Similar to the single-family home and residential real estate markets, the commercial real estate market follows cyclical trends. Investors are always seeking ways to predict how these trends will affect their specific markets shortly, and they wonder, “What are the finest real estate areas for commercial investments?”
These ever-changing trends and their influence drive an investor’s strategy for beating the competition. There can be no discussion of commercial real estate investing or economic growth without mentioning COVID-19 and its influence on Commercial Real Estate (CRE).
The pandemic has impacted businesses worldwide, including several in the CRE sector. Commercial real estate prices can still fluctuate in the best cities to buy.
Read on to know more about the best places to buy commercial real estate in the U.S. and what to expect with new investment opportunities and the right investment professionals at Saint Investment.
Table of Contents
Current real estate market trends in the United States.
Throughout 2021, commercial real estate was likely to confront some unique difficulties—the future of remote work and office buildings. When a major portion of the workforce was compelled to migrate owing to COVID-19, many investors questioned the feasibility of office buildings and long-term commercial leases. Real estate market trends to look forward to in 2023 are as follows:
Another year of expansion will be aided by significant capital and public debt.
Most signals point to another solid year in commercial real estate among those knowledgeable about the market. Preqin said that commercial real estate funds amassed about $152.2 billion in the dry powder until mid-October, ready to be deployed on growth possibilities and demand and available loans.
The housing boom will almost certainly continue.
According to recent data, multifamily continued to outperform in 2021, with investment volume surpassing $179 billion in Q3 2021. Low supply and price competitiveness in single-family homes and a flight to quality housing were also causes. Investors should be alert to oversupply this year. However, it appears that the market will continue to do well.
The Federal Housing Finance Agency imposed a $78 billion limit on multifamily purchases, up 11.4% from 2021. This, combined with stronger household formation and hybrid work, lays a solid platform for continuing demand throughout markets, particularly in secondary and suburban areas.
A growing number of quants will join the real estate market.
Given the prospect of outsized returns, consistent yields, volatility hedges, and unique tax advantages, more quants are likely to enter the market in the next few years. Tailwinds are blowing across the market due to the post-Covid rebound and infrastructure spending, and smart investors should pay attention.
Importantly, cultivating a robust network of partners and sponsors aids in maintaining high value. Professionals who keep their ears to the ground in each market can protect risk-averse investors.
Where Are The Best Places To Purchase Commercial Real Estate?
Few states in the United States attract commercial real estate investors the most because they offer lower facility costs and effective property tax rates. On the other hand, these states are experiencing high income and job growth. Exploring and investing in these states can help investors build a strong portfolio while increasing their bank balances.
In terms of real estate market trends, 2023 is predicted to be an exciting year. For the upcoming year, investors should monitor both residential and commercial developments. Here are the top ten markets to monitor in the coming year for individuals looking for new opportunities:
- Tampa, FL
- Charlotte, NC
- Dallas, TX
- Atlanta, GA
- Seattle, WA
- Nashville, TN
- Raleigh-Durham, NC
- Phoenix, AZ
- Austin, TX
- Boston, MA
When Should I Hire An Investment Firm?
Professional investors can offer you a range of long-term strategic assistance when looking for commercial real estate. Investment first can save you time and possibly money when scaling through commercial properties. Some outstanding candidates for hiring an investment firm include:
- Those who want a brick and mortar store for their business
- People going through a major business change (e.g., location expansion)
- Those who’ve had a transaction-heavy year (e.g., home sales)
- Small business owners looking to scale up
Leave It To The Pros At Saint Investment
Professionals at Saint Investments are backed by years of investing expertise and founded by the high net-worthy investment partners. Using dependability, flexibility, and performance as basic foundations of their operational strategy, Saint Investments brings unique investment terms to the real estate world.
Frequently Asked Questions:
Increases in employment, population, GDP, and construction all help drive expansion in the United States commercial real estate industry. The development of the commercial real estate sector in the United States is influenced not only by factors like location and infrastructure but also by government policy.
The forecast for the retail market in the leading commercial real estate markets in the United States remains unclear. The COVID-19 epidemic has had a substantial effect on the retail industry, resulting in store closures and a move toward online purchasing.
As the economy improves and customers return to in-person shopping, there may be a rebirth of physical retail establishments in the top US commercial real estate markets. Changes in consumer behavior, the availability of vaccinations, and overall economic conditions will influence the future of the retail industry in the leading commercial real estate markets in the United States.
In recent years, the demand for industrial space in the leading commercial real estate markets in the United States has expanded dramatically owing to reasons such as the expansion of e-commerce, supply chain optimization, and the necessity for distribution centers. This rise in demand has resulted in a market with low vacancy rates, rising rental prices, and a rise in the number of industrial properties being created or bought.
This tendency is anticipated to continue in the foreseeable future, particularly as the economy continues its recovery from the COVID-19 epidemic.
Borrowing costs for developers, investors, and property owners might rise as a result of a rise in interest rates, which can have a negative effect on the commercial real estate market in the United States.
Real estate price rise can be limited by higher interest rates since the cost of ownership increases.
Moreover, some commercial property owners may find it difficult to make loan payments due to rising interest rates, which can lead to default and property foreclosure.
In the end, the strength of the economy, access to finance, and the supply and demand dynamics of individual markets will determine how rising interest rates affect the US commercial real estate market.
As a result of the rise of e-commerce, the main commercial real estate markets in the United States have seen a dramatic increase in the demand for warehouse and distribution center space in the industrial sector. Demand for industrial properties in the region is being driven by the rising need for supply chain management and storage options in response to the proliferation of internet shopping. Because of this, the vacancy rate in the industrial sector has gone down while rental prices have gone up and new industrial properties have been built and purchased.
As e-commerce keeps expanding, this pattern should keep on growing.
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.