If you currently or plan to invest in commercial real estate, you should know what is going on in the market. Every market trend can have a significant impact on your investment potential and profitability. To increase your profits, you should take a proactive approach and conduct regular research on the industry. These are a few trends you should consider.
Office Construction Rate
Office buildings are one of the primary commercial property investments. Office space is typically in demand. For example, 60% of the new office space built in 2018 was leased immediately. However, over the last few years, many construction companies have reduced their investment in building office space. Part of this reduction is due to construction costs, but some companies have faced zoning challenges. In addition, mobile or telecommuting work has increased, reducing the need for this type of commercial property.
Watch the construction and leasing trends in your area to identify the types of properties that actually make a profit. Work with local realtors to determine what properties the area needs and which are making the highest profits.
Expansion of Digital Content
The world has become digitized, and customers have begun demanding high-quality photography and videos. Unfortunately, many commercial real estate companies still believe that raw data is the driving force in leasing and purchasing decisions. They believe an amateur cellphone can sell a property just as well as a professional presentation.
Most buyers spend more time looking at a property’s photos than reading its description. In addition, your properties will sell or lease up to 32% faster if you have high-quality visuals. Therefore, invest in professional photography, videography and editing so that your customers can spend time reviewing what you have in the best light possible. Work with realtors who value professional visuals.
E-commerce sales have increased exponentially. Today, retailers experience four times the sales online than they do in brick-and-mortar stores. However, traditional sales outlets are still making profits. For example, most consumers still prefer to visit a grocery store than purchase their groceries online.
As e-commerce increases in influence, commercial investments may move toward storage and warehousing facilities. Construction companies may begin converting old buildings in strategic locations, such as those near major interstates and highways or in large cities. These properties will be wise investments in the future. However, don’t discount the value of retail properties, especially those in strategic areas, such as in shopping centers with businesses that sell a wide variety of goods and services.
Commercial real estate investment is highly competitive, but you can make the most of your investments by doing some research and anticipating market trends.