2020 brought a lot of changes to the commercial real estate market. The focus of those looking to make an investment has shifted but the outlook for 2021 is promising. Companies are looking for warehouses as they shift inventory models, and people are looking for new options in housing after moving out of major cities and interest rates are historically low. These trends provide new opportunities for those looking to make a commercial real estate investment.
Increased demand for warehouses and storerooms
E-commerce and online shopping saw a significant lift in 2020 and it continues to boom. Customers have become more accustomed to shopping from the comfort of their own home. When retailers had to expand or quickly shift their operations to accommodate the large increase in online shopping, it prompted increasing demand for warehouse space. The change in consumer behavior is also shifting in how retail spaces are being utilized. Many retailers are using less space as a sales floor and more space as a storeroom. Retail stores, as well as third-party logistics companies are looking at how to improve fulfilment center operations, as many are also shifting from a just-in-time inventory model to a just-in-case model. The change is to help ease concerns for shortages that we experienced in 2020 and we are continuing to see for goods in a variety of categories. This is an important trend to note for those looking to make a commercial real estate investment. With companies selling and shipping more inventory direct to the consumer, the demand for warehouse space is expected to grow.
Renters looking for affordable housing in the suburbs
The decreasing demand for living within urban centers and increased demand for housing in suburban areas is spurring growth in rental communities beyond downtown areas. Renters are looking for lower rents and additional space, which is prompting developers to purchase land in the suburbs and build single-family rental communities, along with more apartment buildings and mixed-use projects. The trend of abandoning urban cores is expected to continue, presenting new opportunities for commercial real estate investments in areas not previously considered. With multifamily rental properties having very low barriers to entry, this sector is projected to grow and flourish throughout 2021.
Low interest rates
As we saw throughout the past year, the increased effort to stimulate the U.S. economy kept interest rates at historically low levels. In accordance with this effort the Federal Reserve cut interest rates and these rates are expected to remain low through 2021. For those looking to borrow for commercial investment money is cheap and the return to eating out, gathering and demand for entertainment bodes well for leasing in certain sectors and geographic areas.
Landmark Title employs an experienced team of professionals that recognizes the importance of choosing a detail-oriented escrow and title agency to handle your complex commercial real estate transactions. Our highly knowledgeable team is here to help and available to answer your questions.
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