The year 2022 is coming to an end, and with it come market trends that seem to be changing on a consistent level. Like 2022, the new year will also see investors act with caution when it comes to commercial real estate. This, however, is not a bad sign, but the opposite of it. According to the reports, investors, though cautious, are keen to invest in real estate. Inflation, high interest rates, and an overall economic shift can be expected towards the end of 2022 and in the beginning of 2023. These changes in the market are changing the way people invest in real estate and get great returns on investment. According CCIM’s Commercial Investment Real Estate Magazine these are the predictions and trends that can be expected the following year in commercial real estate:
Office Retail Space Owners Seeking Shorter Lease
The survey, Colliers’ “Return to Office” showed that 40% of participants said they are looking at shorter lease options. This isn’t coming as a big show to anybody as Covid-19 and the post-pandemic work scenario (can you use the word “mindset” instead?) shows a preference given to hybrid or remote jobs over in-office jobs. According to the same survey’s results, 60% of participants said that they prefer a 3-day in-person work week. Hybrid work environments are up to 77% after the pandemic, compared to the 20% pre-pandemic.
Retail Market Investment Boom
Commercial real estate proved to be a hedge against inflation towards the end of 2022. CBRE’s data suggests that approximately $98.4 billion was invested in the retail sector in 2022 (including the month of December.) This is a whopping 115.4% increase compared to the figures last year!
Hospitality Industry Paints A Promising Picture
Covid-19 caused an irrevocable change to the hospitality industry. Average daily-rates of hotel rooms has seen an increase in price at around 7% from last year, as per the Midyear Hospitality National Report by Marcus & Millichap. This means that despite a slow start, hospitality is seeing a rise in occupancy and per-room returns or revenue per room, making it the ideal time to invest in the hospitality sector. Cap rates have dropped to 7.5% from the 9% mark of 2019.
Retail Income To See A Hike
According to recent reports, new tenants are paying a higher rent when compared to their predecessors. RealPage Market Analytics suggests that this hike is close to 19% (new tenants are paying 19% more than old tenants of the same property) and the market right now and continuing into 2023 is going to stay hot.
Logistics and Data Centers Booming
The data center market of Nort America is booming. Development has been on a stable and continuous rise since H12022 and is expected to stay the same moving into the new year. The perfect example of this is the state of Texas. Dallas, Texas had the second highest amount under construction in the past year.
All in all, 2022 has been a year of ups and downs for real estate. In 2023, we can expect good returns on investments, especially in the retail sector. TC Global Commercial can help you get the best real estate deal this new year! Get in touch with one of our experts today for great return on investments.
This article has been adapted from the CCIM, “Commercial Investment Real Estate” magazine.
The content in this blog is for information only. No information on here constitutes a solicitation, recommendation, endorsement, or offer by TC Global Commercial Real Estate. All investment and other real estate or financial transactions should be taken after consulting with a professional financial and/or investment advisor. The article is, in no way, an example of professional and/or financial advice. Reader discretion is advised. TC Global Commercial is not responsible for any action taken by the reader in terms of, but not limited to, real estate investments and financial undertakings.
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