Global commercial real estate investment surged 11% in the first half of 2013. So where is the money going, what types of commercial properties are attracting the most attention from international investors and what industry shifts are likely to predict where the best commercial real estate returns lay ahead?
According to a new Capital Markets research report global commercial real estate investment grew by double digits through June 2013. Quarter two 2013 alone reportedly saw a 19% year over year lift in investment in the U.S. alone. So where do industry experts expect this capital to continue to flow to, and what factors are they focused on to ensure maximum returns over the next couple of years?
U.S. multifamily property continues to be a favorite with global investors, with Canadians pouring over $3 billion into the sector in the last 15 months. In fact, new data from the Mortgage Bankers Association shows multifamily commercial loans are the only type which have grown year over year; up 30%, versus hotels which are down 35%.
While the office leasing sector may still be finding its feet, it is predicted to join the list of top performers in 2013 and 2014 as landlords adjust their strategy and shake up space to meet changing demand. One of the most significant trends that has emerged in this sector over the last year is coworking and shared office space for independent business owners and entrepreneurs launching new startups. However, keeping an eye on the next evolution, forward thinking commercial real estate investment property owners and landlords might also want to consider what happens when startups and coworking grows up. We’ve already seen the tip of a new iceberg emerging in which some of these spaces are converting back to executive suite setups, while innovators work on corporate houses and entire live-work communities for staying part of the entire lifecycle of new and growing businesses.
Expectations of increasing amounts of capital being put into direct investment in commercial real estate appear to be becoming realized, with more of the same ahead.
Meanwhile, a survey of 600 global executives on improving performance of investments and portfolios reveals that top demands include seeking diversity and value by taking on different types of risk and expanding into secondary markets, while focusing on reducing direct investment costs and reducing operational costs.
For many this challenge can be navigated successfully by turning to help from a local full service property management company with a good track record of providing cost savings and increased returns for clients, while eliminating endless hours of labor and stress.