After nearly two years of unprecedented transformation, the Commercial Real Estate (CRE) industry is at a crossroads. But, according to projections, In 2022, the economy and CRE markets will continue to recover, and setbacks from Covid-19 flareups will be brief.
A rising tide may elevate all boats, but not all boats are equal. That is, CRE is for you. Almost every sector of this huge industry will recover from the first shock of the pandemic-induced shutdowns. However, some will recover far more quickly than others. With a rent increase of 5% in the new year, the industrial and multifamily sectors appear to be the most promising, followed by retail and office CRE (0.6%) and REITs.
According to The Fall 2021 Real Estate Economic Forecast, which is based on a survey of 49 economists and experts from 36 major real estate organizations, CRE property prices will rise by 7% in 2022 based on the price index. Despite financial concerns and a changing regulatory environment, there is a general sense of confidence about the fundamentals. Eighty percent of respondents believe their institution’s revenue will be slightly or much higher in 2022 than it had been in 2021.
Commercial Real Estate forecast for 2022
- Multifamily housing will remain popular as well – According to the National Association of Realtors, multifamily investors can expect solid demand to support rising rents in most locations across the country (NAR). In its fall forecast, the trade association noted that skyrocketing property prices, which hinder affordability for many people, and building activity that lags demand, will all continue to be factors.
- The retail industry will continue on its erratic path – Essential brands will remain solid tenants and anchors for landlords. But, at the same time, individual entrepreneurs may be the best option for filling strip malls and downtown space previously costly.
- The Federal Reserve, Interest Rates, and Inflation -During 2022, inflation will continue above trend, although it will progressively decrease as the year passes. In the second half of 2022, the Federal Reserve will begin gradual, moderate increases in its short-term interest rate objective. Long-term interest rates are expected to decrease, making commercial real estate financing appealing.
Labor shortages, logistics concerns, travel restrictions, inflation, and the unchanging rule of supply and demand will all continue to influence CRE in 2022. As a result, CRE executives must alter their methods to obtain greater long-term success. In addition, the real estate business still has a long way to go in terms of achieving equitable representation. CRE executives should therefore place a high priority on social concerns as well as diversity, equity, and inclusion programs. However, as we approach 2022, there is optimism that we will do better as far as commercial Real Estate is concerned.
With all of the optimism surrounding the CRE market, you can finally own that retail store, office building, or warehouse facility you’ve always wanted. All you have to do is reach out to Eric L. Frazier MBA.
References
https://www.fool.com/real-estate/2021/12/06/4-commercial-real-estate-predictions-for-2022/
https://www2.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html
