The last several years have produced good results in the commercial real estate market, and the upward trends are expected to continue into the second half of 2016. These are five trends we expect to see more of in the fall and winter of this year.
Steady Industrial Sector
Demand for industrial space in the real estate market continues to grow. Consumer spending has increased in areas such a electronics and furniture, thereby impacting demand for warehouse space in many primary markets.
Appetite for Risk
The secondary real estate market has shown a willingness of investors to take on additional risk for higher returns. This is particularly true in markets heavy in Class A properties.
Investment Follows Jobs
CRE investors continue to look at secondary markets showing strong jobs growth. This trend is expected to continue in markets saturated with jobs in energy, technology and banking.
Vacancy rates have continued to drop depending upon the classification of property. As a result, rents for office, industrial and retail space has increased, although vacancy rates in multi-family housing in some markets may increase slightly, thus impacting rent increases.
Increased Capital Flows and Allocations
As high-net worth investors and institutions reallocate investments, the strong performance in commercial real estate may influence their decision to enter that market. We expect these organizations to increase their allocation targets for the commercial real estate market. Some have referred to it as the “Fourth Asset Class” equivalent to stocks, bonds and cash. In addition, international investors have shown increasing allocations towards the U.S. CRE market.
When considered together, these trends represent a significant potential for continued growth and opportunity through the last half of 2016.
Our team of CRE experts at Menlo Commercial Real Estate can assist you with finding the best investment properties to suit your particular portfolio. You can contact us at 480.659.1777 or shoot us an email at firstname.lastname@example.org for more information.