Over the past few years, the commercial real estate market has faced many challenges and changes because of the pandemic. For commercial real estate investors, it’s important to understand what is going on with the future of the industry. Otherwise, you could find yourself in trouble with the wrong types of commercial property investments. From inflation to hybrid work schedules, there are a lot of factors shaping the future of commercial real estate which may leave you questioning if commercial real estate is a good investment in 2023.
Although there is a lot of uncertainty for the future of the commercial real estate, there are some exciting opportunities investors can take advantage of. As we take on a new year, take the time to understand these commercial real estate trends in 2023 shared by the team at Price Commercial Properties.
Hybrid Work Is Here to Stay
One of the biggest changes to the commercial real estate market in recent years is the shift to hybrid or remote working. Before the Covid-19 pandemic, most employees were in the office from 9 to 5, but post-lockdowns, many companies have made a permanent shift in their operations. Many employees now work from the office only a few days a week, if they do at all. This means it is more important than ever for commercial landlords to find ways to incentivize their tenants to return to the office and make use of their leased space and building amenities. Consider how you can keep your tenants connected to the building, even when the office may be out of sight and out of mind.
Employee-Centric Office Space
Gone are the days when employees simply needed a space for their desks. We’ve started seeing more and more commercial office spaces beginning to incorporate amenity centers and other employee-centric spaces into their buildings. To stand up against other commercial real estate opportunities in the area, your buildings need to focus on what tenants want. Think about your tenant base and take note of what they like. What amenities or services can you offer to make them comfortable and excited to come to the office every day? Activating onsite amenities and reimagining office spaces can elevate your commercial real estate portfolio and help keep vacancies down.
Understanding Rising Interest Rates
Are you considering adding to your commercial real estate portfolio? If so, then you are likely aware of the fluctuating interest rates over the past year. With rising interest rates, you may be questioning if it is the right time to buy (or sell) commercial properties. When looking at commercial real estate price trends over the past year, we saw interest rates around 4% — which made the market hot! Now that interest rates are starting to settle above 6%, slowing down the commercial real estate market a tad. If you’re looking to add to or sell off parts of your portfolio, keep an eye on interest rates over the next few months as they will impact your property values.
Inflation is on the Rise
Inflation is another important factor for commercial real estate investors to keep an eye on, as it has been trending historically high. Whether you own an office tower downtown or a local furniture showroom like High Point Furniture Market, your commercial property will be impacted by inflation. High inflation costs impact the real estate market in a variety of ways, including operating expenses, construction, rent, vacancies, maintenance, and debt. When costs are up, it makes everything related to building operations cost more. Because of this, you need to find ways to mitigate operating expenses, so you are still earning more than what you’re spending.
Property Technology Is Important
When you own a commercial building, you need it to be more than just a building for your tenants. Your building needs to be a place where they want to come each morning, not just to do their job, but because they want to be there. However, with hybrid work becoming more popular, you need a way to stay connected with those working from home so you can keep them engaged (and drive them to come back to the building!). Following commercial real estate technology trends can help you keep your tenants in the know about what is going on in or around the commercial property. Along with tenant engagement, there are other technologies that you can utilize to streamline building operations or monitor construction projects.
How Price Commercial Properties Can Help
Investing in commercial real estate is a big decision. The future of the industry in the post-pandemic times is starting to adjust and settle, but does that mean it’s a good investment for you and your goals? If you’re unsure about commercial real estate market trends, you can have a Price Commercial Properties realtor by your side to walk you through the process. We can help you learn and understand the important aspects of commercial real estate investment as we search for your ideal property to support your investment portfolio and your future goals. We support investors of all sizes and experiences. We know this opportunity is an important part of your plan to secure your financial future and we can provide you with the information you need to make the best decision.
Ready to get the inside scoop on investing in commercial real estate? Contact us today!