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A New Era for Commercial Real Estate – The Predictions from the Experts

Commercial Real Estate

A New Era for Commercial Real Estate – The Predictions from the Experts

Commercial real estate (CRE) is a property utilised only for commercial activities or workspace. Other subcategories of this industry include office buildings, shopping centres, warehouses, and other leasing facilities. The commercial real estate sector suffered difficulties during the coronavirus epidemic in 2020 and 2021. Unfavorable predictions for the retail and corporate real estate markets were made for a while due to the stream of variations and ambiguity around the future of office-based activity and rents.  Despite the lack of certainty in the commercial real estate market, patterns appear to improve yearly. This article opens the predictions and thoughts of some of the commercial real estate industry’s top experts on what the future holds for the industry.

Forecast of Commercial Real Estate: 

  • The Future of Office Space

Businesses had to switch to remote work during the pandemic’s start; this experiment was unexpectedly productive and profitable. However, as CEOs look to return to the workplace, they have to deal with lower employee retention due to rising demands for more flexibility and reasonable compensation. As remote work becomes more prevalent, traditional office buildings will have difficulty attracting tenants. But marketers are already thinking about creative solutions that will appeal to remote workers. Approximately 44% of the workforce looked for new positions in March 2022 that offered better compensation, benefits, and continuous remote work. We’ve already seen the rise of co-working spaces, but marketers are also exploring a whole host of new concepts for office space. 

  • Virtual offices make it easy for remote workers to be in a given city without renting a physical office.
  • Flex offices allow remote workers to rent offices on an as-needed basis. 
  • Coworking/hotels allow remote workers to work on-site in hotels. 
  • Gyms/spas/childcare allows remote workers to work on-site in fitness centres/spas/childcare facilities.
  • The Future of Retail Space:

Retailers are quickly repurposing their storefronts to serve as e-commerce fulfillment centers. While this shift is creating challenges for the real estate industry—like rising vacancies—it’s also creating new opportunities. With an increasing number of retailers serving as their fulfillment centers, there is a significant increase in the number of retailers needing office space. Retailers will continue to evolve as e-commerce becomes more popular. We’ll also soon see some retailers start to operate as hybrid businesses that offer both e-commerce and in-store options. This will create new challenges for commercial real estate, but it will also create new opportunities. The new ecommerce retail space will badly impact local retail shops. According to UBS, a major worldwide investment firm, that 80,000 local shops will close by 2026; however, due to inflation and rising retail sales, this prediction is more likely to fall between 40,000 and 50,000.

  • The Future of Industrial Space:

The pandemic will have a significant impact on industrial real estate. We’ll see an increase in the demand for warehousing and distribution space as e-commerce grows and logistics companies look for cost-effective ways to serve their customers. Industrial landlords will also see an increase in the demand for power generation and transmission space as the grid struggles to deal with the rise of renewable energy. While COVID-19 will create some challenges for industrial real estate, it will also create new opportunities. Industrial real estate will likely increase demand, pushing industrial rent up. According to Calanog. “Still, if more goods continue to be ordered online and industries such as life sciences emerge, demand for industrial space will likely remain robust. Since industrial real estate forms the core of the commercial real estate market, those changes will significantly impact the entire industry.

  • The Future of CRE Technology

The rise of remote work will revolutionise the use of technology in the commercial real estate industry. We’ll see the emergence of augmented reality (AR) and virtual reality (VR) to help people navigate their workplaces. For example, AI will likely help people find the perfect office space by recommending properties based on their individual needs. AR and VR help remote workers collaborate more effectively by letting them view their colleagues as virtual holograms.

The Outlook For The Commercial Real Estate Market In India

In India, the commercial real estate market is undoubtedly growing. The commercial real estate market is anticipated to expand to a market value of US$ 1 trillion by the end of 2030, becoming a favourite choice of investors with a CAGR of almost 13 per cent from the projected period of the fiscal year 2022 to 2027, according to the Mordor Intelligence study. According to the report, commercial space is also growing quickly, supplying India with the infrastructure it needs to meet its changing needs. In the upcoming years, growth in India’s commercial real estate sector is anticipated to be boosted by substantial institutional investments.

Commercial Real Estate

Commercial real estate’s future undoubtedly appears optimistic, given the favourable conditions ahead. India’s largest cities saw a net absorption of 4.39 million square feet of office space in the second quarter, up 32% over the same period last year. The demand for real estate infrastructure is anticipated to increase due to government initiatives, urban development plans, and programmes like Smart City and AMRUT.  

Wrapping up – Commercial Real Estate market Potential

Even though there is still some uncertainty surrounding the pandemic recovery, the commercial real estate market is growing, and all signals are heading up. Renters and consumers have changed their behaviors, which has affected the commercial scene. Commercial investors can ostensibly maximize real estate potential by updating multifamily properties and taking into account consumers’ “convenience first” ethos while making purchases.

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