July 4, 2022

6 Trends That Will Drive Commercial Real Estate in 2022

4 min read
commercial real estate

The last couple of years were, without any doubt, a very tumultuous period for the entire commercial real estate sector. On the one hand, the outbreak of COVID-19 combined with the rise of the remote workforce took an incredibly heavy blow on the demand for this type of property with the exception of industrial real estate which kept going strong even during the pandemic.

On the other, the entire real estate industry is undergoing a digital revolution and relies more heavily on AI and data centers which causes tectonic internal changes and completely overhauls its infrastructure.

Where does that leave the present-day commercial real estate and what forces will be driving its evolution until the end of 2022 and beyond? Let us try to find that out together. These are the top six commercial real estate trends for 2022.

Bigger companies taking over the office space

So, as we mentioned in the introduction the pandemic work conditions forced countless companies to send their workers to remote work positions and a large quantity of these employees won’t ever come back to their native positions. This topic will keep popping out throughout the article. Be that as it may, the hot, high-traffic office spaces won’t stay vacant for too long, and bigger companies trying to expand will quickly close in to make use of these properties. That will lead to certain market consolidation and cause necessary price adjustments. Other market corners will inevitably take a hit as a result.

E-commerce driving warehouse leases

When talking about the growth of the e-commerce sector we have experienced over the last couple of years, most people in the industry like to point out its negative effects on the retail property market. However, the commercial real estate sector should snatch a small win out of this development. Namely, the higher volume of goods being traded online across the globe also creates the need for safely storing these commodities before delivery. That should give warehouses and similar CREs a very strong push into the spotlight and make them one of the most promising corners of the commercial real estate sector.

The necessity for faster and leaner construction

If the previous period thought us one thing that would be that the complete industry frameworks can be changed over the course of the night and that effective long-term planning is no longer possible. The current geopolitical situation indicates the situation won’t change anytime soon. Because of that, there is a growing necessity for a nimbler industry and more efficient construction works. The answer to this problem will most likely be found in modular building construction. This option also presents a more eco-friendly solution so expect to see a number of modular constructions in circulation to keep growing.

Healthcare and fitness keep on expanding

The outbreak of COVID-19 caused countless companies to close their doors. The Healthcare sector didn’t experience such problems. On the contrary, the pandemic only outlined just how strained the national health infrastructure is. This industry will mark inevitable growth in the following years. The fitness and personal wellbeing center will ride this wave of renewed interest in public health. Of course, all these industries and sectors need to utilize a very specific type of facilities so expect to see more investments placed in that niche. The growth of the senior population will keep the sector viable in foreseeable future.

Demand for essential businesses

Of course, the healthcare and fitness industries are not the only business sectors that will be marking growth in the future period. When the economy finds itself in trouble, we usually see higher demand for essential businesses like grocery stores, pharmacies, auto parts, dollar stores, and similar companies. This time is no exception. So, what does this turnaround mean for the real estate market? Well, things will, for the time being, take a smaller scale and we will see the focus on short-term performance. At the same time, stable income from these tenants will bring some much-needed stability to the market.

Changing the nature of the office spaces

So, we have already seen that the growing number of remote workers is leaving a large chunk of the available commercial office space underutilized. What can then, the investors do to attract high-paying clients that are not necessarily interested in the location or the square footage? Well, the extra space can be repurposed to offer the remaining workers different amenities, an open office concept, a place where they can work out during the job breaks, or full-scale gaming rooms. All these things can lend the commercial properties so we can expect to see the available office space used for these other ancillary purposes.

We hope these few tips have shown you the general direction in which the commercial real estate market will be heading until the end of the year and beyond. This entire sector along with a digital revolution took quite a heavy blow due to the outbreak of COVID-19 and it is only now gradually coming back to its feet. However, the market we will get at the end of this transition won’t look like the one we left in 2020. Still, the current trends give us a good foundation to believe the industry will be able to adapt and overcome contemporary obstacles.

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