5 Game-Changing Trends in Commercial Property Sales
2015 saw the best year in housing since 2007 and the commercial real estate market was no different. The last year saw higher rents and occupancy rates across nearly every sector. So far in 2016, that trend has remained relatively steady. The Phoenix area is currently one of the top 20 most active markets. According to Real Capital Analytics, Phoenix ranks as the 13th most active city in the U.S. in office sales and 8th in retail space sales. Here are 5 more trends that are changing the game in commercial property sales.
- Rise of Class B Properties: Because of the higher rents of 2015 and the recent bent toward luxury developments, many renters are looking for more reasonable rents in older Class B properties. Real estate investors are buying older properties in these communities and renovating as opposed to building new construction. This trend is particularly popular in the housing industry with apartment owners and landlords who are seeing millennials renting for the first time. These first time renters are looking for Class B properties with the amenities of Class A properties but in older buildings with more affordable rents.
- Rehab and the Migration to the City: Recent years have brought significantly higher construction costs making new construction cost prohibitive. Instead many developers are reusing existing properties allowing for quicker and more cost-effective projects. This trend is showing up most often in the ever growing trend in itself – urban migration. Millennials are leading the urban movement, preferring to live in cities that are walkable, have easy access to jobs and offer diverse cultural options. Because cities tend to lack usable land to build new properties, developers are moving toward rehab and reuse of existing properties. Many are creating mixed-use commercial properties that combine apartments, offices and retail spaces. Recently suburbs have begun moving toward a more urban feel as well with more mixed-use development. This trend is creating a huge demand for office, retail and housing properties.
- Competition: Competition in commercial real estate is growing at an historic rate. Due to several years of lower interest rates and an unsettled equity market, capital has been flowing. According to PricewaterhouseCoopers and the Urban Land Institute annual report, “Emerging Trends in Real Estate” report, acquisition volume for the year ending June 30 was $497.4 billion, an increase of 24.6%. This has rapidly and dramatically increased demand as well as prices making competition fierce.
- Shift in Employer Base and Clients: The PricewaterhouseCoopers report points out that smaller companies of fewer than 50 employees are guiding commercial real estate more and more. Mitch Roschelle, a partner at PwC says, “The real estate industry’s traditional focus on big cities and large employers is shifting significantly as small businesses emerge as the growth engine for the U.S. economy. This is creating disruption in the office sector as it finds ways to create new space models to accommodate these employers.”
- Innovative Value-Added Products: With the increased competition in commercial property sales, CRE agents are looking for that “extra something” that will make their product stand out from the rest. They need something unique that adds value to the product and that competitors do not offer. Office warranties, the newest trend in commercial real estate, offer this unique value-add. An office warranty is a product that covers the most time-consuming, budget-busting system repairs and provides regular preventive maintenance. This innovative office warranty program is designed to make maintenance and repair easier. As a truly comprehensive approach to office equipment maintenance and repair, the Office Guardian system encompasses regular service intervals as well as emergency repair and cost-effective replacement of HVAC, plumbing, and electrical systems. In the Phoenix, Arizona area, commercial property sales agents can showcase a property with the protection of an office warranty from OfficeGuardian. Properties will rent faster than the ones right next door because tenants will move in knowing that they don’t have to worry about office systems failing while they are trying to get their business up and running. The peace of mind that office warranty coverage offers prospective tenants is invaluable. The office warranty from Office Guardian provides for easy financial planning for office building owners and their tenants. Without a warranty in place, the sudden malfunctioning of an HVAC system would represent an immediate, exceedingly high cost that could eat into leasing profits or a business’ overall revenues during a given year. That inability to calculate the cost of repair or replacement hangs over the heads of building owners and tenants each day they set foot in the office to get work done. However, the low monthly cost of one of OfficeGuardian’s comprehensive plans is easy for building owners to incorporate into their budget for the building and its amenities.
With OfficeGuardian, rest assured that your property is in good hands. Not only do our plans cover appliances and office systems that break down, but we remove even more of the hassles of maintenance with services such as carpet cleaning, window washing, and pest control.
OfficeGuardian gives you that extra value to separate your property from the rest and gets deals closed faster.
For more information visit www.officewarranty.com.