The advent of new technologies coupled with economic developments like new tax laws are greatly affecting the commercial real estate industry in the U.S. this year. As in previous ones, rapid introduction of disruptive tech like the internet of things (IoT) and augmented reality are changing how new malls, stores, and the like are being built or renovated, aimed at drawing in customers and reshaping shopping convenience and quality-of-life.
An important trend is the increased housing demand, mainly due to a better economy and dip in unemployment. With housing having been underproduced in Q4 of 2017, U.S. Census statistics show that the adjusted annual rate has gone up by 9.7 percent in January 2018 alone. More and more millennials are buying single-family homes, while boomers are trading in theirs for apartments in urban hubs. In fact, U.S. homeownership, in general, has risen from 62.9 to 64.2 percent just two months into the year.
Improved and more favorable GDP growth predictions are also driving commercial real estate. The U.S. has increased allocations to the area to $1 trillion, and the GDP is expected to grow by 2.6 percent in 2018, a big jump from the previous estimate of 1.6 percent. Again, the stymied growth of late last year was due mainly to the housing shortage, which has thankfully now rebounded.
Lastly, interest rates are going up. This is enticing many Americans to buy homes now. The rate of 30-year, fixed-rate mortgage has risen to 4.38 percent in late February, and there’s fear that it would go up even higher as the year progresses. Higher interest is leading to more expensive loans for both developing or refinancing new properties.
Based in Sarasota, Florida,Randy Benderson is the president of Benderson Development, a commercial real estate company with over 500 properties in 38 states. The business is a venture his father Nathan Benderson established in New York over 60 years ago. For similar reads, click here.
Randy Benderson 