The landscape of commercial real estate in the last decade has been ever-changing. Now, as we are near the cusp of 2020, there are many changes expected and projections made for the coming year.
Factors such as climate change, energy prices, and government regulations are behind many of the trends in the real estate industry.
Here is what to expect from the commercial real estate market in 2020.
Growing Tech Market and Tenants
According to CBRE’s 2020 Real Estate Market Outlook report, growth for the United States commercial real estate industry is expected in the coming year. Technology tenants are projected to dominate the year’s leasing activity. Mid-2019 figures show 4,000 tenants seeking over 174 million sq. ft. of office space.
The tech industry is going strong in the U.S.
In certain markets, such as Salt Lake City, Austin, San Francisco, San Jose, and Nashville, tech is driving a lot of construction activity. Due to increasing demand, these places will also enjoy the highest rates of completions.
U.S. Commercial Real Estate Market is Strong Despite Economic Uncertainty
According to Deloitte, there are concerns about the country’s economy considering US-China trade relations and declining industrial production. However, the commercial real estate market is still strong if one considers base fundamentals.
Rental growth in the U.S. increased and vacancy levels decreased across different property types. When surveyed, over 70 percent of commercial real estate executives planned to either increase or maintain their overall tech investments in the event of an economic downturn.
Moderation of Flexible Office Space Growth
According to the CBRE report, flexible office inventory should come up to approximately 87 million sq. ft. by the end of 2020. They project that partnership or service agreements between flex operators and landlords will be one of the main factors driving flexible office space expansion in 2020. This is because the risk tolerance of landlords and occupiers will lessen.
CBRE’s growth forecast for flexible office space sits at 13 percent in 2020. At the heart of flex space occupancy demand will be speed, low capital outlay, and flexibility.
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