Published on May 4, 2022 by: Adrian
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ArticlesNews
Inflation is the highest it’s been since January 1982. Going to the grocery store and getting gas may be putting a strain on your wallet, but the near-future of commercial real estate is likely not as bad as you think.
“During the second half of the 1980s, booms spread like wildfire through housing, land, and commercial property markets in many countries. The greatest of them were in the English-speaking nations of the USA, United Kingdom, and Australia…
The characteristics of these booms were broadly similar—the world’s major economies were in the longest, albeit the slowest, upturn of the post-1945 era following the severe recession of the early 1980s; all were experiencing substantial growth in their service sectors; financial systems were being liberalized so that credit was easy to come by; consumer spending was rising fast; and there was widespread optimism that governments had finally cracked the mystery of sustained growth by allowing free rein to markets.”
–Environment and Planning A, 1994- M. Ball
The above passage provokes some interesting ideas, so let’s break it down.
Dan Rosenbloom reminds us in this Forbes article that “Historically, commercial real estate has provided a hedge against inflation; stock-focused investors are expressing interest in diversifying through real estate; and monetary policy appears to support growth in the economy.” Although the past does not always dictate the future, it often helps us understand key indicators.
We’re beginning to approach our post-covid economy with optimism and a healthy dose of apprehension. It’s no secret that the economy suffered during the pandemic but let’s zoom out and take a look at the strides we made out of necessity – mainly in the tech sector.
Technology gains will help us bounce back faster than we have before, primarily because of the organizational and acceleration benefits of tech solutions in government and business. What used to be a relatively closed community stemming out of Silicon Valley is now a saturated global marketplace producing new solutions and apps daily as the remote workforce continues to thrive and crypto-currencies become more popular.
This is important, while it’s true that our businesses are largely dependent upon tech – it’s also true that financially we are migrating into more digital forms of currency which are mirroring the same liberties afforded by easier access to credit in the 1980s – only on a grander scale.
The widespread boom of e-commerce is a hot topic when it comes to commercial real estate as many brick and mortar establishments closed their doors during the pandemic and vacancies continue to linger – but many of our collective fears have begun to fade into manageable trends.
“Multifamily vacancies hit 4.7% in the third quarter of 2021, reverting back to levels seen at the end of 2019,” said Victor Calanog, Head of CRE Economics for Moody’s Analytics.
Coastal cities have returned to their normal populations, and people still have the need and desire to physically shop, dine, and take in live entertainment. But the real main topic is work – with remote workforces increasing is commercial real estate poised to take a long-term hit?
The answer isn’t yes, or no, it’s a hybrid. Hybrid work solutions are becoming a compromise for companies whose employees refuse to give up remote solutions, and an incentive for companies who offer full-remote work.
We talked about how technology solutions will help the economy bounce back faster and a lot of this is to do with applications that help expedite and organize businesses – but the latest tech boom is also largely cloud-based which means that data is the ultimate secret weapon in business, and in real estate.
Platforms like ours aren’t just about connecting your client data to your company’s organization to create contracts and perform faster transactions – it’s about lead generation through national databases, prioritization based on lead deal preferences, and analytics that help structure your assessments and build out sales pipelines on a large scale.
Inflation means a lot of things; new housing solutions, new hybrid workplaces, and different lifestyle needs that will influence commercial successes. The best way to stay abreast of trends is to keep an eye on the data, and stay adaptable in a very quickly changing market. The only way to do that is with a smart technical CRE solution. Reach out to us today to learn more.
