Current Trends in the Commercial Real Estate Market According to Howard Wilner
Commercial real estate has been a solid investment opportunity for many years, and it does not appear to be slowing down any time soon. Commercial real estate consistently yields strong returns, even in the face of stiff competition. The best way to experience success in the commercial real estate market is by understanding trends in the industry. Howard Wilner, President of Automax Pre-Owned, shares some of the current trends in the commercial real estate market for 2019.
Millennials Are Moving to the Suburbs (But Suburbia is Changing)
It has long been thought that millennials (many of which are now in their early 30’s) are choosing to remain in cities to work and raise their families, where previous generations may have flocked to suburbia. However, recent data has shown that this is in fact, not the case. Millennials are moving to suburban areas — in fact, 2.6 million Americans moved to the suburbs from the city over the last two years. Suburbia as we know it is changing. Millennials and their families are making suburbia their own, creating highly walkable, easy to access “Hipsturbias” or “Urban-burbs” that showcase some of the best of both worlds.
The Construction Industry is Struggling
In a time of unprecedented growth, rising construction costs and labor shortages are causing major concern for developers. Rising construction costs began following the recession in 2008 and are becoming more and common in 2019. Challenges facing the construction industry include a decline in immigrant laborers and tariff and trade wars which have resulted in increased pressures and rising costs, explains Howard Wilner. Rents are therefore rising steadily as a result of these increasing costs. Many are also concerned about the costs of land and housing, which undoubtedly are impacted as a result of rising construction costs.
The Return of Retail Storefronts
The retail industry is making a strong and steady comeback in 2019. In previous years, retailers were hesitant to open true brick and mortar storefronts. However, given the strong performance of the retail sector in 2018 and into 2019, retailers are beginning to once again reflect on the ‘shopping experience’ in a bid to grow their businesses and attract and retain customers, says Howard Wilner. Retailers are working hard to develop the perfect shopping experience for customers, and even online-only retailers are taking the leap toward opening brick and mortar storefronts to tap into this sector of the retail market.
We are Still Waiting for the Other Shoe to Drop
Still reeling from the effects of the recession of 2008, many are feeling apprehensive about the economy’s recent period of expansion. Currently we are nearing our 10th year of economic expansion — the longest period of expansion yet. Experts state that historically, downturns have been known to occur within one to two years after the economy has reached full employment. Some economists and analysts predict that we will see a slowing economy in 2019 as a result of short-term interest rate bumps and less stimulus from federal tax cuts. Overall, it is best to remember that a downturn is a likely outcome, and to prepare yourself accordingly, Howard Wilner explains.
The commercial real estate market is rapidly changing in 2019, with construction industry shortages, a potential looming economic slowdown, and the return of retail storefronts, to name a few. It is important for investors to stay on top of the latest trends to ensure they are adequately positioned for success.
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