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Emerging Commercial Real Estate Investment Trends

Published on Wednesday - January 15, 2014

2014 is going to be a huge year for U.S. real estate. However, many investors are not fully aware of some of the most significant trends that are beginning to emerging in the early part of the year. Revolutionary commercial real estate investment trends may wind up being responsible for some of the greatest income generating and wealth building opportunities over the next decade. Those investors who take advantage of these exit strategies may be rewarded accordingly.

Fresh confidence has spurred more investment and lending opportunities, as mortgage lenders and global investors are eager to plow cash into the market. With the anticipation of a new era of prosperity at hand, underwriting is loosening. The appetite for growth is quickly supplanting the emphasis of conservative wealth preservation. This is likely to spur more bulk buying as well as providing a huge cash injection for the economy.

Experts from Bloomberg and Blackstone operations have recently pointed out just how many millions of U.S. residential properties are currently being held free and clear of any mortgage debt.

Much of this wealth is already being tapped by homeowners who are finally finding themselves as the beneficiary of home equity. Many real estate investors might have assumed that homeowners would be more conservative than ever, given the hard lessons of recent years past. However, it would appear as if the opposite is true. New reports show a tremendous surge in retail shopping with home buyers splurging on everything from clothes to new cars.

A lot of this money can be leveraged by real estate investors on the behalf of homeowners looking to get into property investing. However, it is also bound to lead to a surge in returns for retail property owners and demand for retail space.

In turn, a booming retail sector will increase the need for office space to support operational functions in a variety of ways. Some reports showed net leased office and retail cap rates falling in Q4 of 2013, but analysts reporting via the CCIM Institute predict this will be reversed throughout 2014, as commercial real estate investors are expected to scoop up properties before interest rates increase too much.

Investors should expect to see the office market in a constant flux throughout 2014. Some areas will find co-working and shared office arrangements finally catching on, while others see start-ups needing more private office space. However, according to new research reports, the medical sector could see some of the most significant growth. According to leading analysts, this sector will boom in the next decade.

Clearly, the early adopters and investors who claim property in these sectors will be those that see the greatest growth and position themselves for the best cash flow spreads. However, this best growth may not be in the areas or properties many expect. There is clearly a trend and more demand growing for new properties (although performance history can’t be ignored), as well as recently renovated properties ready to handle new tech. Think San Diego versus San Francisco and New Haven, CT versus NYC.

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