From the moment this new year began, commercial real estate has seen a massive wave of interest coming from investors. Eager parties from all around the globe have been honing in on the US’s collection of commercial assets, viewing them as safeguards against any possible external fluctuations.
The latest investment trends can be observed through the ebbs and flows of the commercial market. Some sectors are more popular than others, but there are currently 3 hot areas that investors can’t seem to keep their hands off of. Let’s explore these expanding CRE sectors and find out what makes them so irresistible to the market’s top investors.
Industrial is On the Rise
It’s not hard to see why industrial real estate would stand as one of the hottest assets to investors. The demand for industrial properties is present within nearly every major company.
Tech giants need industrial spaces to act as HQ as the capabilities of data continue to change and expand. Retail brands are looking to get their hands on warehouse spaces around the country as they transition into omnichannel retailers. In order to succeed, many warehouses are required to better accommodate online shoppers with faster deliveries.
With so much focus on US industrial spaces, it’s also piqued the interest of investors around the globe. ULI’s 2019 Emerging Trends Report reveals that industrial is the top-rated commercial sector by investors.
Multi-Family Attracts Big Players
Behind industrial, the multi-family sector is CRE’s second hottest investment choice. US apartment complexes have always offered an attractive opportunity to deep-pocketed investors around the globe, and the multi-family sector stands as one of CRE’s core markets. Multi-family assets have attained the highest sales totals and strongest price appreciation rates in decades. What’s more, leasing and sales transaction activity remains robust.
Looking towards 2020 and beyond, transaction values in these core areas are expected to remain strong.
The Return of Retail
CRE’s retail market is making a strong comeback within the global investment scene. Retail, which for the most part has received the cold shoulder from investors, is expected to begin piquing interests through 2019.
ULI reports that the most sought-after retail properties will be ones that are ready to be remodeled and redeveloped. These types of spaces provide the perfect opportunity to be transformed into any number of retail-centric functions.
Elaborating further, ULI continues – “If a site is sufficiently large, mixed-use is a great option for close-in suburbs looking to exploit maturing millennials’ desire to enter their next life-cycle phase. There also is an opportunity to turn the tables on the e-commerce trend that fostered the obsolescence by redevelopment into distribution facilities.”
Investor interest in domestic commercial assets is on the rise and set to continue into the future. This spells good news for CRE moving forward.