If you only looked at headlines, you might not know how strong the commercial real estate market is. For example, commercial real estate investors might be happy to hear that vacancy rates in US office buildings have not dipped below pre-pandemic levels.
This stat may be surprising given the rise of remote offices and work-from-home setups. Nonetheless, it shows the strength of the market for US property management in the commercial real estate space.
Commercial real estate is often a less stressful experience than residential real estate. The leases generally last longer, so property owners do not have to deal with as much turnover.
Additionally, commercial residents tend to be able to pay higher rental rates than residential residents.
Anybody interested in investing in or managing commercial real estate should get familiar with the emerging trends.
2023 will be a fascinating year for commercial real estate as it moves on from the turbulence of the pandemic. Continue reading to learn about the trends to watch in commercial real estate in 2023.
Property Managers Will Have to Closely Monitor Remote Work
Remote work gets plenty of headlines on platforms like LinkedIn and Twitter. The truth is that just 26% of US employees worked remotely in 2022.
It remains to be seen whether or not remote work will remain as prevalent moving forward.
Even if remote work grows in popularity, commercial property managers should keep their eye out for new opportunities. There are plenty of businesses that need spaces besides offices.
Co-working spaces and short-term office rentals will be popular in a remote-first world. Additionally, other types of businesses can still thrive even if people aren’t in an office.
If remote work does stick around, it will be important to identify the new areas where people want to gather.
Downtown business districts may become less popular. At the same time, suburban business districts may see more demand.
Low Rent Prices Will Not Be Enough to Attract Renters
In a world in which every office is the same, properties with low rent prices will attract more residents. However, that may not be the case any longer.
If companies are going to lure employees back to the office, they are going to need upscale amenities and prime locations.
Do not think about trying to lower rent to attract renters. Instead, commercial property investors should think about how to provide better workspaces.
Location will also be of the utmost importance. Prime location may no longer mean space on the busiest street downtown. It could mean being close to a residential area, or near up-and-coming cafes and restaurants.
The Strong Job Market Will Help Commercial Property Managers
Some commercial property managers might be hesitant to invest in the market over fears of remote work.
However, the low unemployment rate should be a sign that the economy is still running strong. When the economy is running strong, commercial real estate is always an attractive investment.
The unemployment rate in the United States has been hovering around 3.5% and 3.7% for much of 2022. These are among some of the lowest unemployment levels the US has seen over the past 25 years.
With the labor market remaining tight, it’s a great time for commercial property managers to invest in the market. A tight labor market means that people need properties for their businesses.
Suburbs and Smaller Cities Will Present Growth Opportunities
The pandemic led to a movement out of large cities and into suburbs and small metros. While this was difficult for some commercial property investors, it also presented an opportunity.
As more people move out of big cities, they will need offices and businesses near their homes. Smart property managers should consider extending their property management services. Go beyond the major cities and explore small towns.
While some property managers might be used to only looking at commercial real estate in downtown areas, it is worth it to expand your horizons. Suburbs and small towns offer a lower entry point.
Properties are not as expensive, which means you do not need as much capital to invest.
Additionally, smaller markets may have less competition for properties. If you are an up-and-coming property manager, these small metros are perfect for you.
You will be able to develop relationships and work your way into the market without worrying about large conglomerates that have already bought up every commercial property.
If you are unfamiliar with property management in smaller metro areas, now is a great time to explore this exciting opportunity.
Property Management Technology Will Continue to Play a Major Role
Property management technology looks to be one of the trends that will not be going anywhere soon. That includes tools like resident portals maintenance portals and accounting software. The tools make life easier for property managers.
The worlds of cloud computing and property management will continue to merge. More property managers will realize the time-saving benefits of cloud-based software.
Residents get a better overall experience with a portal to pay rent and track maintenance requests.
Managers get to see all their properties in one online dashboard. Technology improves the entire industry, and smart property managers will use it to save time and boost profits.
Analyzing the Top Trends in Commercial U.S. Property Management
Now that you are familiar with some of the top trends in commercial US property management, you’re ready to move forward with confidence. While the past few years have been tough for commercial real estate property managers, the next year looks much more promising.
It’s a good time to learn more about the world of commercial property management. Be sure to check out the latest news and insights provided by Property Management Insider.
Do You Want to Learn More?
Contact us if you want to learn more or have any questions about emerging trends in real estate.