Top Locations for Commercial Real Estate

Top Locations for Commercial Real Estate

There can be little doubt that 2020 was a watershed year for commercial real estate; in the fallout from the COVID-19 pandemic, it is unlikely that the work culture of the United States will ever be the same again. To wit, the concept of work-from-home as a functional business strategy went from the stuff of fantasy to reality in the space of only a few months last year. Anyone in the field of commercial real estate must be aware of this change to plan for the future.

Moving With the Curve

With that being said, there are a few things to consider when analyzing market changes in real estate in 2021. Firstly, expect rent costs to fall in areas such as Silicon Valley and New York City. These areas are still major centers for tech and investment companies; however, locations such as these are seeing mass exoduses of workers who favor home offices to office buildings. If you want to get a foothold in these areas, however, now is a great time to find a bargain.

Real Estate Hot Spots

Secondly, investors should be aware of real estate “hot spots” currently emerging around the country. These are regions where real estate investing is extraordinarily competitive and by extension extraordinarily profitable. Austin, Texas made headlines in 2020 after entrepreneurs like Elon Musk announced that they were moving their corporate operations to this up-and-coming city. Expect a boom in real estate prices in Austin in coming years as Texas becomes a haven for big tech companies keen to take advantage of the state’s generous tax policies.

Other “hot” cities include but are not limited to:

  • Portland, Oregon
  • Birmingham, Alabama
  • Boulder, Colorado
  • Louisville, Kentucky
  • Missoula, Montana
  • Atlanta, Georgia
  • Boise, Idaho

Changing Industries

Most importantly, however, real estate aficionados should know that the work-from-home trend doesn’t apply equally to every industry across the board. Tech companies employ armies of computer science grads to perform important coding work; certainly, for the most part, it is not necessary for these workers to stay in office buildings to complete their tasks. Consequently, tech real estate may see remarkable changes in the next five years.

 

Playing Against Type

Despite a shift towards work-from-home thinking in the tech world, however, there is still a lot of office-based work that needs to be done across a variety of industries. For example, most doctor appointments still need to be completed in person; real estate space for healthcare clinics will almost certainly be in very high demand in coming years. The same principle holds for sectors of the economy related to lab work and wholesale supply chains.

 

To wit, there is still life in the commercial real estate market yet. It is true that investors will need to stay on their toes in coming years as America transitions to a new stage of work culture; however, the benefits will be numerous for investors who can adapt to changing times and changing business needs.

Current Trends in Real Estate Development

Current Trends in Real Estate Development

The real estate sector is a crucial pillar of the global economy. Whereas it has taken a major hit thanks to the Covid-19 pandemic, the real estate industry is increasingly getting transformed by adopting new trends. There is a wide range of opportunities ahead of us as far as the industry is concerned. Analysts project that the industry’s future is highly likely going to be defined by certain characteristic trends consistent with response to the identified market gaps.

Smart amenities

The future of the real estate industry will undoubtedly focus on adopting technology and integrating it into real estate constructions. The need to have smart homes and offices will drive up the demand for smart homes where technology is integrated into every aspect of home living. This includes home security systems and remote controlling of smart home devices.

Lesser demand for commercial space

The Covid-19 pandemic has taught us one thing – that we can productively work from home. Large businesses are expected to scale down their demand for commercial office space, even as they work towards reducing the number of office workers. As more workers work from home, there is expected to be a gradual decline in the demand for large commercial office rooms. Businesses will leverage the virtual workforce as part of the strategy of reducing overhead costs associated with the ownership of physical office spaces.

Priority in property maintenance

Consumers of the real estate industry are generally more concerned about keeping their spaces in good sanitary conditions. This comes at a time when the pandemic has elaborated the need to keep our environment clean and disinfected. The underlying concept of cleanliness is expected to extend into ensuring that our homes look physically appealing. This is expected to be accompanied by fresh landscaping ideas so as to keep real estate properties attractive to live in.

Changes in property utility

Another of the most remarkable future changes in the real estate industry is expected to touch on the utilization of office spaces. More office space, for example, will go into the adoption of technological tools, such as video conferencing rooms and large television sets to facilitate video conferencing. With the idea of social distancing still fresh in our minds, the number of persons who can live in a specific office space is expected to reduce as part of the maintenance of social distance.

Tips for Becoming a Commercial Real Estate (CRE) Developer

Tips for Becoming a Commercial Real Estate (CRE) Developer

If you’re interested in becoming a commercial real estate developer, you have probably done enough research to know that you’ll need good credit. In addition, there are several steps to take in pursuing this type of career, and there are multiple avenues for breaking into the industry. Here are a few tips that will help your realize your dreams of becoming a CRE developer.

 

Choose Your Starting Place

There are many different ways to get involved with commercial real estate development, so you should choose the option that’s right for you. Most people get started by pursuing a career as a commercial real estate broker or agent. These career paths are preferable because they will help you get the necessary licenses and permits to get involved with CRE development. Additionally, these opportunities teach you the ins and outs of investing in commercial real estate before you use your own money to develop new properties.

