Issues Affecting Commercial Real Estate

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Policymakers, urban planners, investors, developers and commercial real estate professionals face multiple issues that affect the commercial real estate industry at every stage. The Counselors of Real Estate have made a list of the 2017-2018 Top Ten Issues Affecting Real Estate. Below is a review of some of these issues.  

The Technology Boom

Technology is developing and evolving at a breathtaking pace. It seems that everyday some new innovation is being touted as the next ‘need-to-have’ technology. However it is not a gadget, but a number of innovative technologies which are changing the way commercial real estate is bought, sold, leased and managed. Evolving shipping technologies, robotic learning, new transportation options such as self-driving vehicles and the use of ‘big data’ will continue to shape every aspect of commercial real estate.

Generational Disruption

60% of all American adults are either baby boomers or millennials. The combined economic power of 75 million millennials and 74 million baby boomers is impacting the way investors, developers, construction firms and property owners operate. Baby boomers want to ‘age in place’ with access to amenities where they live while millennials want neighborhoods with walkability and experiences. The work preferences of each group also affects the development of office spaces. The younger generation desires open, collaborative work environments while the older generation still prefers the traditional offices they are accustomed to.

Climate Change

Between now and the year 2100, conservative estimates say that sea levels could rise by 14 inches. Other estimates put the sea’s rise much higher, at as much as eight feet. Coastal cities like New York, Miami, New Orleans and others will be most affected by disappearing coastlines. Those involved in commercial real estate are taking even the lowest estimate seriously as they plan for the future.

Infrastructure Investment

Miriam-Webster defines infrastructure as, ‘the system of public works of a country, state, or region’. Without new and updated roads, tunnels, airports, ports and bridges, the United States will have a difficult time moving goods and people around the country. Those who work in the commercial real estate industry have a vested interest in infrastructure, as it directly impacts the entire chain of business. This year, the Blackstone Group plans to establish a $40 billion infrastructure fund.  

Retail Disruption

The United States is an overly-retailed country with five times more retail space per capita than the UK and ten times more than Germany. Over the past decade, changes in the retail industry have had a major impact on commercial real estate leading to store closings across the nation, even by big name retailers like Macy’s. Moving forward, as consumer spending continues to shift into online merchants, retailers are being forced to adapt or shut their doors. Part of the adaption comes through refining their distribution methods and streamlining their inventories. Regardless of the changes made by retailers, developers, property owners and management companies are keeping a close eye on the retail industry to see how it will affect them.

Keeping Up With the Issues

Ranging from changes in real estate-related technology to a shift in the nation’s demographics, there are a number of issues affecting commercial real estate in the United States. Everyone who has an interest in commercial real estate issues, from investors to developers to brokers, is watching these and other issues, using them to guide their plans for the coming years.

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