As it is just about the time that we step into 2024, having an understanding of the CRE industry is quite crucial. No doubt there have been a lot of ups and downs during the last few years with a pandemic, subsequent hikes, record low interest rates, supply chain shortages, and other key trends that have moved the way people operate, live, or manage.
CRE Technology is Making Investors Win Deals. So, what lies ahead of CRE? Let’s understand the trends that will rule in 2024. It will help you make the right decision.
CRE Trends for 2024
1. Use of PropTech
PropTech is Helping CRE to Reduce Cost. As technology continues to evolve and upgrade the influence of the same can clearly be seen in real estate transactions. AI tools are getting a lot of attention these days, but it is only one-way digital tools have transformed the industry.
Property technology, or proptech, indeed has brought a revolution in real estate investment. Some significant areas of transformation here include.
- Property management
The software tools make it quite easy to collect trends and communicate with the tenants.
- Search platforms
Residential real estate has accepted the use of Propetch to such a level that it helps investors find everything from investment properties to real estate agents. Even CRE is getting on board with this.
- Virtual tours
Investors can now take a look at the facilities without actually visiting, and it makes it easier to diversify the portfolio geographically.
- Data analysis
Some highly advanced data prop-tech offers a better understanding of rent price fluctuation, neighbourhood trends, and changes in property values these market data helps in crafting right CRE investment strategy.
However, there are other tools as well that, include money lending technologies, crowdfunding platforms for real estate, advertising and marketing tools, and others.
2. Flex spaces
Given how office spaces are facing vacancies it was just the right time that the companies started to rethink the traditional office culture. This has made the future of CRE flexible. Now, there are spaces that have been designed for one configuration with a specified use. This helps transform into another, even with the same tenant. The flexi space is generally included.
- Multi-purpose areas that can shift the function as required.
- Strategic use of space to make it more cost-efficient.
- Reconfigured office spaces to accommodate more people.
Some companies have chosen to stay fully remote after the pandemic, but for those who do not require office spaces, such type of flexible spaces are perfect for their requirement.
3. Coworking
The companies that have chosen not to return to the office policy still require spaces to meet with the clients and employees and carry out some other work. This becomes crucial when working at home is not an option. Coworking space demand exploded before and during the COVID times. Focuses towards sustainability green co-working spaces on the rise for CRE investors.
From 2015 to 2022, the number of people who have now utilized coworking spaces in the US has increased and, in fact, doubled. You will be surprised to know despite recent WeWork’s declaration of bankruptcy coworking is still projected to continue at a great rate.
4. Value add investment
Ready-to-rent luxury apartments and new office buildings are no doubt attractive to newbie investors. However, they are not the only path to move ahead in the CRE industry. The experienced investors are now turning forward where value value-added properties are.
Value-added investment properties are the properties that the owners can make more valuable by choosing to go ahead with rebranding, renovation, etc. Some of the examples here include.
- An old warehouse is renovated to make it more environmentally friendly. This attracts new green manufacturing companies.
- Coworking property with no proper amenities gets updated outdoor spaces and better facilities to make it usable for private office and meeting space.
In some of the cases, the properties are already rented out but bring in more income. Rebranding is done to add more features or amenities that can make the property attractive. This is a great option for the areas where CRE needs to change, but adding new buildings to the portfolio is not feasible.
5. Eco-friendly investments
Eco-friendly investing is the part of green movement in commercial real estate which majorly focuses on reducing the impact of building and protecting the planet.
The goal here is to get as close as possible to work with carbon-neutral facilities that are developing in a way that ensures no carbon emissions to the atmosphere. Those commercial real estate developers who are interested in eco-friendly investing choose
- To use sustainable building materials.
- To add alternative power when possible.
- To implement passive design principles for ensuring affordable cooling and heating.
The best part is eco-friendly practices are also eligible for various local and federal tax benefits. Thus, they are absolutely worth pursuing, especially in the coming year.
6. Core and core plus real estate investments
Given the state of the recent market, the investors are now turning towards core and core plus investments in the world; core and core plus properties are all well-established with long-term tenants. However, a significant difference with the core plus assets is that they require more repairs and renovations. Thus, making it riskier. But it also offers an opportunity for better returns.
A trend towards these available ready-to-go investments clearly indicates that some of the investors are working to stabilize your portfolio with minimal cash and maintenance requirements. This is exactly what will rule in 2024.
7. Alternative investments
The alternative investments generally fall out of what may be considered traditional or typical real estate investments. They cover a variety of CRE properties, some of which one can check out here.
Student Housing
The students from across the globe get back to the university every fall. At first, they choose to spend on the campus in some college supplied student housing. But after some time, they might want to live independently.
Thus, renting a spot off campus is a preferable choice for them. While many might not consider CRE property, student housing can be quite a lucrative market for traditional CRE investors to enter and make a profit from. Here are some of the factors that surely indicate an investment here will be fruitful.
- Income from student housing is predictable and consistent.
- The demand for student housing continues to grow. It is estimated that 46,000,000 students will require housing by 2031.
- The leases are all secured as they require a Cosigner, which means rent will be paid on time.
Data centers
You must already know how the world of technology is evolving. Now, industry data is required everywhere, especially when it comes to CRE investing.
You must already be aware of it, given the amount of data generated for the use of CRE investing. There must be a space to store it as well. Thus, data center investments are quite an attractive opportunity these days.
The data centres have large computing systems that are responsible for storing and processing huge quantities of data. They have specific requirements in terms of security and temperature, and many of the buildings can easily be repurposed to meet them.
Once the systems are in place the data centers require little maintenance but will offer great return on investment.
Storage space
Over the last few years, the demand for storage space has increased tremendously. Not only does it promise a better growth opportunity, but it also guarantees a great return. Savvy commercial investors have already identified the benefits of investing.
Here, the construction cost is quite low, while the maintenance cost also remains low. Thus, this means you will not require any extra effort to put in the property. But there will be regular income starting to flow in.
Parking lots
As the cities continue to get more crowded, parking lots and the need for garages keep on increasing. They are a great way of increasing return on investment. This is due to consistency in monthly income and maintenance costs, and most of the investors are choosing to go ahead with this method.
For example, the drivers can choose to rent a monthly parking spot in Manhattan for as much as $1400. This clearly indicates how well this type of rental property can perform in the coming time.
There are a lot of investment options available when it comes to CRE. However, it is important to research well about it and perform a deep analysis before taking any step. This will guarantee you are able to get maximum returns from your investment.
Conclusion
While no one can predict what the future of CRE will be and what trends will shape it, there is still a possibility for you to make better returns from it. As the industry continues to evolve, it will be interesting to try out your hands at some new property types.
However, if you are worried about the financing, then you can consider trusting Private Capital Investors. They have a good reputation in the industry. Their experts will be there to make the process absolutely easy. They will help you understand the best choices available in the market. With their professional support, you can get the financing as soon as possible and at a good rate.
