Commercial real estate is a growing market in the United States, even amidst the economic and political uncertainty we find ourselves living in. It is because of these turbulent factors that it is so important we keep up to date with all of the trends and changes that will impact the commercial real estate market.
Well, thanks to the recently published ninth annual Akerman U.S. Real Estate Sector Report, from Ackerman LLC, we have some idea of how the commercial real estate market could be affected in the coming years.
Here are some of the biggest commercial real estate trends highlighted in the report that we think you need to know about:
A running theme throughout the report is that respondents are overall cautiously optimistic about the future. When asked how to best describe their outlook for the U.S. real estate market this year, 45% or respondents said they are marginally more optimistic than they were last year, with 23% being significantly more optimistic. That is a total of 65% of respondents who are feeling optimistic about the future of the market.
Meanwhile, 48% of respondents believe that U.S. job creation will be marginally higher this year than in 2017, with only 5% thinking it will be lower.
The Ackerman report shows that the trend towards young people and families finding renting more realistic than buying homes outright – but even renting looks set to become more difficult. Over the course of the past year, average fair market rates rose higher than weekly wages in over 60% of housing markets in the country.
Accordingly, the report found that there will be increased investment and interest in micro-units. A micro-unit ordinance is being passed which will allow units under 400 sq. ft. in size to be made, and micro units are already being utilized in the hospitality sector.
Interestingly, the data in the report shows that Multifamily is the most active real estate market segment, according to an impressive 63% of respondents. What makes this interesting is the fact that it shows a substantial change of pace compared to last year’s findings, in which almost half of the respondents predicted that multifamily development would be outpaced by single-family development.
In addition, most respondents believe that Multifamily will see the most foreign investment this year of all real estate market sectors in the U.S.
When asked which trend will have the biggest impact on the commercial real estate market over the course of the next three years, just under half (48%) of the respondents felt that the “effects of technology” was number one. This is a significant jump up from last year’s report, in which it was ranked third.
The second biggest trend identified by respondents was the “tax reform/ changes in the tax code” which was backed by 36%, understandable in light of the expected impact the recent tax bill might have on the commercial real estate market.