Commercial real estate in 2022 will be a mix of tenants and occupiers, and the economy will continue to hum along. The year ahead will see a more refined business cycle that will become part of the new normal. With interest rates likely on the rise, investors may have to adjust their strategies accordingly.
The past year was tough for those in commercial real estate C
orpus Christi, but the year ahead offers some reason to be cautiously optimistic. So let us take a quick look at what the new year may bring.
The future of real estate in 2022
The divergence of commercial real estate
While the national market will be healthy, regional markets are expected to diverge. Many small and mid-sized markets with weak economies are likely to falter in 2022.
Rising interest rates could dampen investment activity and make it harder for borrowers to refinance existing debt. Also, as the business cycle matures, there will be fewer opportunities for new investments. There will be winners and losers in commercial real estate.
Office market recovery
The office sector is at “an inflection point.” After years of under-investment, the office sector is expected to see increased demand thanks to a growing economy. Increased demand, coupled with a low supply of new products, should bode well for commercial real estate office space. However, how companies will respond to the tightening labor market remains unclear. It is one office segment to watch in 2022, and the recovery in office buildings is expected to be slow but steady.
Brick-and-mortar retail sales
In recent years, the retail sector has passed through a massive transformation, and things will begin to slow down slightly in 2022. Brick-and-mortar retailers can’t afford to make the same expensive mistakes they did during the 1990s and early 2000s when Internet shopping was still in its infancy. Consumers will show a greater preference for shopping online than in stores by 2022. Realtors will be less inclined to list commercial property for sale Corpus Christi.
Build to rent
Institutional investors have increased interest in building portfolios of for-sale multifamily products. The build-to-rent model is likely to gain significant traction.
Investors are attracted by steady income, which can be brought online sooner than market rate multifamily through the build to rent model. There will be property for sale, as some large institutional investors have been testing the water, but this will pick up steam in 2022.
Business travel and conventions
Business travel is an important indicator of the strength of a local economy. If work trips increase, it means people are buying more goods and services. As the economy strengthens, commercial real estate demand for travel will increase. Negotiating a major trade deal will increase business travel.
The growth in the commercial properties sector will be heavily reliant on new development projects. The apartment building is set to pick up over the next five years, with developers building more high-end units that are likely to fetch higher rents. Hotel construction has also been growing, with the total number of rooms expected to reach a record high.
Taxes were once considered boring, but they are becoming one of the most controversial issues for commercial real estate investors. Taxes will loom large in 2022.
Governments at all levels will be eager to collect more revenue due to rising spending needs. Yet taxes that squeeze property valuations won’t solve the public’s growing budget problems.
The property sector continues to grow, thanks in part to the labor markets. While some segments will remain strong, others will struggle. Before investing in commercial real estate property, learn the basics and look for solid cash flow.
Multifamily has led the market recovery in recent years, but it’s poised to see continued growth. Despite some hiccups, the multifamily market is coming off of a record-breaking year and will see continued positive momentum in 2022.
While new development will remain strong, the demand for multifamily is expected to outpace supply through 2022. International investment is expected to continue fueling the multifamily market as well.
Growth of co-working spaces and co-living
Co-working and co-living spaces continue to expand exponentially. The number of co-working spaces grew from 1,000 to more than 7,000. Co-working tenants spend more than double the amount on rent compared to traditional office tenants, and this demand has fueled a rapid increase in co-working spaces.
The commercial real estate market is thriving throughout the country as demand for commercial land for sale increases. The market will have to adjust for changing trends in the workforce, but the industry is poised to continue its momentum. In 2022, office, industrial, retail and multifamily will likely be the strongest sectors.
Rise of “Creative Class”
Society is separated between those who have access to economic opportunities and real estate in Corpus Christi and those who can’t join in. This gap leads to increased polarization among populations, which will only worsen over time. There should be a massive focus on community, inclusion, and diversity.
Commercial real estate is an important aspect of the economy. The no-taxing approach is detrimental to the country’s commercial sector, but businesses are always looking for ways around taxes. This will be a continuing trend until 2022. However, some unexpected setbacks in communities that aren’t prepared for them can be. The realtors in Corpus Christi, TX, will determine where they can expect the best returns on property.