Commercial Real Estate Trends 2017
As we enter approach the second quarter of 2017, we’re able to determine the unfolding ways in which commercial real estate is developing across the country. With a new administration settling into Washington and the evolving nature of the economy, we take a look at some of the trends we see developing in the market over the coming twelve months.
It’s taken a long time for the effects of the 2008 property crash to work their way through the system, but as 2016 unfolded and moving into 2017 we’ve seen the steady increase in property values. With prices in commercial property approaching those 2008 levels. This is likely to continue on an upward curve into the foreseeable future. With investment confidence increasing thanks to predicted tax cuts and the removal of certain regulations that may have been seen as a barrier in the past.
Mixed Use Developments
There’s a growing trend within commercial real estate towards a range of mixed use development projects. It falls in line with the trend for greater urban development and city center projects.
As the boom for urbanization grows we’re seeing developments that are offering regeneration of old city buildings into a mix of luxury accommodations along with commercial, retail, and entertainment units. Purpose built areas designed in particular around the lifestyle of young and mobile professionals. Offering all range of amenities and facilities, within easy access in a city center or downtown location.
Meeting the Demands of the Sharing Economy
Space design and lease agreements are needing to be shaped to meet the changing demands of a new commercial landscape; based around start-ups, collaborative working practices and the drive towards shared space working.
Essentially, commercial real estate is needing to adapt to these trends to offer units that are both configured to accommodate this new kind of working environment. Different companies may be occupying the same space while also having to amend some of the more traditional lease agreements. Possibly moving towards flexible leasing or more short term agreements.
Data Analysis Dictating Investment
This is the era of big data and industries from insurance, tech, and retail marketing. They are all buying into the concept of analyzing the extraordinary tidal wave of structured and unstructured data through online (particularly social media) channels to derive new levels of customer insight.
And it’s an area that the commercial real estate market is sure to follow suit.
Increasingly sophisticated data gathering and analyses allows for investors to attain ever more informed decisions about where and how to invest, based upon laser-target demographic information.
Internet of Things
Further technological advances such as the increased focus on the internet is also likely to play an increasingly prominent role in the future of commercial real estate. For instance, in the retail logistics environment the drive towards automated distribution and the development of smart factories and distribution centers is already a feature of the marketplace. Smart factories is something that is only going to be expanded upon in the months and years ahead.
However, this is but one facet of the IoT potential for commercial real estate investment. Smart living is around and about us in almost everything we do these days. IoT into commercial buildings can open up a whole new world of possibilities around employee welfare (smart ventilation, heating etc) through to implications on security and insurance matters (smart CCTV and alarm systems, for example).
There’s plenty of reason for cautious optimism for the commercial real estate market moving into the spring and summer of 2017. The promise of continued low interest rates and possible tax reductions may offer new impetus for investment opportunity. While the industries embracing of new ways of living, new ways of working, and new technology will present both a challenge to the traditional landscape and an opportunity to match property to modern need in the years ahead.
To discuss additional commercial real estate trends in the corridor, please contact Craig Byers at 319-360-7017 or cbyers@Q4realestate.com.