 

Network With Professional in Related Industries

It’s never too soon to start networking with professionals who can help you become a CRE developer. This may involve connecting with lenders, lawyers, and other agents who are all involved in the commercial real estate industry. Additionally, you should network with general contractors, electricians, plumbers, and other skilled workers involved in construction trades. Maintaining a close connection with professionals in a wide range of related fields will give you access to their services when you may need to rely on them.

 

Prepare For the Red Tape

Once you’re ready to dive in and develop your first commercial property, you’ll have to deal with the bureaucracy involved in developing land. This involves getting environmental reports for the land in question, and submitting documentation to the city or county for the approval of your building permits. Additionally, there may be steps you’ll have to take to meet your lender’s terms. Even after you obtain the necessary approvals, you’ll have to go through the process of reviewing bids and awarding the project to the contractors with the most favorable offers.

 

It’s also important to remember that market research and a deep analysis of each project will play a role in determining your success as a real estate developer. In time, you’ll hone your skills and become adept at recognizing promising opportunities. In the meantime, you should accept that you’ll make mistakes, and develop a strategy for learning from them.

 

The Future of Commercial Real Estate

The Future of Commercial Real Estate

A commercial real estate property is an asset that generates income for its owners. The property offers favorable returns over a long time. It benefits the owners with consistent monthly rental income and adds value to the total investment portfolio. The process of commercial real estate appraisal determines the current or market value of a commercial property which in turn helps seek financing, insurance, purchase, or sale deals.

Commercial real estate investments have earned solid returns in the past. Unfortunately, these gains have dissipated due to the Covid-19 pandemic. Clients choose to move out of office spaces they no longer afford to save on rental costs as employees work remotely. Whereas there is some semblance of a return to normalcy, it will take time, and companies worldwide will have to adapt to new business models to survive the post coronavirus era.

This trend has been long in the works as the past decade will show, with brick and mortar businesses switching to digital platforms. Global brands have set up massive distribution centers across the continent to serve an ever-growing internet consumer base. Notably, the near-collapse of coworking spaces company WeWork has cast doubt over flexible working spaces options that the sector had started to acclimatize.

With global travel at less than 50%, short-term stays companies will continue to struggle in the foreseeable future casting further doubts on investments in real estate startups such as Common, Quarters, and Ollie. Deloitte projects that economic activity across Europe, large Asia-pacific economies, e.g., Japan and Australia, India, United States, and China, will face a severe downturn if the coronavirus vaccination is not practical. As it will take time to develop enough vaccines and deploy them, economists expect growth to remain constrained for a long time. Nonetheless, the economy will recover. The critical question for Commercial Real Estate owners is whether CRE companies are ready for the future.

By tapping into tenant data, commercial real estate companies will become more resilient. IoT sensors collect proprietary information about the behavior of users in multiple real estate properties. This data provides a valuable commodity that could help technological and marketing companies build trust and increase user engagement. These observed trends are bound to take commercial real estate to a whole new competitive phase.

What to Know About Commercial Real Estate Appraisals

What to Know About Commercial Real Estate Appraisals

Whether you are looking to purchase or sell a property, commercial real estate appraisals are key to determining the price or value of the property in question. Appraising commercial real estate is beneficial to a seller and a buyer as it helps identify the comparative value of a particular property against other available properties in the market. Commercial property is defined as a property used exclusively for business-related purposes or to provide workspaces rather than private living spaces.

Commercial real estate should not be confused with residential real estate appraisals, which looks at the value of single-family homes, condominiums, or townhouses mainly used as private living spaces. Whereas commercial real estate properties are typically leased by tenants who conduct income-generating activities, residential properties are purchased for personal use. Knowing the distinction between the two will help you choose the right valuation approaches when you are buying or selling.

Commercial real estate appraisal is the process of identifying the current value of a commercial property. It is mainly conducted by sellers to identify the market value of their property when considering selling it to other parties. In other cases, buyers undertake a commercial property appraisal to verify whether the asking price is competitive against other options in the market. In both instances, the derived value of the property acts as an unbiased, fair estimate that sets a foundation for negotiations, financing, restructuring or insurance purposes.  

The current market value of a real estate property helps banks determine how much financing they can safely lend against such assets. Financial institutions provide capital to investors, individuals and businesses against assets that can be sold off to recover the total sum of principal and interest accrued on loan should the borrower fail in their obligations to repay. In the case of real estate, the current market value forms a basis for calculating the maximum mortgage value a bank can lend safely.

Further, insurance companies use commercial real estate appraisals to determine how much you should pay to insure the commercial property’s value against such perils as fire, theft, and natural disasters. Whichever the case, it is essential to identify the exact purpose of the appraisal report to determine the correct method of undertaking commercial real estate valuations.