Despite setbacks in some markets due to the pandemic during 2020 and 2021, the commercial real estate industry has a more promising outlook going into 2022. With little available industrial space remaining, the industrial development pipeline will see heightened and competitive preleasing activity. Newer buildings that focus on ESG standards will also likely see increased demand for tenants as health and wellness continues to be a focus during pandemic uncertainty.
Environmental, Social and Governance (ESG) considerations will become increasingly important for real estate investors in 2022. Additionally, ESG certifications can open doors to new funds, exclusive lending deals and even more selective, profitable tenants. Using AI, investment firms may be able to better visualize market trends. With increased opportunities in the hotel sector, consider diversifying your portfolio by investing with Avistone. 25% indicated that they were suited well for industrial properties or fulfillment centers. The material offers carbon emissions savings of 60% to 70% compared to steel and concrete buildings. A growing economy with increased employment, steadily rising wages and healthy savings created an economy in which households have more to spend, driving market-wide growth in the real estate vertical. Loosening travel restrictions also promise continued recovery in the hotel sector. Find out more about these market drivers and the other trends shaping life and work in 2022. High-quality retail investments may not stoke the same fear, but these transactions will call for a thorough, data-driven analysis to prove their mettle in a changing world. With rents higher than ever, multifamily investors also doubled down. In addition, technology is already being used by some companies to better understand and manage their properties. Along with the physical upgrade, this also presents an opportunity to align with ESG and sustainability standards, making the refurbished asset more attractive for corporate occupiers. Investors responded to a changing market, targeting asset classes that became favorable in the pandemics wake. Avistone, LLC Past performance may not be indicative of future results; there is no assurance that objectives will be met. Investors traditionally look at multifamily as a low-risk investment, given the constant need for affordable renting space, especially in cities. With more than 100,000 professionals in over 100 countries, CBRE is the global leader in commercial real estate services and investment. Hotels are also focusing on building their reputation as safe and clean spaces to drive more guests to their properties. Hotels in strong fly-to and drive-to leisure markets are recovering faster than other properties. The answer to whether flex office is a more cost-effective solution or not depends on which side of the fence you sit on. As the cost of single-family homes continues to rise, more people are looking at apartments. We endeavor to keep your personal information secure with appropriate level of security and keep for as long as we need it for legitimate business or legal reasons. While the above acts as a qualitative commentary on the commercial real estate market, we are also witnessing a strong uptake of space from organizations across the technology, outsourcing and BFSI sectors. Landlords have paid increasing attention to the latter as they look to diversify their tenant mix, especially as existing retailers particularly within the fashion industry consolidate their locations. This commercial real estate trend gives property managers more options when it comes to leasing, as the space required to operate a ghost kitchen is dramatically smaller than a restaurant. Grocery stores and home improvement retailers have been thriving throughout the uncertainty of the pandemic-era market. Following the wide availability of vaccines and a resurgence of relatively normal life, real estate demand is rising, in step with other market indicators. As consumers move increasingly online, retailers and shopping centres have begun to put a greater emphasis on their physical spaces in attempt to recapture the market. Global Research Director, Property Sectors, Manager, Capital Markets Research & Strategy, Contact us - Real Estate Industry Services | JLL. This, along with some limits to new construction due to supply chain problems, is keeping rent prices strong. Investors remain focused on portfolio diversification and are aligning investment strategies to longer-term economic and demographic shifts, benefitting logistics, living and healthcare assets. Overall, the commercial real estate sector is poised for a massive revival toward sustainability and workplace transformation. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. According to Real Capital Analytics, commercial real estatesales transactions totaled $809 billion in 2021, exceeding 2019s $600 billion total and doubling the 2020 total. Retail sales were very strong in the first two months of 2022 with year-over-year sales up 14.14% in January and 18.18% in February.
