Without a doubt, the past few years have been rocky in the real estate industry. We have seen prices go up, interest rates go down, then interest rates go up, and prices go down again. At the same time, there are some significant commercial real estate trends that are going to emerge in 2023 and beyond.
What are some of the most important trends you should watch for in the commercial real estate sector in 2023? Take a look at some important information below, and do not hesitate to reach out to an expert who can help you.
1. Turbulence in Prices
There is going to be significant turbulence in the commercial real estate sector with respect to prices. Prices shot up significantly in many areas of the country during the coronavirus pandemic. This includes the commercial real estate sector. At the same time, there are some areas of the country where there is a dropping demand for commercial real estate because more people are working from home.
As the population continues to shift in the wake of the pandemic, remote work, and the return to the office, commercial real estate prices are going to rise and fall in different parts of the country. It is important to work with an expert who can help you navigate this issue.
2. A Growth in Suburban Commercial Real Estate
As mentioned above, many people are working from home today. This means that a lot of people in the suburbs have more flexibility in their time than they did in the past. Therefore, there is more demand for commercial real estate in the suburbs. Some people want to open a small business close to home, and many people want an opportunity to run errands during the day.
That makes commercial real estate in the suburbs more valuable than ever before. Expect to see commercial real estate in the suburbs continue to expand.
3. The Digital World Will Continue To Expand
The Internet has been a powerful tool in the real estate sector for a long time. It is only going to become more powerful in 2023. It is not exactly a secret that most people use the Internet when they are starting to look for real estate. Particularly given what happened during the coronavirus pandemic, the importance of the digital world to the commercial real estate sector accelerated exponentially.
The digital world will continue to play a significant role in the real estate sector. For example, drone videos are going to be used to provide people with key information about specific properties. Online staging is also going to be an important tool, as many people want to see what the property might look like with their items in it before they decide if they want to purchase it.
It will be interesting to see what type of role the digital world will play in the commercial real estate sector moving forward.
4. Shorter Leases Are Becoming More Popular
The business world is more unpredictable than it ever has been in the past. A lot of people do not know what the future holds, particularly with disparate numbers being released on the economy. Some people aren’t sure if they will be asked to return to the office in the future, and there are other people who aren’t sure exactly what the best location for their offices might be.
Therefore, expect to see shorter leases in the commercial real estate sector. A lot of people are hesitant to sign longer leases because they aren’t entirely sure if they are going to be there in the near future. Anyone who wants to have success renting out commercial real estate should consider offering shorter leases to their potential renters.
5. Larger Down Payments Will Be More Competitive
Just as the price of commercial real estate has been turbulent during the past few years, down payments are going to be turbulent as well. Because the Federal Reserve has continued to raise interest rates, the cost of borrowing money to complete commercial real estate transactions is only going to increase. As a result, many people are interested in saving money by offering a larger down payment. This is also more attractive to people selling commercial real estate as it increases the chances of the transaction going through.
With this in mind, if you have your eye on a specific property, you may want to offer a larger down payment if you want your offer to be competitive.
6. The Seller’s Market Will Continue
Even though there’s still a lot of issues in the commercial real estate sector, it is also true that we are still in a seller’s market. Rising interest rates have tamped down demand somewhat, but there is also not a lot of supply. A lot of builders are hesitant to construct new buildings right now with rising interest rates, and that means that there will still be a lot of demand for properties that become available.
Because it is still a seller’s market, commercial real estate prices are likely to rise in the near future, and that creates some unique investment opportunities for people in this space. If you are interested in taking advantage of this unique opportunity, you need to work with a professional who can give you the funding you need on your terms. That is where we can help you.
Work With Hard Money Lenders AZ To Invest in Commercial Real Estate
It can be a challenge to get funding for a commercial investment property, but it would be our pleasure to help you. We are, and we have a tremendous amount of experience working with borrowers of all backgrounds. We have some unique loan vehicles that we can use to help you borrow the money you need at a price you can afford. If you would like to learn more about the options we have available, contact us today to speak to a member of our team, and let us help you get the process started.