Growth Ahead is the Prediction
We are well into 2020 and according to many outlooks and reports we have a stellar year ahead. As CBRE has predicted 2020 could be “one of the strongest years on record” for the commercial real estate industry.
It was reported the sector could see between $478 billion and $502 billion in investments in 2020. That would put it on par with the prior two years, outpacing previous years. Also mentioned, the prediction includes money that would go toward multifamily housing, retail, data centers, office space, industrial buildings, and more.
CBRE researchers cite low inflation, low interest rates, strong consumer spending, and increased capital flows into the sector as reasons for their bullish forecast for 2020.
Commercial Real Estate in 2020: Technology Will Have Impact
The speed of which technology travels and creates immediate change is shaking up every industry – commercial real estate as well is going to feel the impact.
The letters AI are all the buzz. It used to be that “artificial intelligence” was something you’d expect to find only in one of the Matrix movies, but that’s no longer the case. AI has taken the world by storm and is slowly integrating into every facet of our lives.
3 Ways CRE is Embracing Technology
Smart Buildings – Buildings have gone high tech and are now being built smart. The introduction of this technology is going to completely change the face of how retail, office, and industrial properties are run. Instead of being managed by an onsite control room, smart buildings can be monitored and controlled over the internet thanks to cloud technology.
This means that managers and building owners can control everything from electricity, HVAC, and security with the help of the internet.
Likelihood of Fraud is Decreased – Cryptocurrency was a term that win the past meant very little to anyone outside of technology and investing.
However, these days, the crypto disruption is being integrated into all facets of business, including real estate. Thanks to built-in smart contracts associated with blockchain technology, money doesn’t change hands until both parties first fulfill their end of the agreement. This, combined with the increased transparency, reduces the likelihood of fraud when buying, selling, and investing in property.
Leveraging the Cloud – Contracts, client information, and other important info are all stored remotely and accessed through cloud servers by smartphones, tablets, and laptops.
Not only does cloud storage and Internet of Things (IoT) devices make life easier by syncing data across platforms, it also means that you never have to show up to a meeting unprepared again – even if you’re notified last minute.
Commercial Real Estate in 2020: Retail Apocalypse and Technology
The retail apocalypse is the closing of numerous North American brick-and-mortar retail stores, especially those of large chains, starting around 2010 and continuing onward. In 2019, US retailers announced 9,302 store closings, a 59% jump from 2018, and the highest number since tracking the data began in 2012.
Post 2012, life has definitely changed for the average retail broker. In this new technology-driven era the retail industry is forcefully being re-invented. As the Sears, Pier 1’s, Toys R Us, and Payless Shoe stores of the world begin to close creating large vacancies, technology and data is complicating the decision-making process when it comes to leasing spaces.
Years ago, you met with a broker while looking at the retail site and minimal data available to estimate what potential sales could be generated at the at the property.
However, technology has drastically changed the entire process of the consideration of a retail property. Entering the room is “competitive data”, we now know everything about a given population from their education, average income, to buying habits.
Tech tools like Placer are being embedded into cellphone apps.
These tools track cellphone usage in specific areas, allowing brokers to access data that creates a more direct correlation between where traffic is heading in a retail area and a store’s projected sales based on the traffic.
Having all these tools empowers a tenant with more information to make decisions however it also can create hesitancy. It could be difficult to find a credit-worthy tenant willing to sign a long-term lease agreement in our fickle and quick-changing environment.
Brokers will need to find new long-term traffic-driving concepts to replace spaces left empty by past retailers, the next few years could be more complicated for brokers. 2020 will be a pivot able year for sure for the commercial real estate industry.