The real estate markets have been erratic, to say the least. Still, recent developments have been pointing toward more recovery and progress in the right direction as we see more first-time homebuyers and investors transition to a more aggressive approach. And, considering that the looming threat of Covid-19 is being met with consolidated efforts, it leaves many people to believe that the overall economic outlook is bullish.
However, one area of real estate that hasn’t been getting a lot of attention as of late is commercial real estate properties. According to current speculations, we are bound to see a sudden reemergence of this market. So, today we will be exploring some of the indicators that support this speculation and whether these trends are strong enough to combat the animosity and uncertainty prevalent in the markets.
Embracing The Hybrid Workplace
Remote work has become the new norm across every industry. Still, as the world slowly opens up, many businesses are looking to take on the difficult task of opening their doors for more collaborative spaces and embracing the hybrid workplace. As a result, there will be a sudden rise in demand for office spaces, and while the majority of 2020 saw a very quiet market, 2021 will mark a shift in momentum.
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Transforming The Work Environment:
Businesses have witnessed first-hand all the benefits that come with remote work. Knowing that certain employees prefer the flexible hours of working from home and on their own time, they are now tasked with transforming the traditional work environment. There’s a rising need for better overall infrastructure to guarantee the harmonious relationship of in-house employees and the remote workforce, meaning that office spaces must answer the call for change.
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Introducing Innovative Tech-Solutions:
The tech industry is the undisputed biggest beneficiary of the global pandemic because the digital migration of businesses and influx of users undoubtedly marked a significant increase in demand. And now that recent developments have cooled things down, the same industry will also be introducing innovative tech solutions that will require aggressive expansion. As a result, it is expected that the tech sector will drive the most volume of leasing agreements. -
Reemerging Demand For Commercial Space:
Economic recovery, in general, is bringing forth a reemerging demand for commercial space, especially for essential facilities such as healthcare, grocery stores, and retail centers that support the local businesses. Furthermore, there’s an ongoing rise in entrepreneurship and real estate investing with more people concerned about their financial security, which signals a healthy investing market.
Warehouse Operations & Logistics Facilities
Apart from more traditional office spaces, the vast industrial sector is experiencing a sudden demand for more warehouse operations and logistics facilities. Pandemic limitations are gradually being uplifted and allowing increased workload capacity. And considering the number of backlogged production orders and shortages that are deterring the global market supplies from meeting demand, there’s a lot of catching up to be done.
- Relentless Growth Of E-Commerce:
When stores closed their doors due to the pandemic, this magnified the already sustainable growth of E-Commerce to a relentless level. And with online sales now making up the majority of retail sales, the valuation of the E-Commerce industry is only bound to increase even more. As a result, the disruptive forces of these companies will require the infrastructure to support and optimize their operations. - Recovering Supply Chains:
Supply chains have been heavily strained for the better part of 2020. While we are still experiencing this threat by a large margin in 2021, supply chains have been gradually recovering over time. Therefore, it’s only natural to expect new commercial building developments and demand for commercial restoration services to support a growing need for storage facilities and warehouse units.
General Uncertainty Is Still A Threat
Likewise, there’s no denying that general uncertainty remains a massive threat to every market, including commercial real estate. And while there’s nothing inherently wrong with highlighting optimistic views and news that indicate a bullish trend, we should also acknowledge that our battle with Covid-19 and the changing geopolitical landscape both still have a long way to go. Therefore, regardless of economic rebounds and bullish sentiments, if anything unexpected were to shake the markets right now, it would slow down overall progress.
Capitalizing On Emerging Commercial Real Estate Opportunities
Nevertheless, emerging commercial real estate opportunities available right now and acting on baseless negative rumors might just put you on the short end and make you late for the next trend upwards. So while we do recommend a passive and risk aversive investing strategy to combat the uncertainty in the markets, evaluating and acting on your risk appetite can also secure you long-term profits.