New trends in commercial real estate are expected in 2022. If you work in commercial real estate or you’re an investor, it is valuable to know the trends to help make more informed business decisions.
Trends in multi-family housing
Rental prices experienced significant increases in 2021, and we expect to see this trend continue into 2022. Development of apartment buildings, mixed-use projects and build-to-rent communities are all a strong trend in commercial real estate. With Phoenix being the leader in build-to-rent projects, it is a niche that is projected to remain hot in commercial real estate through the new year.
Other trends in commercial real estate
With Arizona as a top pick for people moving from out-of-state. In addition to demand for housing and rental properties, it is prompting demand for self-storage facilities. During 2020 and 2021, residential senior living facilities experienced a drop in occupancy rates, largely in response to the pandemic. With the aging population, this is predicted to turn around in 2022 and continue into 2023.
In the past year we saw the lowest interest rates in decades. While there is talk of an increase in rates, long term interest rates are expected to remain low throughout the new year. This is good news for financing commercial real estate transactions. Low rates increase buying power and make deals more competitive. Also, as we go into the new year, inflation will continue to be above the normal levels. This is predicted to slow down as the year progresses.
Consumers have become more accustomed to online shopping, which is not expected to slow down in 2022. Despite this trend, there is an increase in demand for brick-and-mortar locations. These stores are designed to be flexible retail spaces that can be used for both warehousing and shipping and retail shopping space. Consumers are looking to go back in stores to shop, but also want the convenience of shopping online with in-store pick up and returns. This trend is leading to a demand for more storage in physical locations.
More companies are looking at moving employees back into the office, but still offering the option to work from home. These hybrid work schedules being adopted by companies are expected to remain well beyond the coming year. The trends in commercial real estate for office space are not being dictated by how many days people are spending in the office, but rather the peak days in the office. The days that most people work in-person determine the maximum amount of space companies now require. Along these same lines, coworking spaces are expected to continue to gain popularity. Overall, office spaces are expected to be a lucrative investment in 2022.
Landmark Title is well versed in handling complex commercial real estate transactions, and we are available to answer any questions you may have. Contact us today to talk to one of our knowledgeable team members about how we can help.