(617) 674-2043 advisors@mansardcre.com

As an owner of commercial real estate property, staying on top of commercial real estate marketing trends can help you strategize successfully.

The American commercial real estate market size is valued at $1.1 trillion for 2019. Over the last 5 years, the industry has steadily grown at about 2.6% per year.

As you can see, commercial real estate is a lucrative industry to get into, especially if you have properties of high value. If you’re thinking about selling, below are 10 commercial real estate market trends you should know about for 2019.

1. E-commerce Will Be King

Throughout the last decade, e-commerce has steadily grown. It’s done so to the point where many entrepreneurs favor it instead of traditional brick and mortar stores.

For the year of 2019, it’s expected that e-commerce will still dominate the market. This means they’ll need properties to function as fulfillment sites, as the businesses will be run completely online. For those who own properties that could meet this need, it’s a good time to sell.

2. Office Construction May Slow Down

There are over 28.8 million small businesses in the US, which means there’s a high demand for office space to accommodate them. In 2018, there was plenty of construction done to meet this need.

However, new construction may slow down in 2019 due to rising construction costs and labor shortage, as well as zoning problems. If you have office space that you’d like to sell, it’ll be in high demand, so you can sell for excellent prices.

3. Multifamily Real Estate Is Hot

A decade ago, most sales in the commercial real estate industry were made in commercial office properties. While these are a strong contender, they’re no longer on top.

Currently, multifamily properties are one of the hottest assets in the market. They’ve been steadily rising to the top, with sales topping $70 billion. Multifamily property owners will want to get in on this hot market.

4. Hold off on Central Business District (CBD) Office Sales

This area of commercial real estate isn’t doing as well. In fact, it was the only sector that had a drop in price appreciation in 2018.

Investor and tenant demand for CBD Office has been strong, yet rents have failed to appreciate dramatically in this cycle. Because of these factors, if you have office CBD, you might want to exit now or hold off on selling until the next expansion phase in the cycle returns.

5. Interest Rates Will Gradually Rise

The US economy is doing very well, with record-low unemployment rates and great job growth. Since the American economy is so strong, the Federal Reserve is most likely to increase interest rates this year, and possibly in the next few ones as well.

Because of this, we may be seeing a decrease in people investing money into purchases. What this means for your property is uncertain, as it depends on how in demand it is and how that sector is doing this year.

6. There Will Be Fewer Retail Bankruptcies

When e-commerce started booming, this led to the closing of many major brands. However, some time has passed now, so retail companies will experience fewer bankruptcies, although there will still be some.

Instead, they’ll be shifting their focuses and evolving their strategies to adapt to an e-commerce focused society.

7. Commercial Asset Pricing Is Increasing

Overall, the commercial real estate sector has amazingly high prices, even more so than the residential sector. The areas with the highest prices are industrial and suburban offices, as well as apartments. You can rest easy knowing cap rates are going to remain pretty stable this year.

You may be holding out on selling since you want to get more return on your transaction, but be aware there’s such thing as selling too late. You may want to consult with a professional commercial real estate broker to ensure you’re selling your property at the right time.

8. Millennials Are Moving to “Hipster” Suburbs

While it was widely believed that millennials hated suburbs, this is proving to be untrue. The majority of millennials are now settling down and starting families, which means a large number of them are moving into suburbs.

As the demand for housing in the suburbs grows, so will the demand for retail. So if you own any retail spaces in trending suburbs, it’s a good time to consider selling it.

9. Recession Isn’t in the Cards

In this country’s history, a recession usually would happen a few years after a period of prosperity. Since the US economy has been very strong, many are wary that a recession can happen anytime soon.

While this is certainly a possibility, it doesn’t look like it’ll happen anytime soon in 2019. However, some analysts think the economy will slow this year because of the increasing interest rates. You should still have a contingency plan in place, as there’s no predicting what can happen to change the economy in an instant.

10. Opportunity Zones May Be Promising

The Opportunity Zone program was created in 2017 under the Tax Cuts and Jobs Act. This act allowed for less risk when private capital is used to invest in distressed communities.

If you invest in a distressed community, the longer you make the commitment, the more tax forgiveness you get. As a result, this is a promising area to invest in and many people are keeping their eye on these opportunity zones in 2019.

Take These Commercial Real Estate Market Trends into Consideration

With the knowledge of these 2019 commercial real estate market trends, you should have a better time either selling right away or holding off until the market looks better for the type of sale you’d like to make. However, it’s always good to talk to a broker so you can get a professional opinion on the optimal time to sell.

If you’d like a reputable commercial real estate broker to help you with your sale, please request a consultation with us now.

Ready to get started?

Schedule a free consultation with MANSARD’s team of experts to learn more. We’ll discuss real-time commercial real estate market opportunities and help you determine the best investment strategy for your portfolio.