The commercial real estate market is undergoing a revolution, and it’s one largely fueled by new technologies and new approaches to the landlord-tenant models. That means that those invested in commercial real estate will have to make changes in both perspective and methodology in order to stay competitive. Expect the following trends to play a dominant role throughout 2019.
A Game of Technological Catch-Up
We’re in the midst of a fourth industrial revolution, but the commercial real estate business is currently behind many other sectors in adapting to these changes. One of the biggest emerging technological trends is the development of business intelligence and predictive analytics. While A.I. based solutions are a game changer in a number of markets, real estate has been slow to keep pace, but that could soon be changing. Almost half of CREs plan to start incorporating these technologies into their operations in the next year and a half, and as they become more prominent, they’ll increasingly become a necessity for staying competitive.
Little Slowdown in the Industrial Boom
Anyone involved in CRE will be aware that industrial developments have been steadily profitable sources of income, and that should persist through 2019. That’s in large part due to the continued growth of the e-commerce sector. As digital shopping continues its dominance of the retail sector, there will be more need for warehouses and manufacturing facilities.
Decent Growth in the Retail Sector
But the growth of e-commerce won’t necessarily signify the death knell of traditional brick and mortar establishments. While digital shopping was once seen as a replacement for traditional retail, it looks as if traditional retailers will be expanding their footprint. Increasing the viability of retail is a likely trend wherein e-commerce businesses make increasing moves into the physical space. By expanding into an omnichannel approach, they can increase their visibility, and that’s a move that can benefit commercial real estate developers and investors.
Slowly Increasing Interest Rates
Job growth shows no signs of stopping in the immediate future, and we can expect the Fed to react as a means to keep inflation in check. This will likely take the form of a rise in short-term interest rates. But you can expect this rate to be slow and steady, as a means of avoiding instability in the market.