Despite the lag, retail and office prices have been rising, albeit slowly. To sufficiently protect data at every touchpoint, firms must ensure that every platform data flows through meets required standards. Subscribe today and join hundreds of professionals who get the latest blogs delivered straight to their inbox. Economists are calling for up to four additional increases in 2022 as central banks around the world attempt to keep prices under control. As larger institutional firms like Blackstone continue to amass unprecedented amounts of capital, as well as benefit from economies of scale, these competitive insights will play a significant role in informing investment strategies. New food and beverage concepts will also help to draw customers back to the shops, as will service-oriented retailers. In the wake of this uncertainty, commercial real estate trends have shifted toward shorter leases, or those less than two years, providing companies with more flexibility when it comes to securing space. The e-commerce boom has set in motion many commercial real estate trends, most notably a strong boost in popularity for industrial properties like warehouses and final-mile fulfillment centers. Our unmatched research and thought leadership platform delivers actionable insights to help our clients make informed business decisions. Purchases of industrial and multifamily units increased by 30% compared to levels in pre-pandemic 2019. Demand more from your real estate. Throughout the lifecycle of an asset, data might flow through multiple systems as it is handed off through various departments. In the 2021 edition of PwCs report,Emerging Trends In Real Estate, experts predicted property technology, or proptech, would help the return to offices nationwide and become a competitive advantage in attracting and retaining tenants. Based on predictions from the likes of Forbes and PwC, here are some of the trends professionals recommend keeping an eye on in the new year. Business travel and conventions are beginning to open up as international travel restrictions loosen. And, private investors represented more than 43% of volumes a record share of activity. While ESG is nothing new, the jolt forward occurred most recently in US and Asia Pacific markets, which lagged behind Europe. Dealpath uses cookies to give you the best experience on our website. Environmental concerns have permeated every sphere of life, and commercial real estate trends are no different. Perhaps the most prominent and enduring commercial real estate trend that will come out of the pandemic is the transition to remote and hybrid workplaces. Facing the new challenge of collaborating from remote environments, without the option for in-person meetings or casual conversations, commercial real estate firms recognized the immediate need to move to the cloud. To protect against ransomware attacks, firms need to take additional measures, using modern standards as the benchmark. Unlike central business districts, where this trend was most noticeable, suburban offices have proven to be a more reliable target. Gateway cities are urban metro areas that act as the foundation and hub for the economic industry for the state, region, and sometimes country. ft. nationwide before rising to a 15-year high in 2023. 96% of office-focused REITs considered it a threat, as well as 93% in hospitality, and 92% in multifamily. 39% of respondents indicated that malls were being developed into mixed-use properties, which includes residential, retail and office. You can find out more about which cookies we are using or switch them off in settings. Healthcare providers are increasingly trying to be closer to their patients, whether in off-site medical buildings or inhabiting former retail spaces. Opps! According to NARs 2021 Q1 survey, investors indicated intentions to repurpose vacant malls into a variety of other asset classes. As we head further into the new year, it may benefit investors to keep an eye on how commercial real estates resilience as an investment has put it at the forefront of economic recovery. From a financial standpoint, data has already more than proven the importance of increasing security measures. Now, firms are seeking new ways to achieve their own growth in a highly favorable environment. In companies, the technology has made it easier to adhere to current pandemic restrictions through programs that allow employers to visualize schedules and office layouts. Even as retail declines, distribution centers will remain integral for businesses of all sizes. Instead, the role of physical stores will change. Breaking from the downward trend throughout 2020, retail had grown somewhat by the end of 2021. The fastest growing areas in the US were characterized by their location, service offerings and neighborhood presence. In the early days of the pandemic, restaurants had no choice but to shutter their doors amidst restrictions, generating revenue mainly through delivery and pick-up. According to JLLs 2021 real estate life sciences lab outlook, the commercial real estate trend toward life sciences stems from a stronger desire to live long, healthy lives, as well as the movement toward personalized medicine borne from living organisms, called biologics. Despite this, hotels that cater to business travelers will likely see a stronger recovery as 2022 progresses. Based on CBREs U.S. Capital Markets Figures Q2 2021 report, commercial real estate cap rate trends show that cap rates have decreased across nearly all industries.