There is plenty of optimism in the CRE industry at Mid-Year, thanks to continued momentum with multifamily and industrial leasing, construction and sales; improving fundamentals in the office sector; and an experiential shift in the retail world.
While the interest rate environment brings some uncertainty and signs of caution, industry professionals remain bullish as we head into the fall. One factor driving much of this momentum is the 83.1 million people that make up the Millennial population—the largest population group in U.S. history. These mid-20 to mid-30 year olds continue to bring change to the commercial real estate industry, from collaborative office environments to experience rich retail venues. They’re even willing to sacrifice space for top amenities when looking for a place to live—and investors are responding.
These viewpoints were expressed by a range of industry participants, as documented in the National Real Estate Investor Mid-Year Outlook and recent Real Capital Markets Investor Sentiment Reports. Here are some other key take aways:
- Technology is fueling speed to market in the investment world – As noted by RCM’s Tina Lichens in the National Real Estate Investor Mid-Year Outlook, speed and convenience have become two standard benchmarks of success, driving all property related activity. Twenty years ago, it took 10-plus days to create custom digital marketing pieces to preview a new listing. Today, the timeline is truncated down to just a couple of hours and those pieces can be viewed on mobile devices from anywhere at any time.
- Retail Reinvents Itself – Investors have responded the industry’s shift toward retail that combines shopping with restaurants, entertainment and a bigger interaction with technology for inventory access and purchasing. According to Real Capital Markets’ May 2018 Retail Investor Sentiment Report, retail owners are starting to rethink their strategies, understand the local demographics and buying patterns, and find ways to bring in shoppers and motivate them to return.
- Multifamily and Industrial are almost in a dead heat for the asset of choice – While the retail industry is focusing on reinventing itself, some investors are hedging their bets and diversifying into other asset classes. According to the National Investor Sentiment Report from earlier this year, as the demand for industrial assets has grown in recent years, it has almost caught up with multifamily making them the two most attractive investment opportunities to investors.