its value. However, the industry has to tackle an increase in data breaches. This can be done by investing in data security and made possible through real estate software.
10. Creative Solutions Are Needed Now More Than Ever
Rising interest rates have limited available financing opportunities for investors, and it’ll get worse before it gets better. Investors have to come up with creative solutions to prevent a big market crash, such as turning to capital recycling, which disposes of assets to fund new projects.
(Disclaimer: Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)