From the moment this new year began, commercial real estate has seen a massive wave of interest coming from investors. Eager parties from around the globe have been honing in on the U.S.’s collection of commercial assets, viewing them as safeguards against any possible external fluctuations.
The latest investment trends can be observed through the ebbs and flows of the commercial market. Some sectors are more popular than others, but there are currently three hot areas that have captured investor interest. Let’s explore these expanding CRE sectors and find out what makes them so irresistible to the market’s top investors.
Industrial is On the Rise
It’s not hard to see why industrial real estate would stand as one of the hottest assets to investors. The demand for industrial properties is present within nearly every major company.
Tech giants need industrial spaces to act as HQ as the capabilities of data continue to change and expand. Retail brands are looking to get their hands on warehouse space around the country as they transition into omnichannel retailers. In order to succeed, many warehouses are required to better accommodate online shoppers with faster deliveries.
With so much focus on U.S. industrial space, it’s also piqued the interest of investors around the globe. ULI’s 2019 Emerging Trends Report reveals that industrial is currently the top-rated commercial sector by investors.
Multifamily Attracts Big Players
Behind industrial, the multifamily sector is CRE’s second top investment choice. Apartment complexes have always offered an attractive opportunity to deep-pocketed investors around the globe, and the multifamily sector stands as one of CRE’s core markets. Multifamily assets have attained the highest sales totals and strongest price appreciation rates in decades. What’s more, leasing and sales transaction activity remains robust.
Looking further into 2020 and beyond, transaction values in these core areas are expected to remain strong.
The Return of Retail
CRE’s retail market is making an undeniably strong comeback within the global investment scene. Retail, which for the most part has received the cold shoulder from investors, has gained the interest of investors throughout late 2019.
ULI reports that the most sought-after retail properties will be ones that are ready to be remodeled and redeveloped. These types of spaces provide the perfect opportunity to be transformed into any number of retail-centric functions.
Elaborating further, ULI continues – “If a site is sufficiently large, mixed-use is a great option for close-in suburbs looking to exploit maturing millennials’ desire to enter their next life-cycle phase. There also is an opportunity to turn the tables on the e-commerce trend that fostered the obsolescence by redevelopment into distribution facilities.”
Investor interest in domestic commercial assets is on the rise and set to continue into the future. This spells good news for CRE moving forward.
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