As 2017 has begun, the market will continue to experience changes in technology, demographics, and geopolitical events expected to alter the face of commercial real estate.
In addition, the millennial community is continuing to impact living and work spaces throughout the marketplace. Specifically, we will continue to see companies alter, and completely change in some cases, their interior work environments to benefit their employee base. These changes are material to employee retention and overall stability within their workforce.
Today’s work place is, and will continue to be, a place where collaboration is not just welcomed but preferred. It will be important for companies to keep a keen pulse on the millennial base with innovative technology and resources.
Experts and industry leaders believe the following are trends for 2017:
- Overall real estate returns are expected to slow
- Economy is expected to continue to grow
- Technology, demographics and geopolitical events to challenge the industry
- Transactions and prices are expected to moderate
For example, the 2017 outlook of commercial real estate transactions, prices, and values may be different than 2016 & 2015. For instance, 2015 was a record year for commercial real estate transaction volumes—primarily due to large portfolio and entity-level transactions—which resulted in a YOY decline for transaction volumes in 2016, per Real Capital Analytics. While this downward trend, combined with high property prices, presents headwinds for transaction volume in 2017, tailwinds for the commercial real estate market include the anticipated economic boost from the new presidential administration. These trends will support a continuation of strong property fundamentals.
It should also be noted that while the “Trump effect” is expected to boost commercial real estate investment due to decreases in regulations and to other pro-business policies, President Trump’s hasty policy directives may unnerve investors. With a combination of positive and negative factors expected in 2017, transaction volume is likely to be similar, or perhaps a little more neutral than 2016 levels.
There are plenty of areas to watch for in 2017 and the market should continue to be positive and create opportunities, even given the disruptive environment. There are many opportunities within the industry in 2017 if companies and service providers pay attention to the changing regulations and the need for technology and resources to provide better services and market knowledge.
Eric Beichler is managing principal at Mohr Partners Inc.
