What does the commercial real estate market look like for 2021? Being aware of the most recent trends and prediction outlooks will help investors to prosper in the commercial real estate (CRE) market in 2021.
Technology
A fascinating newer trend is how technology has affected commercial real estate. One of those methods is the use of drone technology. Drones are capable of taking videos and photos of properties producing the most incredible views of the property that have never been seen before. The aerial views of a property and surrounding properties give a buyer an unusual perspective. They can be used for residential properties, commercial properties, land, tourist lodging, and most any other kind of commercial property. Not only can a drone take still photos, but it can also take videos with Hollywood-type filming and editing techniques. There can be 360° panoramic shots, extremely high orbital shots, tilt, zoom, and even a blastoff-from-the-ground effect to highlight a property. Mapping software has also become popular to identify the exact location of the property on a map. RIS media reports that homes sold 68% more quickly when they could show aerial images as opposed to homes that only offered standard images.
Other tech trends in the real estate industry are related to the ease of sending information and communications. There are rarely missed calls these days, and texts have become the preferred method of communication. Almost anything a potential buyer wants to know about the property, they can often retrieve the information in seconds or minutes. They can get information about the property, and they can instantly retrieve information about a loan, interest rates, market changes, and price drops. Certain algorithms have also been developed that match customers with particular types of properties they are interested in.
Other ways technology has affected the real estate market is related to virtual reality (VR). This is partly due to the pandemic and not wanting to be in close proximity to other people. Real estate agents can have VR videos created that come in handy when an in-person tour of a property isn’t available. They are inexpensive to create, and they can show anything a buyer would be interested in without having to physically visit the property. An agent can also show the VR video to many people in a short period of time as opposed to individually touring a property with each one of them. It can be an incredible timesaver.
Is there much inventory available for commercial real estate?
The pandemic and its related lockdowns have resulted in a significant percentage of companies requiring their employees to work from home. This has created vacancies for commercial real estate for businesses needing to expand or simply require more office for manufacturing space for their operations.
As the population becomes more vaccinated and states ease pandemic-related restrictions, a) people are traveling more and will be staying at hotels, and b) businesses will be asking employees to return to office properties. The market for commercial real estate is improving, but sales and leasing for office space is still low. Fewer real estate deals exist for industrial properties and land, while better deals are available for office building properties and retail properties.
E-Commerce Operations
Everyone surely still remembers the shortages that occurred during the pandemic starting in March 2020. Toilet paper, paper towels, cleaning products, rubber gloves, and many other products became difficult or impossible to find either on the shelves of local retailers or online. As of this writing in April 2021, many products are still hard to find. This shortage was partly due to people hoarding products for fear of waiting too long to purchase necessities. Another reason was the sudden increase in demand for sterilization products, and yet another reason was that manufacturing businesses closed or limited their operations either because their employees had contracted the coronavirus or because they wanted to mitigate the spread of the virus. This resulted in online businesses changing their inventory approach to increasing inventory in case of another coronavirus surge or another pandemic. Therefore, storage space likely is in demand in 2021, which will be an opportunity for those wishing to purchase commercial real estate.
Stimulus Money
In an effort to boost the economy, the government gave stimulus money to most households and many businesses in the country. While many households and businesses relied on this money to pay necessary debt, others who received the stimulus were not in financial trouble. Those who suddenly received several thousands of dollars in the last 6-8 months subsequently have had the chance to invest in commercial real estate as opposed to spending the money on bills and other necessities. Businesses can therefore grow from this sudden influx of cash and buy or lease potential income-producing commercial properties.
Attractive Rates For Commercial Real Estate
Due to the hit the economy took from the pandemic, the feds have lowered loan rates to make them attractive for investors. They are still historically low and are available for those who would like to invest in commercial real estate properties. You should consider getting a commercial real estate loan if you are interested in investing in CRE property. Don’t wait too long, though. As the economy warms up, the loan rates will start rising.
Emerging Industries
The Ladders.com website predicts substantial growth in the following industries:
Data science
Software development
Healthcare
Artificial Intelligence
Mental health
Sales
Digital designers
Marketing
Finance
Education
Certain industries will be bouncing back more quickly and needing office space. A retrofitted or cleaned-up storage space or office space might be attractive to an emerging industry in your area and could potentially attract commercial tenants.
While the pandemic created chaos for many industries, it has left behind commercial real estate opportunities in several areas and business sectors. CRE investors should be on the lookout for attractive opportunities. Creativity and research into a specific market could reveal some commercial real estate deals that could be taken advantage of. Purchasing and flipping a commercial real estate property or refurbishing a run-down property for rental reasons could result in future profits. The economy is improving and will come back stronger and stronger, and commercial real estate opportunities are waiting to be snatched up by investors.