Commercial Real Estate Trends for 2022
to Keep an Eye On
The pandemic had a negative effect on all classes of real estate, commercial included, but thanks to this calamity that hit us, we now have many innovative possibilities in the CRE. Some of these benefits include more affordable prices, efficient communication and contactless forms and payments. In 2022, CRE will continue to recover but many new trends will stay.
Brick-and-mortar retail sales
The pandemic boosted the demand for online purchases, but brick-and-mortar stores are recovering thanks to smart moves that provide buyers with first-class shopping and entertainment opportunities. New leases will reduce vacancy rates and fill many holes left due to COVID-19. During the early days of the pandemic, consumers mostly shopped online. Social distancing and isolation laws caused brick-and-mortar channels to decline. But today, store sales are coming back to their previous state (even above the pre-pandemic level). All in all, we can expect the sales to increase through all channels available.
Bigger demand for CRE leases
As stated above, e-commerce was going strong before the pandemic, but it was seriously fueled by social distancing, isolation rules and lockdowns. To keep up with the demand, retailers of all kinds are rethinking their fulfillment centers, so today, we have an increased demand for commercial real estate such as warehouse leases. If there are investors and owners looking to break into the commercial real estate market, now is the time.
The rise of modular building
Why commercial construction companies are investing more and more into modular solutions? First, the construction sector is suffering from a shortage of skilled labor making it hard to keep up with the demand. Second, there are many safety concerns that make modular building much safer, quicker and more controlled. With modular building, commercial spaces of all kinds can be expanded quickly and seamlessly, allowing building companies and those in need of commercial spaces to stay on track.
Data centers continue to perform
Data centers have experienced a huge surge in demand at the beginning of 2020, fueled mostly by digital technologies. There’s a big need to keep pace with businesses’ demand for cloud and mobile technologies so it’s crucial to invest in data centers, fiber networks and various tech infrastructures. During the last two years, data center investment blew up and it will continue to grow in 2022.
The Healthcare sector is still going strong
Employment in the healthcare sector rebound quickly than in any other market, with offices and facilities still being in high demand. With successful vaccination, other healthcare REITs like senior care and long-term care are also elevated. Investing in healthcare real estate is still risky, but the sector is expected to maintain a high status for the upcoming years.
Covid-19 and its effects
According to experts, the commercial real estate market and the entire economy will continue to recover this year, without exhibiting any setbacks from surges in numbers of COVID-19 cases periodically. The new Omicron variant and its younger brothers and sisters will constantly serve as a reminder that we can expect other infections that can damage our economy, but good vaccination programs and natural immunity will hopefully contain the risk and allow us to continue with our lives.
The pandemic seems to be slowing down, but it still has a strong grip on our lives. It also affects the commercial real estate market on a daily basis. Still, many investors are strongly present in the market despite issues with site visits, assessments and staffing—these often delay the projects significantly. Some sectors are going really strong and will continue to perform well (these are the ones to look forward to investing in) such as e-commerce warehouses, storage facilities, grocery stores and medical facilities. It seems that these spaces will never die out.