The commercial real estate industry has had its challenges since the pandemic began. Yet, as 2021 ends, the industry is experiencing a promising turnaround in some sectors. While retail growth has stalled, the multifamily and industrial industries have dominated the market. Will this trend continue in 2022? Keep reading to learn more about what to expect from commercial real estate investing in the new year.
Commercial Real Estate Investing Sees an Increased Demand for Warehouse Space
Thanks to e-commerce sites such as Amazon, the demand for warehouse space continues to rise. Manufacturers and e-commerce sites are looking for spaces to store their inventory, cut shipping times, and mitigate shipping delays. Commercial real estate investors should strongly consider putting their money into warehouse spaces in 2022.
Multifamily Units Are Great for Commercial Real Estate Investing
The rental market is hot, and there’s no sign of it cooling off any time soon. Multifamily units continue to support higher rent in nearly every market across the United States. Some of the factors contributing to a hot multifamily market are low single-family inventory, poor affordability, and lengthy construction times. Investors who’ve been considering getting into multifamily commercial real estate will find that 2022 presents numerous opportunities for significant ROI.
Retail Properties Continue to Be Unstable Commercial Real Estate Investing Opportunities
The retail industry has taken a hit since the start of the pandemic. Its recovery is nowhere near in sight. While grocery stores and drugstore chains are reliable tenants, other retail operations are risky. Brick-and-mortar stores are closing at an increasing rate. According to the UBS group, as many as 80,000 US stores could shut their doors permanently by 2026. Although that number only represents approximately 9% of stores in the country, it’s still a staggering number that investors should take note of.
Commercial Real Estate Investing in Office Spaces Is Tricky
While many US businesses are bringing their employees back into the office, others have altered their stance on remote employment. Not only are more businesses allowing their employees to work from home permanently, but the Great Resignation of 2021 has also affected the need for large office spaces. As the country gets back to a new normal following the pandemic, office space utilization isn’t expected to increase. It’s likely to decrease by as much as 15% by 2024.
What do these trends mean for commercial real estate investing in 2022? Commercial real estate investors will find the most promising ROI in sectors such as multifamily housing and industrial spaces. For those investors who’ve preferred to put their money in retail spaces, stick with spaces that are ideal for top performers like Walgreens and grocers.
Caldwell Commercial Leads the Way
What was once a sure investment in the commercial real estate sector might not hold as much promise in 2022. If you’re an investor interested in commercial real estate investing, contact Caldwell Commercial. Our team of commercial real estate experts has a combined 80 years of experience helping our clients grow and succeed in commercial real estate investing. Call us today to learn more!
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