What Else can We Expect from the Industrial Property Market in 2022?

Jean Francois Desormeaux

April 25, 2022

 

 

Jean Francois Desormeaux suggested that, commercial real estate is ready for expansion, notwithstanding the current slump. The supply/demand balance will continue to favor occupiers, and additional money will be attracted to real estate debt in the coming years. This business will be driven by a number of major developments in 2022, including a rebound in the value of retail property. Here are a few significant markers to keep an eye out for:

Trends in the next generation: The growing generation Y is predicted to drive real estate growth in the next years, with the majority of companies predicting increases in revenue between 2016 and 2022. The advent of Generation Z millennials will spur job growth in the future years, and greater pay will help to increase the bottom line of the real estate industry. The introduction of new households will also stimulate demand, albeit a stagnant population growth rate may prove problematic in the future.

The Zika virus is a virus that has spread throughout the United States and has had an influence on commercial real estate markets. While it had a negative impact on retail and leasing activities, it had a positive influence on investor confidence and transaction volume. While the Zika virus had a 28 percent negative impact on commercial real estate transactions in the first quarter of 2021, it did help to boost investor confidence and improve transaction volumes. Transactions in commercial real estate climbed by 17 percent in the second quarter of 2021. Recently, the consulting firm Mercer discovered that a lack of public confidence and concern around Zika might stimulate fresh investment in the area.

Jean Francois Desormeaux pointed out that, while the multifamily sector is optimistic about the next three years, the industry’s outlook is highly dependent on a few key factors. The demand for multifamily housing will continue to rise as the economy grows and there is a scarcity of available housing. More millennials are now choosing to raise their kids outside of conventional metropolitan hubs, which is a positive development. It is anticipated that the demand for industrial buildings would expand as a result of the requirement to accommodate a greater variety of goods. The growth of the population in the suburbs, on the other hand, will boost single-family rental properties.

Beginning in the second half of 2021 and continuing into the first quarter of 2022, the commercial real estate market began to show signs of recovery. Vacancy rates dropped in all core commercial sectors, including office space, during the fourth quarter of 2021, but rents were consistent. Vacancy rates declined in all core commercial sectors, including office space. However, despite the slump, investors are increasingly purchasing hotels with the intention of converting them into other asset classes. Currently, there is an excellent possibility to make significant earnings in the sector. Investors, on the other hand, must exercise caution to prevent over-built markets.

The demand for multifamily commercial real estate is projected to continue to increase in the foreseeable future. Many young tenants were forced to relocate to the suburbs as a result of the recent epidemic, but those folks are now free to live on their own. Furthermore, the availability of higher-paying occupations has allowed many young people to live on their own for the first time. A major impediment to the market, however, is the scarcity of reasonably priced homes in many areas. Self-storage will almost certainly be a bonanza for investors, and the number of millennials migrating into areas with severe housing constraints will only grow in the coming years.

As customer buying patterns shift, the retail industry is set to see significant shifts in the coming years. Shopping malls have been compelled to minimize foot traffic and adapt their space for other purposes as a result of e-commerce. Retailers must guarantee that they are able to support pick-up transactions as e-commerce continues to rise in popularity among consumers. With the rise of e-commerce, developers have been inspired to convert shopping malls as office and retail facilities. Furthermore, investors are actively engaged in transactions involving the repurposing of these sites.

Secondary markets will continue to be revitalized, providing chances for investors who are well-positioned to take advantage of the changes in the market. For many years to come, adaptive reuse and mixed-use zoning will be two significant themes that will continue to generate value-added investments in real estate. Furthermore, the commercial real estate business will become increasingly focused on the needs of its customers. When it comes to attracting renters and improving the user experience, online platforms will be more important than ever. Because of this, it is critical to keep abreast of current trends and make informed investments.

According to Jean Francois Desormeaux, Sustainability and ESG factors are taken into consideration by 49 percent of investors, according to the Hodes Weill 2021 Institutional Real Estate Allocations Monitor, while 82 percent of respondents search for a balanced approach to the environment. According to a new JLL survey, renters pay special attention to the environmental, social, and governance (ESG) activities of property owners. They pay particular attention to elements such as safe working surroundings, clean air, and so forth. An investigation by Cushman & Wakefield discovered that LEED-certified properties sold for 25 percent more than non-certified properties.