Business Trends

Report Finds Some Commercial RE Sectors ‘Thriving’, by Cassidy Turley

File Type: Free Content, Article
Release Date: July 2013
Average Rating:       (0 Ratings)
finance graph

Even though the U.S. economy is not as robust as it should be at this point in the economic cycle, some sectors of commercial real estate are not only doing well but they are thriving, according to a Cassidy Turley report, What’s Hot in Commercial Real Estate Summer 2013.

The most notable winners include multi-family, “big box” distribution center space, high-end office space, creative office space, medical office buildings and virtually any property type that is newly built or newly renovated.

There are a number of forces at work that explain why these sectors are winning in this recovery, according to the report. For instance, the rise of e-commerce and mobile technology is contributing to the massive surge in demand for distribution center space in multiple markets across the country. Some forces reflect a more risk-averse, practical consumer, which explains some of the shift in demand from owning a home to renting.

Other forces are driven by pure demographics: Millennials – those aged 20-35 – are entering their prime rental years, fueling the engine for multi-family market; at the same time an increasing number of baby-boomers are reaching the age where they require increased medical attention, hence, the medical office bonanza. Demographics also explain shifts in the office sector. With the rise of the millennial generation, the new workplace is increasingly focused on mobility, wireless office space, communal work areas, new creative space and energy efficiency. Properties that can check off those boxes – rather than older, traditional product – are dominating in this recovery. The younger generation is also drawn to edgy, urban lifestyles; that explains why most downtown areas are hot, while most suburbs are not.