Commercial Real Estate Trends for Investors to Watch in 2017

Given the rate at which the market is changing, keeping up with the trends in commercial real estate can be especially challenging. While technology is advancing at an incredibly rapid rate, millennials taking control of the global workforce, and the looming changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, it’s safe to assume that 2017 will be a year of change in commercial real estate.

As investors, we’re expected to stay current with the changes in the market. The smallest change, like the unexpected popularity of coworking office spaces, could have a huge impact in commercial real estate. Here are some of the top trends that are expected to make big changes in commercial real estate during 2017.

Changes in the Office Sector

The biggest change in the office industry is the emergence of coworking office spaces. Part of the reasons that co-working spaces have grown in popularity has to do with the fact that more millennials are choosing to be their own boss or opt for remote jobs for the added flexibility, but whatever the case, traditional office owners are researching different floor plans in hopes of boosting productivity and making themselves more appealing to younger professionals.

  1. Coworking office spaces

With the emergence of multinational powerhouses like WeWork and Regis cutting into the traditional office space market share, industry investors are trying to come up with unique ways to compete with this emerging market that is projected to house nearly four million workers by 2020.

  1. Office growth in Midwestern cities

Shifts in population suggest that millennials are leaving the East and West Coasts for cities with cheaper standards of living, and it looks like the Midwest will benefit the most from this migration. Along with the revitalization of urban areas, we can also expect to see the office sector increase in cities that are experiencing significant growth, like Indianapolis, St. Louis, Detroit, and Cincinnati.

Changes in Multifamily Properties

It looks as if 2017 will be a major year for multifamily property as young professionals explore different renters markets across the United States.

  1. Growing populations in the South and Midwest

The growth of multifamily properties on the West Coast aren’t expected to do as well in 2017 as they’ve historically performed. In fact, it seems as if many young professionals are leaving the region for cheaper housing in the South and Midwest, two regions that are performing well in the current renters’ markets. Interestingly enough, it looks like the entire southern portion of the country is experiencing growth in the multifamily industry, with Texas and Florida leading the pack.

Changes in Industrial Properties

Industrial properties are seeing a lot of changes thanks to the popularity of online shopping. In such a short amount of time, companies like Amazon and Walmart have completely changed the demand for industrial property.

  1. The warehouse industry is growing

As ecommerce grows, so does the demand for storage and shipping centers across the country. Retail giants like Wal-Mart and Nike are finding ways to increase their online sales in order to compete with Amazon, which is why industrial real estate companies like Prologis have experienced incredible growth in such a short amount of time. It’s safe to assume that certain cities across the United States will experience significant growth as the demand for more shipping centers and warehouses increase over time. This could have an effect on other real estate sectors as well, including multifamily and retail properties.

  1. Multi-tenant industrial property looks like a good choice

For the past few years, startup companies have been one of the most popular trends in the job market, and it doesn’t look like that will be slowing down anytime soon. Along with these small entrepreneurial firms comes an increased need for affordable industrial spaces where these companies can manufacture, package, and ship their products.

Enter multi-tenant industrial properties, a small-time workspace that shares a similar concept as coworking office spaces, but for a different sector. Not only are these properties in high demand at the moment, we’re currently experiencing a decline in industrial park construction that could increase your industrial property’s value down the road.

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Changes in Retail Properties

Changes in retail are largely driven by the popularity of e-commerce, making it an important sector to closely monitor.

  1. The decline of malls

Malls and shopping centers aren’t performing as well as they should thanks to the convenience and efficiency of online shopping. This has caused a number of retailers to become creative and provide more than just a product, but an experience as well. While brick-and-mortar stores are far from dead, we can expect to see many malls around the country turn their lights off for the last item. With that said, Amazon did open their first physical store last year, and it was a smashing success.

Capitalizing on the Commercial Real Estate Trends

As a developer, keeping up with the trends means nothing if you don’t have a way to capitalize on the changes in the industry. Marketplace lending platforms like Sharestates can help you get there in a fraction of the time that it takes to get a loan through the bank.