It is difficult to predict the ups and downs of commercial real estate. It is constantly in a state of flux, ebbing and flowing with the changes in the economy. But Chief Economist for the National Association of Realtors (NAR), Lawrence Yun, predicts a very successful year for commercial real estate activity, anticipating an upward trajectory throughout 2017.
2016 was a rewarding year for commercial real estate, and, as a result of the changes that occurred this year, 2017 is expected to follow a similar pattern. However, real estate agents should be in the know when it comes to new changes and trends that could arise in the new year that could change the face of commercial real estate. The effects of some may be risky, but others lend themselves to growth.
New Technology: Drones
What do drones have to do with commercial real estate? A lot, actually. The more visual representation of a property you can give to a potential buyer, the better. Drones are able to capture a unique perspective impossible for regular cameras to see. They also showcase larger properties, which is beneficial if you have an available listing with a significant number of acres.
If you are still unconvinced that drones can actually help you sell real estate, consider this: Listings with drone videos get over 400% more inquiries, which roughly translates into 60% more leads, than ones without. And now that the Federal Aviation Administration (FAA) just recently eased their restrictions on the commercial use of drones, more real estate agents will be able to explore this new technology in the new year!
Higher Interest Rates
An increase in interest rates actually signals a strong economy. In the real estate world, this typically means that the market will be stronger. Of course, higher interest rates could inhibit some deals since it will be more costly for the buyer, but borrowers and lenders may be more cautious as a result, which will result in lower-risk transactions.
Sought-After Urban Centers
The urban market is still popular thanks to the relocation of many millennials. Because more and more millennials are seeking to plant themselves and grow their lives in more urban locations, employers are following in pursuit, relocating their offices downtown.
The After-Effects Of Brexit
If you’ve been paying attention to foreign news recently, you have heard of the Brexit fallout. If the euro or pound become weaker as a result of this change, banks in Europe are going to have to consider the higher cost of capital against the stability of the commercial real estate market in the United States, which could negatively affect non-US lenders.
The fate of commercial real estate in 2017 may still be uncertain, but these changes and trends could offer a very successful, productive year!