The Azucena Take: Commercial Real Estate Trends to Expect in 2022
The end of the year is almost here and many of us are planning to gather with the family for the weekend. Between the holiday festivities and ending the year with a bang, you might be wondering what will 2022 look like. A smart investor has already planned for next year but it's not too late for one to get started.
No future plan is going to be perfect and there are so many unknown factors in play that could change everything. However, there are three trends we could expect to see next year. These could define the commercial real estate market of 2022.
1. Recovery of the Urban Core: Most economic restrictions have been lifted and over 70% of the population has been vaccinated. This has resulted in a boom for retail and multifamily properties in major cities. While some metros have recovered faster than others, even those lagging have seen prosperity in 2021 and will continue to see it in 2022.
While the fate of the office space is still unclear, there is an indicator that urban offices could see a revival in 2022. Especially as employees don't mind embracing a hybrid model.
2. Housing Shortage and Apartments: The migration to secondary and tertiary along with the ongoing supply chain crisis has resulted in home prices skyrocketing in 2021. It's going to take some time before supply catches up with demand.
People will need a place to live and if they can't own then they will have to lease. This has been a win for investment property owners. In 2021, apartment net absorption was at 218K (an all-time high) while the vacancy rate dropped to 3.5%. Meanwhile, 74% of investors expect the value of apartments to continue to rise through 2022.
3. Inflation: Growth in the urban core and demand for housing will have an impact on inflation. The Federal Reserve may have to step in and that could result in interest rates going up. This could also mean the cost of rent could rise as commercial real estate has been one of the best investments during times of inflation.
This is not set in stone and anything could happen in 2022. A smart investor should be positioned for whatever happens in the market. Now is the time to speak with an advisor and to start planning for the economy of 2022.
FYI - Doom reading some click-bait article about "A Market Crash" or "Investing in Bitcoin" is not research. Go speak with an actual financial expert to be better prepared.
The Azucena Take provides an inside look into the investment real estate market using the research done and data collected by Marcus & Millichap.