As the COVID-19 pandemic pushed businesses to adopt remote work and consumers to turn to ecommerce shopping, the commercial real estate industry has been forced to adapt. With the rise of remote work, companies are reevaluating their office space needs, while the surge in online shopping has created a boom in warehouse and distribution center demand. To explore the future of commercial real estate investments in light of these trends, we interviewed multiple thought leaders in the industry. Here’s what they had to say.
Interviewee: Matthew Martinez
Company: Diamond Real Estate Group
Answer: From my experience working on complex transactions and analyzing market data, I have developed a sharp eye for identifying investment opportunities and navigating the challenges that can arise in this industry. My insights and experiences can help guide investors towards making informed decisions about the future of commercial real estate and what it holds.
The future of commercial real estate investments in the age of remote work and e-commerce presents both new opportunities and challenges. On one hand, the shift towards remote work has led to a decrease in demand for traditional office spaces and a greater need for flexible, adaptable spaces. On the other hand, the rise of e-commerce has created a strong demand for warehousing and distribution facilities.
As a result, investors must be strategic and forward-thinking in their approach to commercial real estate investments, seeking out properties that align with current and emerging trends in the market. Additionally, the use of technology in real estate transactions and property management will likely continue to increase, making it an important consideration for investors looking to stay ahead of the curve.
Overall, the future of commercial real estate investments is promising, but requires a well-informed and adaptable approach to succeed in this rapidly changing landscape.
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Interviewee: Alex Capozzolo
Company: SD House Guys
Answer: Commercial real estate investments are an attractive option for investors looking to diversify their portfolios and build long-term wealth. The sector has demonstrated resilience in the face of economic downturns, making it an attractive choice even during uncertain times. As technology continues to evolve, so too will commercial real estate investments, as new business models emerge and innovative strategies are developed to maximize returns.
In the future, technology will play an even larger role in commercial real estate investments. Automated processes and predictive analytics will enable investors to quickly identify opportunities and make data-driven decisions. Real estate crowdfunding platforms are also expected to become increasingly popular as they provide greater access for smaller investors who can take advantage of the diversification benefits of commercial real estate.
In addition, the trend towards green or sustainable buildings is likely to continue as the environmental impact of construction becomes more widely discussed and tenants demand healthier office spaces. Investors can capitalize on this trend by investing in energy-efficient buildings or those with renewable energy sources such as solar power.
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Interviewee: Richard Mews
Company: Sell With Richard
Answer: The future of commercial real estate investments is full of potential and growth. With advancements in technology and changing consumer habits, the industry is poised for a revolution. One trend we can expect to see is the increase in e-commerce and the need for warehouses and distribution centers. Additionally, there will be a push towards sustainable and environmentally conscious buildings. This can lead to increased demand for green buildings and smart infrastructure. As a real estate investor, it is crucial to stay informed and adapt to these changes in order to maximize profits and stay ahead of the game.
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Interviewee: Drew Reynolds
Company: Realized
Answer: Knowing that rates are high, what considerations should investors keep in mind when determining whether to invest in commercial real estate in a high interest rate
environment?
Single-family rental (SFR) properties may become more available for investors as they become a new asset. SFRs can give the average investor fractional access to these rental homes that are purchased in bulk and professionally managed by the Sponsor. With mortgage applications slowing, many prospective home buyers may decide to prolong their decision to purchase until interest rates decrease, leading to a stronger rental market.
In the event of a recession, multifamily and rent-flexible investments such as self-storage can prove beneficial as rates can easily be adjusted to affect current market conditions. Strong rental growth potential can help ensure a positive cash flow in situations where upfront costs (interest rates, construction costs, labor) continue to increase.
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Interviewee: Rinal Patel
Company: Suburbrealtor
Answer: Yes, in truth, remote working and e-commerce have completely revolutionized the American work and employment experience, however, the truth also remains that offices or market workspaces are not going anywhere at all. Yes, from the period of the covid 19 pandemic, till now, commercial real estate along with the rest of the world has been forced to experience a change in the manner of business practice. However, adapting to the ever-increasing changes in the practice of a business is part of the trait that makes for a successful business, this is why future real estate trends will be such that makes accommodations and provisions for beauty and aesthetics also as incentives for employees to return to the office and attraction for the customers who would rather shop their wares from physical stalls and malls.
