While rising interest rates are impacting the economy as a whole, experts predict the commercial real estate market will continue performing, particularly well in the short term. Even though certain sectors continue to lag, the market as a whole remains strong. Here’s what’s happening right now in the commercial real estate market and what we might see in the coming months.
Commercial Real Estate Market Trends
Interest Rate Hikes
Interest rates have continued to increase steadily this year. Each Federal Open Market Committee (FOMC) meeting has led to a new hike. Even so, rates are nowhere close to their all-time high.
Strip malls in densely populated areas are thriving. These are retail areas that house businesses like grocery stores, restaurants, and salons. As medical care becomes more consumer-friendly, you can expect to see more of these types of outlets, such as walk-in clinics, labs, and imaging centers.
There continues to be a persistent labor shortage across many industries. While at-home and hybrid work has become popular, many industries and companies continue to value in-person work. Organizations can re-think the ways they use their existing or new office space to produce the best results for their business.
Considering the rising mortgage rates and prices in the housing market, people are choosing to continue renting over buying. As of the first quarter of 2022, multifamily vacancies were at just 4.7%. And rents are going up as well, making these profitable investments. Rent growth late last year hit a record at 8.1%. Some other opportunities in the multifamily market include affordable and workforce housing, two areas where there are major shortages and needs.
There continues to be a massive industrial boom in this country, much of it driven by the staggering growth in eCommerce. As more and more goods are ordered online, there is a growing need for manufacturing and warehouse space to fulfill those orders.
What’s Ahead for Commercial Real Estate?
Despite some economic volatility, most commercial sectors and properties continue to outperform expectations. Even though recession concerns and the recent interest rate increases seemed to come on suddenly, there are still opportunities in this market. Patient and discerning investors with longer-term goals will win out in this type of market.
Caldwell Commercial is a Leader in South Carolina Real Estate
While some sectors might continue to struggle in 2022, there continue to be plenty of opportunities in the commercial real estate market. If you’re interested in commercial real estate investing or need quality property management services, contact Caldwell Commercial. Our team of commercial real estate experts and property managers has over 80 years of combined experience helping clients throughout the Charleston, SC, area grow and succeed. Call us today to learn more.