Thursday, August 18

Why Experts Are Predicting an Acceleration in Commercial Real Estate in 2015

If 2014 was the year that the commercial real estate market woke up from a long period of dormancy, then 2015 will be the year it rubbed its eyes, had its morning cup of coffee and started the day off with a buzz.

That’s at least how experts described the outlook for 2015 at a recent commercial brokerage forecasting event, according to a January 6 Las Vegas Review-Journal article.

Across all sectors, from retail to industrial, commercial real estate will continue to make gains on the advances it made in 2014. This is especially true in the investment sector, which will see steady gains in land prices and rising confidence among property buyers. According to UrbanLand, a continued increase in the amount of investment capital entering the commercial real estate market can be expected throughout the entire year, thanks to boosted allocations.

“Our 2015 outlook for commercial real estate is extremely positive. The only potential gray clouds on the horizon are the expected waves of maturing CMBS loans in 2015-2017,” said Taylor W. Grace, managing partner at Midwest Capital Funding. “Given their typical ten-year loan periods, and more CMBS issuances in 2005-2007 than any other time in history, it has the potential to create refinancing pressure in the markets.”

In addition to boosted capital flow and allocation in the investment sector, commercial real estate industry workers can expect low supply in relation to demand, which will encourage the development of new properties across the country. Multifamily residential developments — especially apartments — will surpass office space construction for the first time in a 10-year period, according to UrbanLand.

“Lending institutions appear to be becoming more aggressive on both lending volume and terms recently, which could help alleviate this potential problem,” said Grace.

At the same time, the suburban shopping mall’s time of dominating the retail sector of commercial real estate will continue to wane in 2015. With more people preferring to do their shopping online and budgeting less of their money toward apparel purchases, retail shops across the country are shutting their doors.

In lieu of the mall, which was a hallmark of the mid-range store that appealed to shoppers of all incomes, investors will turn to high-end boutique shops and heavily discounted retail stores — a bifurcation of the retail sector.

With all these shifts in the market expected to take place in 2015, there will be no shortage of growth and fruition taking place throughout the commercial real estate market.

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