Commercial real estate trends 2022

  • Technology: Retail must embrace technological changes, as consumers have inculcated the habit of shopping at their convenience. Although physical stores have their vantage, online will likely drive a good share of growth this year. Having said this, a growing number of retailers are taking shelter in technology, offering digital payment options and virtual product experience, as well as reviewing their inventory online.
  • Technology will likely play a key role. As per PwC, above 80% of travellers are looking for improved digital customer experience.
  • Mask enforcement and other hygiene-related factors are likely to influence travellers’ choice of accommodation.
  • Labour shortage is likely to be the key constraint for the industry given owners had trimmed their staff, who may have moved to alternative employments.
  • A new variant and health/safety concerns may impede the recovery rate of the sector.
  • Supply should be decent, as a good number for hotels that folded operations during the pandemic may intend to enter the market again.
  • Maintaining a large inventory would be key. This will likely become a new normal as increased demands pressure owners, who would also want to hedge against potential supply chain disruptions.
  • Occupancy would be high, notwithstanding the expected increased rent growth on escalating construction costs and higher demand for warehouse spaces, not to mention lower delinquency rates. Investors will likely bet big on this sector, as it should nourish other sectors.
  • Even though the industrial sector confronts a plethora of challenges such as higher raw material cost, power tariff hikes and ongoing labour shortages, it will likely remain on top of investors’ list this year. Finding the right asset at a competitive price should be a challenge as prices edge higher.
  • Suburban markets in the US will likely see higher rent and price growth, compared to metros, as people, encouraged by hybrid work models, are flocking to suburbs. Although the UK market would still be dominant by major markets although secondary cities would also see good traction.
  • Builders have to come up with new designs, such as built-in office spaces and additional space for wellness programmes, for better multi-family experience.
  • The peak inflation and developers’ focus on more Class A offerings may push government to provide more tax incentives and other benefits to attract some investment on otherwise fading affordable housing programs.
  • Occupancy levels across all major markets are estimated at above 95% similar to pre-covid trend.
  • Urban centres, such as Atlanta, Manhattan, San Francisco and Los Angeles, are likely to be the key attractions for investors, with new real estate being quickly leased.
  • Flexible layouts in floor plans will likely have higher demand.

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/