According to Fred Schmidt, the COO and President of Coldwell Banker Commercial Worldwide, major shifts in how we do business will shape a new commercial real estate market in 2015.
The 3 major shifts we can expect to see are:
- Investors will be increasingly attracted to commercial real estate as vacancy rates in multifamily units continue to remain low. Multifamily units are experiencing the lowest vacancy since 2001.
- Higher employment demand in cities and demand for smaller office spaces. Tenants are looking for less square feet per employee to achieve increase productivity and profitability.
- Millennials will increasingly shape the real estate market as the Baby Boomer generation starts to retire.
- In industrial real estate specifically, businesses are becoming more decentralized and focusing more on e-commerce. In turn, their locations are for order fulfillment and increasingly need rail use.
The positive factors that will lead market growth are:
- GDP growth
- Low interest rates
- Increasing sales and leasing
- Positive employment
- Energy self-sufficiency
The negative growth factors for 2015 are:
- Structural unemployment
- State and local debt
- Event risk: wars and political unrest
- Interest rates may rise