Beauty has always been a source of attraction, in the same way, that it demands attention, it also soothes and eases. A beautifully attractive workspace, can in a huge way serve as an incentive to lure talents back to the office workspace. As some remote employees are still yet to have mastered the practice of remote working, having the option of returning to the office, to a more alluring environment, makes it easier for employees to easily transition back to the office. Also, with improvements in retail and wholesale vendor marker spaces, the shopping experience, will come to include much more than just going out and picking items off stalls, it will also be entertaining and rewarding for customers.
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Interviewee: Janel Muhammad
Company: Destination Own
Answer: My perspective is definitely considered out of the box as that’s what I advocate, thinking outside of the geographical box. As an International Realtor I see many promising opportunities in foreign markets, and with people looking towards overseas for retirement homes and exit strategies. The world is wide open and those looking to grow their investments overseas are jumping right in.
The world is collectively moving toward one big neighborhood with your neighbors being someone from across the world. Where ever you go nowadays you will find ‘”European style” and “American style” villas and condos, and with that comes the need for a solid infrastructure to support all that comes with it commercial real estate included.
Some of the remote cities around the world are being built and rebuilt to accommodate the influx of nomads and expatriates leaving only a few places where you can still go and live like a King with little money. Be mindful though your Kingdom may be lacking some of the creature comforts that you have come to rely on, like a strong wi-fi signal.
I think that it is safe to say that I personally see more of what is happening overseas because International Real Estate is the focus of Destination Own. To sum it all up, I believe the future of real estate is going global, the rest of the world is already on its way.
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Interviewee: Cassie Alongi
Company: We Buy Any House in California
Answer: The commercial real estate will not be left behind it will always find its way of adjusting to new trends that will evolve. Shelter is a primary need of man. The commercial real estate has always found ways to adjust and remain relevant. It has proven its ability to adapt to new trends and changing market conditions in the past. It is likely to continue to do so in the future.
If we consider a notable fact about the change remote work has brought, which is unsatisfying to investors. How remote work has reduced the need for traditional office space and has also led to changes in the way commercial real estate is used and valued, stemming from more companies allowing employees to work from home, has resulted in decrease in rental income and lower property values for office building. But there is also a good side, which is a growing increase in demand for flexible and sustainable workspaces, that are able to provide a professional environment for those who prefers to work outside their homes. That shows how the commercial real estate is able to adjust.
Also, the growth of E-commerce has created new demand for warehouse and fulfilment centre space. I see investors and developers focusing on flexible and adaptive spaces that can accommodate changing work styles and the growing demand for e-commerce fulfilment.
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Interviewee: Shaun Dawson
Company: DeVono Property
Answer: The office has been on a rollercoaster journey over the past few years, and it has not stopped yet. The office has always evolved, adapting to new ways of working, introduction of technology and the development of new business sectors, but generally, it has been at a much slower pace.
Tenants are looking for the best-in-class, sustainable and cost-effective spaces surrounded by amenities, access to transport hubs and greater lease flexibility — what has changed, you may ask. The widespread adoption of hybrid working has added boosters to the evolution, and investors and landlords need to keep up with how tenants use office space.
Consequently, the size of spaces required is shrinking, the location choice is wider, lease lengths are shortening, and flexible office solutions are now a more viable option to leasehold than ever before. Tenant requirements are testing the traditional way investors expect an asset to operate; a shift in the way space is used must be factored in more when investors look to redevelop spaces, especially multi-tenanted spaces.
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Interviewee: Smithy Sodine
Company: Smithy Home Couture
Answer: Commercial real estate is a sector of the economy that has experienced considerable growth over the past few years. This growth has created opportunities for investors, as well as increased interest in this type of investment from both individuals and businesses. However, there are a number of questions that remain about the future of commercial real estate investments.
