Commercial real estate is experiencing significant shifts in 2024, driven by technological advancements, evolving consumer behaviors, and global economic trends.
At International Management Company, our expert team of commercial real estate brokers are here to break down the latest commercial real estate data to help you navigate these changes effectively and make informed decisions.
2024 Commercial Real Estate Data Trends
Keeping up with the shifting trends in commercial real estate is essential for investors and stakeholders. Here is a breakdown of the key insights into the current state of commercial real estate across different asset classes in 2024:
Strength in Multifamily Properties
Despite a slowdown from its peak growth in 2021, multifamily properties remain robust. While rent growth has eased, the vacancy rate remains steady, indicating ongoing demand for multifamily housing. However, developers are facing challenges due to decreased demand for luxury apartments.
Success in Neighborhood Retail
Neighborhood retail spaces in densely populated urban and suburban areas continue to perform well. With e-commerce representing only a fraction of retail sales, brick-and-mortar operators are experiencing consistent performance in these locations.
Industrial Sector Adjustment
The industrial real estate sector is still performing strongly. However, there are signs of softening as post-pandemic demand for inventory decreases and renters delay expansion plans. Despite these challenges, long-term prospects for industrial properties remain positive.
Current Challenges in Commercial Real Estate
In addition to recognizing trends, it’s important to acknowledge the challenges facing the commercial real estate industry, including rising interest rates and costs.
Rising Costs & Inflation
Interest rate unpredictability continues to complicate commercial real estate investments. Turbulence in the bond market makes predicting rate movements challenging, and market forces like inflation also add to the uncertainty around fixed-rate financing.
Interest Rates
Inflation drives up construction and labor expenses, made worse by more frequent natural disasters in 2024. This results in higher insurance premiums and limited coverage for commercial properties.
2024 Commercial Real Estate Opportunities
Despite these challenges, the commercial real estate sector offers various avenues for growth. Here are some of the top opportunities for commercial real estate investors in 2024:
Maximizing Cash Flow
Maximizing cash flow and optimizing financial strategies are essential for success in a changing market environment, especially during market downturns. Implementing treasury services and efficient rent payment solutions can empower businesses to capitalize on opportunities effectively.
Addressing Affordable Housing
Addressing the demand for affordable housing presents opportunities for developers and investors to make a positive impact while generating returns. Innovative solutions like modular construction and adaptive reuse offer avenues to increase housing supply.
Harnessing Proptech Advancements
Commercial real estate technology like Proptech can enhance efficiency, improve tenant experiences, and unlock new revenue streams. From smart building technologies to digital payment solutions, the platform can enhance decision-making and operational efficiency.
Work With the Real Estate Services Brokers at IMC
Commercial real estate in 2024 is characterized by a mix of challenges and opportunities, but our brokers are here to keep you informed on all the latest developments. Contact IMC to discuss your commercial real estate needs today.
