Commercial Real Estate Trends

Commercial Real Estate Trends in 2023

With plenty of doom and gloom predicted at the end of 2022 after a rollercoaster of a year, what can we expect for commercial real estate trends in 2023? There are many macroeconomic forces that could impact the commercial real estate market in 2023 such as geopolitical issues, as well as record-high inflation and rising interest rates. These factors are predicted to lead to a recession in coming months.

However, commercial real estate has always faced a cyclical nature, and property investors who understand how to take advantage of the ups, as well as the downs, will still see plenty of opportunities for growth in the year ahead. Some experts are predicting that interest rates and the real estate market may even see some stabilization with a possible increase in inventory. There are also plenty of areas with positive outlooks for investors. Often investors may be looking for commercial rehabilitation loans for 2023 real estate.

Here are some predicted commercial real estate trends that are worth looking out for and keeping in mind in the year ahead.

Sustainability

Sustainability is increasingly important to both purchasers and tenants. Accordingly, developers and property managers are expected to meet minimum standards of energy efficiency and sustainability. This may include features such as solar panels and green roofs, more green spaces and trees, and developments that incorporate sustainable design principals.

Mixed-Use Developments

Developments that combine residential, commercial, and recreational spaces continue to grow in popularity. Residents and businesses alike are attracted to spaces in walkable communities where everything they need can be accessed on foot.

Rezoning

There has been an ongoing trend for developers to lobby city councils to rezone some districts to residential. It is predicted that 2023 will see this movement increase, with a focus on creating new housing developments which may ease escalating house prices.

Long-term Tenants

Commercial real estate investors are predicted to prioritize top-quality, long-term tenants even over higher rental prices. This preference for long-term security is particularly prevalent in restaurants, technology, and fitness spaces.

Multifamily Properties

Multifamily properties are currently the best-performing asset class. This is predicted to stay strong throughout 2023 due to prospective homebuyers favoring renting over purchasing in the face of rising interest rates. Developers interested in investing in multifamily properties are encouraged to incorporate new technologies as well as energy-saving and sustainability features.

Affordable Housing

Currently, the demand for affordable housing is significantly higher than the supply. This opens up opportunities for CRE investors to find creative solutions such as mixed-income properties and adaptive reuse of buildings such as retail and office spaces.

Office Space

The future of office spaces may remain up in the air with many companies downsizing or not renewing their leases, but there are plenty of opportunities for CRE investors to adapt to changing cultures and expectations. For instance, CRE investors could look for ways to reimagine office spaces in ways that appeal to individuals and businesses who favor hybrid working, such as flexible spaces that can accommodate both remote and in-person working, outdoor spaces, high-speed internet, and on-site amenities such as childcare and catering.

Warehouses and Distribution Centers

A preference for online shopping was accelerated during the COVID-19 pandemic and the demand for e-commerce facilities, warehouses, and distribution centers continue to grow. There is also a need for facilities that can support the delivery of all these online orders. This could present great alternative opportunities for CRE investors.

Self-storage

As people continue to move and downsize in this changing market, the demand for self-storage also increases. This could be another chance for CRE investors to make lucrative investments despite the current and predicted state of the economy.

If you’re looking for a commercial private money lender and real estate investment partner that understands your needs and is ready to help you achieve your goals, get in touch with Alpha Funding today.

This article on commercial real estate trends is intended as a general guide and should not be considered as advice.