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Many of us feel the effects of high inflation, a precarious housing market, and economic uncertainty looming in the future. While the U.S. economy is still in a surge compared to 2020 and 2021, many investors are beginning to worry about the future and if the good times will roll into upcoming years. However, a recent report from CBRE points toward a positive future for commercial real estate, with investments growing 10% year-over-year in Q2 2022 to $167 billion nationwide.
The report also listed other highlights in the commercial sector, including:
- Multifamily was the leading sector with $78 billion in Q2 volume, followed by industrial & logistics with $32 billion and office with $24 billion.
- On a trailing-four-quarter basis, New York was the top market with $67 billion in volume, followed by Los Angeles with $65 billion.
- Institutional investors were net buyers in Q2 2022, while private investors, REITs, and cross-border investors were net sellers.
- Inbound cross-border investment increased by 16% year-over-year in Q2 but was down by 9% from Q1 due to the strengthening U.S. dollar.
It is no surprise to analysts that the multifamily, industrial, and logistics sectors are rapidly growing. As home prices continue to climb, multifamily units are increasingly popular for middle-income families and individuals. As a result, many home shoppers are waiting for prices to drop, and in the meantime causing a surge in the multifamily market.
Industrial and logistics industries, on the other hand, are seeing a boom as online shopping continues to rise nationwide. With the retail experience shifting drastically to an online-dominated arena, manufacturing sites and transportation are growing faster than ever and growing their space to accommodate their growth. This is great news for commercial real estate investors with multi-functional spaces or those developing new industrial and warehouse spaces.
The commercial real estate industry is also experiencing rapid growth due to the rising cost of building and the great post-COVID “return to the office.” Many businesses are aiming for a partial or full return to the office now that COVID-19 restrictions are lifted, but many are struggling to find adequate space because the cost of new construction is so high. With rising inflation and labor shortages in the construction industry, existing real estate is skyrocketing in value. As a result, those with current holdings in retail, office, and other commercial space can expect a steady increase in value and cash flow throughout 2022.
Legacy Commercial Group can help you find suitable commercial options to expand your portfolio and take advantage of the growing commercial market in 2022. To learn about current listings or our asset management services, contact your Legacy consultant today.