Just like residential real estate had a tough time last year, commercial real estate (CRE) faced challenges too in 2023. Some even say it was the toughest year ever.

Here's the big picture

The entire CRE industry is going through a tough phase, still feeling the impacts of the pandemic. According to experts, a lot of office spaces are empty – a record 30-year high with an 18% vacancy rate. This, along with higher interest rates in the last 2 years, is making it hard for the real estate business.

But not everything in the commercial real estate world is struggling. Some areas are actually doing well and are expected to grow in the upcoming year. That's why I am sharing some tips on how I can help make your job as a commercial real estate investor more successful.

2024 Commercial Real Estate Predictions

While many experts think the housing market will get better this spring, the commercial sector has a mix of good and bad news. One area where things don't look great is office space, which is expected to stay the same or even get worse.

Office Space Woes

As mentioned earlier, not many people are using office spaces these days. Basically, folks prefer working from home, and businesses are struggling to get them back to the office. With low unemployment and high individual productivity, convincing people to return to the office is tough. Even flexible schedules aren't enough to fill up massive office buildings. Some owners are trying creative solutions like turning offices into apartments, while others are tearing down structures to build data centers and warehouses. Either way, the future of office spaces doesn't look too bright.

On the bright side, here are some commercial areas that are set to grow:

Revival of Brick-and-Mortar?

Despite online shopping growing and many big malls being only half full, there's hope for smaller, local retail businesses. Busy urban and suburban areas (like strip malls) are helping the retail sector grow with positive numbers.

With fewer new stores being built, neighborhood shopping centers are doing well with low vacancy rates and increasing rents for the foreseeable future. In these cases, we can help you by finding the best locations for retail businesses using specific data like economic, demographic, spending, and more.

Multi-Family Opportunities

Investing in multi-family units like apartments and condos seems promising. This is mainly because mortgage rates have gone up, making it harder for families to buy homes. Despite the challenges in housing and fewer new buildings, there's a demand for multi-family units, leading to rent growth and higher property values.

When it comes to researching and analyzing the return on investment for multi-family properties, we have great resources to assist commercial investment clients.

Enhance Your Commercial Market Forecast

No matter which area of commercial real estate you focus on, JohnHart Commercial Real Estate can help. Our digital tools give access to over 850,000 listings and 56 million off-market properties, allowing us to search and research commercial properties nationwide.

We also provide essential analytic tools like site selection, trade area reports, Return on investment (ROI) and investment, consumer segmentation demographics and data, as well as commercial comps, traffic counts, assessments, points of interest, and climate risk assessment.
 

Here are few important items to look for in 2024:

Monitor Legislative Changes

Stay informed about any new real estate laws, regulations, or policies that have been enacted at the local, state, or federal levels. Legislative changes can influence property values, development, and investment strategies.

Follow Economic Analysis

Economic indicators and analyses can provide insights into how broader economic conditions, influenced by political decisions, may affect the commercial real estate market.

Consult Industry Experts

Real estate professionals, industry associations, and legal experts often analyze and provide commentary on the impact of legislative changes. Seek information and opinions from reputable sources within the real estate community.

Stay Informed on Election Outcomes

The results of elections can have implications for policies related to taxation, zoning, and infrastructure development, all of which can affect the commercial real estate market. Follow reputable news sources for updates on election outcomes and subsequent policy changes.

To get the most current and relevant information on the impact of new real estate laws, remember to verify the credibility of the sources you rely on and cross-reference information from multiple channels to ensure accuracy. I am always here to provide up to date information and news concerning commercial real estate.