Commercial Real Estate

Commercial real estate trends for 2022

Commercial real estate trends for 2022

Commercial real estate trends for 2022

Despite rising interest rates and residual impact from the pandemic, commercial real estate is experiencing success in 2022. The overall outlook for the commercial industry remains positive as we enter the later months of the year. There are several real estate trends to keep an eye on.

 

Commercial real estate building

 

A year of growth and recovery

Even with the unpredictable factors in the industry and economy, one thing’s certain: commercial real estate continues to be bouncing back from the slowing in 2020.  Demand for real estate remains high and commercial real estate values are on the rise. However, strong areas for investment are shifting, so it is important to stay on top of the real estate trends. 

 

Industrial real estate trends

With the steep rise of e-commerce, industrial real estate has boomed over the past year or so. Demand for online deliveries is still increasing, and industrial properties are growing in tandem with that demand. Companies in online retail are fueling construction of warehouses and distribution facilities to house products. Additionally, manufacturers will continue to invest in commercial real estate as onsite inventory increases. Industrial growth shows signs of being extremely reliable this year and will lead the trends in the commercial sector. 

 

Office real estate evolution

The pandemic’s lasting impact on the commercial industry is the shift it brought to the office real estate market. Demand for office properties will continue to be lower than was averaged in previous years and working from home will continue to be a popular norm. Because of all these changes, office space use will most likely be on the decline.

However, there are some reassurances for the office sector. Even though the traditional office will be in less demand, new changes will prevent the sector from dying out. With the appeal of work from home, office spaces are looking to provide new amenities and changes that upgrade the physical office. While the rise in flexibility and hybrid work will lead to higher vacancies for office spaces, occupancy and rent growth are expected to stabilize this year. If you’re thinking of investing in office properties, follow the real estate trends and prioritize offices with appealing amenities and quality features. 

 

New markets will emerge in small cities

Recently, the country has seen significant migration from gateway cities into smaller markets. This shift has sparked opportunity growth in cities like Phoenix and Atlanta. These cities show a rise in job opportunities and have attractive market dynamics. These factors in addition to many others contribute to prices appreciating for major asset types. 

 

Housing real estate trends

The multifamily sector will continue to thrive through the end of this year. With low supply of housing and steep price competition, single-family housing has been incredibly difficult and competitive to obtain. Prices are rising along with mortgage rates, sending families in search of affordable quality housing. With this flight to quality housing, multifamily housing will remain strong. Multifamily vacancies are at a near-record low and there are several new investment opportunities with new multifamily options.

When investing in multifamily properties, make sure to keep an eye on affordability; income growth and averages determine the momentum and rent prices in this sector. Additionally, keep in mind that construction prices are on the rise as labor shortages are still a prevalent issue. However, affordable housing is still in high demand, and supply cannot meet it there. Given all these factors and qualities, multifamily housing will offer a huge opportunity in real estate trends this year. 

 

Hospitality returns

Finally, with the increase in travel in 2022, there is good news for the hospitality industry. Business and leisure trips have seen significant growth so far, driving guests to hotels and other businesses that saw a huge drop in customers during the pandemic. Hotels will resume any renovations that stalled, and the market will continue to become more stable. 

 

Real estate trends of recovery

Overall, 2022 will continue to be a year of the commercial real estate industry getting back into a semi-normal flow. Sectors have been in full recovery mode, and it is finally time for that recovery to shift into growth. 

 

Once you find a great property to invest in, Landmark Title can help. Our experienced commercial team in title and escrow knows how to navigate highly complex transactions and understands what is needed to successfully close. Contact us to learn more about our services and expertise.

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