One question is whether or not this growth will continue. There are many potential reasons why this might not be the case, including market saturation and an increase in defaults among borrowers. In any event, it is important for investors to stay up-to-date on developments in the commercial real estate market in order to make the best decisions for their portfolio.
Another question that remains is what will happen to property values in the future. While there are many factors that can affect these values, such as economic conditions and changes in demand, it is difficult to predict exactly how they will change over time. It is important for investors to have a long-term perspective when investing in commercial real estate, as fluctuations in prices can be quite significant over short periods of time.
Overall, there are many questions about the future of commercial real estate investments that remain unanswered. However, staying informed and making sound decisions based on current trends is essential if investors want to come out ahead over the long term.
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Interviewee: Brenton Thomas
Company: Twibi
Answer: The real estate industry is facing a shift as technology continues to drive change and innovation. One trend that is gaining traction is the use of cryptocurrency in real estate transactions. This includes the use of cryptocurrencies such as Bitcoin for buying, selling, and financing properties. The adoption of cryptocurrency in real estate has the potential to streamline the transaction process, increase transparency, and reduce the need for intermediaries. While the use of cryptocurrency in real estate is still in its early stages, it has the potential to be a game-changer for the industry and could revolutionize the way real estate transactions are conducted in the future. As a thought leader in the real estate industry, it’s important to stay informed and ahead of these trends to effectively guide clients and stay ahead of the competition.
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Interviewee: Mohit Kohli
Company: Hanover Search
Answer: These are my 5 predictions: Workplaces will change, investors will mitigate risk while building agility into their strategy, housing affordability challenges will remain, demand for warehouse space will outpace demand for retail space, and multi-family homes will yield strong rental returns.
I believe in the short term, most firms will sit on their cash reserves while figuring out what the market will do, especially given the higher interest rates. Once the rates stabilize, I feel that we will see greater development taking place, especially within the life sciences and warehouse sectors.
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Interviewee: Jacob Blackett
Company: SyndicationPro
Answer: The future of commercial real estate investments is likely to be shaped by the rise of remote work and the surge in e-commerce shopping. These trends are expected to significantly impact the industry, with some markets still recovering, such as retail and hotel. Evolving real estate trends shaping the nation and an outlook on what’s ahead. This includes rising interest rates, popular asset classes like multifamily, and technology trends that are transforming the industry. These trends suggest that commercial real estate investments will continue to be viable for investors. However, they may need to adjust their strategies to account for changes in the market. Investors should also consider emerging technologies that can help them craft more informed decisions about their investments.
The COVID-19 pandemic has significantly impacted commercial real estate investments, with an estimated $453 billion wiped off office real estate values due to the surge in remote work. A joint research team from NYU & Columbia University studying the impact of remote work on office space properties estimates that office buildings will lose up to $500 billion in value within seven years.
Studies have shown that 61% of workers would actively change jobs to secure flexible working, and 93% would choose a company that offered remote working options. Assuming no change in space per worker, ITEP estimates that employment effects alone will cause the value of the commercial real estate to fall by up to 10%. The future of office properties is uncertain as many firms have reduced or closed their offices due to the remote work revolution, heavily impacting the commercial real estate sector.
The outlook for the commercial real estate market in 2023 is uncertain. Interest rates are expected to remain high, and a recession could further complicate the situation. Retail is at a crossroads, & the future of office space is uncertain. Global real estate leaders are concerned about the economy and potential revenue losses.
The multifamily sector also has started to slow down in the second quarter of 2022, but demand remains strong. Traditional transactions have been disrupted, and there is limited visibility into pricing. Despite these challenges, there may be opportunities for investors who can identify distressed assets and capitalize on them.
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Interviewee: Perry Zheng
Company: Cash Flow Marketplace
Answer: Real estate is becoming a tough industry to crack. The only prediction that seems solid is rising prices. Inflation is still impacting all real estate departments heavily. Buyers are still making arrangements to strike a deal that doesn’t cause a dent in their pocket.
Many buyers had saved up an amount to finally buy their ideal homes. But inflation has given them a reality check and has convinced them to wait. Moreover, people are opting to rent a home rather than buy it. This will help them cater to their budget and save up to buy a house when prices decrease.
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