Do you have a stake in commercial real estate and want to know what to expect? Here is your commercial real estate outlook for 2017.
The outlook for commercial real estate in 2017 is exciting for the industry.
Residential transactions were at their top volume in a decade in 2016. While sales trailed off in the 4th quarter, they were still strong for existing homes across the year.
The market wasn't as strong for new construction last year. This leads experts to wonder how this will impact 2017.
Much can be said for the global commercial real estate market as well.
They also wonder how interest rates will interact with sales. Much of the same can be said for the global commercial real estate market as well.
The commercial market has been buoyed by an influx of foreign cash. And new technology is fueling transactions.
But experts caution a slowdown could be in the cards. Wondering how to pull it all together and forecast success in 2017?
We can help. Here's your expert guide:
Retail Mall and Outlet Space Outlook
There has been some question as to the effect of global politics and the world economy for real estate. But in terms of the start of 2017, the indicators are continuing to trend up.
Simon Properties (REIT) has new or recent projects in Canada, Malaysia, France, South Korea, and Texas. They are a representative REIT in real estate.
In May, they are paying a dividend to shareholders. This is based on performance and represents a 9 percent increase over last year.
There is high occupancy, solid financial performance, and new development underway. The luxury end of the retail sector is performing well and looks to continue the trend.
However, technology has definitely impacted shopping and brick and mortar stores are on the decrease in some sectors.
But technology also is fueling transactions across the board.
The Influence of Crowdfunding and Online Borrowing
Crowdfunding and online borrowing platforms are set to change the commercial real estate game in 2017.
They are more flexible for the timelines as well as for the requirements of the qualification process. This has already been a huge benefit in the private market.
Buyers are getting financing for projects from foreign and domestic sources.
These global financing tools impact commercial real estate as well. For one thing, they open up the market to new buyers.
With crowdfunding and online borrowing, there are new tools. Consortiums of buyers can pool their resources and see large returns.
In addition, buyers who are new to the market and who likely couldn't receive traditional funding are able to make purchases now.
Look for the influence of this technology to increase transactions in hot sectors.
Impact of Foreign Money
The impact of foreign money is a large component on the commercial real estate outlook for 2017. As with crowdfunding and online borrowing, foreign money has an impact on the entire global real estate outlook.
In the United States, that foreign money is very prevalent. In fact, The United States Department of the Treasury is investigating money laundering issues.
Luxury real estate in major urban centers like New York, Boston, and Los Angeles has been dominated by foreign money in the past few years. Many foreign investors are now focused on the US.
Fluctuations in the stock market and domestic politics could impact 2017 commercial transactions. But foreign investors are likely to keep the real estate market stable.
Focus on Virtual
One of the most interesting developments in commercial real estate transactions and activity for 2017 is the increasing demand for virtual access. New technology allows access to properties and spaces as a key selling tool for industry professionals.
While staging has seen a major surge in the private sector for home sales, the staging trend is expandable to commercial spaces as well. Developing walkthroughs and designing spaces for utilization prior to lease negotiation and purchase is a huge advantage to buyers.
Piggybacking on the importance of foreign capital are these tech advancements. They have a connected relationship as more tech utilization leads to more foreign capital.
Virtual technology doesn't just boost transactions for commercial brokers. It also makes properties and spaces more appetizing to a large spectrum of clients.
The outlook for commercial real estate in 2017 includes a heavy emphasis on virtual technology.
Pre-Construction and Development
As the commercial market in the United States soars to new highs there is a continuous search for opportunity. Some of this opportunity is best seen in foreign countries, but there is also a focus on construction and development in the outlook.
Virtual technology looks to boost new construction sales. The tool can help real estate professionals sell out in the early stages of development.
Competitive Advantages and Caution
A word of caution in the commercial real estate market: There are experts who fear that the past 7 years of boom may be leading up to a bust.
Interests rates are historically low which has led to an amazing amount of debt in the commercial market. As new investors pursue new deals the debt continues to balloon.
Urban markets like Houston and San Francisco have already felt the impact of fluctuations in the commercial real estate.
Houston's Class A office space availability rate is at 25 percent. These rates are similar to vacancies during the height of the Financial Crisis.
San Francisco saw a 34 percent decrease in new leasing transactions last year as well.
These two cities represent the energy and high-tech sectors. This trend could spread throughout the domestic commercial real estate market.
As a result, many commercial real estate professionals are working to increase their competitive advantage. They need to succeed in this volatile market.
Getting Expert Help
There is no question that the commercial real estate market outlook is one of volatility. Some cities are seeing contraction.
Others are on their way to a boom. The most seasoned professionals are shoring up their competitive advantage.
Clearly, technology and the digital marketplace plays a major role. From crowdfunding apps to virtual technology it is imperative to be ahead of the curve.
Designblendz can help your team get a competitive edge in the commercial real estate market. With expert help, the outlook is always a great one.
From virtual renderings to 3D animation, our team can help you successfully market your commercial projects. We can help you in the development stage too-- before construction even begins.
The commercial real estate market is moving fast. You should too.
Contact us now to discover how Designblendz can turn your commercial real estate marketing plan into a digital success.