5 Commercial Real Estate Development Trends

commercial real estate development trends

Many internal and external factors impact commercial real estate development. For example, local economic conditions, geopolitical conditions, national inflation and interest rates can all present challenges or opportunities for developers. Therefore, it is important for these companies and individuals to stay abreast of these trends. These are the 5 top trends CRE developers should be aware of.

5 Top CRE Development Trends 

1. Affordable Housing Is in High Demand

Many communities do not have enough housing for local workers, and many do not have housing that these individuals can afford. This is a major challenge in today’s real estate market. In fact, multifamily real estate development has performed the highest of any commercial asset in recent years. Not only are vacancies at all-time lows, but rents have increased significantly to address market changes.

Commercial developers search for the needs of their local communities. In many cases, these needs revolve around affordable housing. Many companies have tested the benefits of modular construction, changing existing facilities into multiunit buildings or creating mixed-income properties to address this housing need.

2. Retail Demand Has Changed

Retail properties have seen many challenges in recent years. As more and more companies move to online sales and customers move to purchase many of their goods online, some retail operations have seen reductions in demand. However, this differs significantly by location. For example, most people still shop at local grocery stores, coffee shops and pharmacies. They also need places where they can pick up necessities or gifts on short notice.

Local strip malls seem to have performed well in many areas, but commercial developers, such as Angelo Ingrassia, need to be creative when it comes to major retail developments, such as malls. In many cases, developers convert these facilities into mixed-use and mixed-income spaces. They may build multi-family housing, restaurants, beauty shops and other popular local retail stores.

3. Industrial Space Is in High Demand

For some of the same reasons that retail space has experienced reduced demand, industrial demand has increased. E-commerce has had a major impact on how people purchase their products, and many appreciate the time savings of buying online rather than searching through a retail store. Therefore, many companies search for industrial spaces for warehousing and distribution complexes.

These facilities are not the warehousing of the past, however. Many have high-tech requirements, such as drones and robotics to increase efficiency. Logistics technology is also in high demand within these facilities and with these companies. Commercial real estate development companies need to move ahead of current trends to locate future desires for their tenants to remain competitive.

4. Office Space Has Changed

Recent trends have moved many workers out of office buildings and into home offices. Remote work has increased significantly over the last three years, and it doesn’t show signs of slowing down. Although some fields will remain in offices, many companies realize the cost benefits of moving at least part of their staff to remote work. However, location, business type and amenities may entice workers back into the office.

Some office buildings now have spaces for childcare, catering or other onsite services. In addition, developers place more emphasis on creating inviting outdoor spaces and building floorplans that promote collaboration. Developers have also considered converting office buildings into mix-use spaces and adapting office spaces into agile workspaces that accommodate different work styles and types of work.

5. Mixed-Use and Flex Spaces Experienced Increased Demand

Several CRE trends support the creation of mixed-use and flex spaces. E-commerce companies have heightened the demand for buildings with significant office space in addition to distribution and warehousing. In addition, many multi-family housing projects have incorporated some retail and other commercial spaces into their designs. Finally, increasing remote work, including self-employment, requires expanded flex spaces in the new economy.

Commercial real estate developers consistently watch workforce trends and community needs to create projects their communities desire. The industry changes monthly so it is crucial for developers and investors to stay in top of the CRE market.