What Property Owners Need to Know About CRE Marketing Trends in 2015

Keeping properties relevant and attractive to tenants is about more than a fresh coat of paint. Property owners who can respond to changes and trends in the commercial real estate market and the location and demographics they target will experience lower vacancies. They can develop properties that meet the needs of the current marketplace.

There are several areas to watch as the population changes and technology plays an ever-increasing role in all aspects of our lives. Being aware of new construction underway and new sources of investment can also give commercial property owners an edge and facilitate sound decision-making.

Appetite for Risk

One aspect of the market that has come onto the radar in the past few years is related to investor behavior.  Domestic and –especially- foreign investors are willing to accept additional risk in exchange for potentially higher yields. This is driving investment in second-tier cities like Austin, Denver, and Philadelphia, where prices are lower and competition is less fierce than in the gateway cities.

Foreign Investment

International transactions are increasing for US commercial properties, with Canada and China leading the way. The US market is seen as very stable, and high net-worth investors are looking for a safe place to invest their cash.  Some estimates put the total for international investment in US real estate at $50 billion for 2015. An interesting development in this arena is the use of bitcoin for property transactions. Using this digital cash can save thousands in fees for attorneys and other middlemen, and there are fewer government restrictions on this type of purchase.  These factors, along with dramatically reduced time required to complete the transaction, are very attractive to international buyers.

Who Are Our Clients?

An important and overarching trend to watch is the change in population demographics. Our population is aging, and the millennials are moving into the driver’s seat. Both of these considerations profoundly affect commercial real estate.

As the median age in the US climbs, the demand for medical services increases. Medical office and facility space will be an increasingly active area. Consideration of this older demographic and their needs will help optimize the appeal of property.

Millennials- those born in the early 1980’s through the early 2000’s- make up a third of the US population, and that number will continue to grow in the coming years. By 2025 millennials are expected to make up 50% of the US population.  Sheer numbers make the needs and interests of millennials something that we should all be watching. Some characteristics of this age group:

  • Prefer renting to home ownership
  • Value community and the environment
  • Expect a more open and collaborative workspace, with amenities and convenient locations

Millennials are leading the trend toward the live/work/play environment, preferring the city center as both a workplace and home, thanks to convenience and amenities.

Where Are Our Clients?

Cities with job growth are naturally the places where demand for office space is highest. Cities with tech-related jobs are the type that are attracting the most new well-paid workers. Construction and development are very active in these locales in an effort to meet the demand for space. Some of the cities experiencing the greatest growth and thus high rates of new construction are:

  • Naples, FL
  • Austin, TX
  • McAllen, TX
  • Greeley, CO
  • Dallas, TX

Being aware of their area’s leading industries and considering the rate of new construction is crucial for property owners making marketing decisions.

Tech is Not Optional

The final trend is ubiquitous, and part of most every aspect of life today. It’s absolutely essential for any successful marketing strategy to include complete integration of technology. Mobile communication, in particular, lets us reach clients where they are, when they are ready to hear our message. Our connected society has expectations for accessible and relevant information, as well as 24/7 service, and we can provide it if we make use of the many tech tools that are out there.

There should be no such thing as “business as usual” in commercial real estate. Staying competitive means keeping an eye on the societal trends that create change in the needs of our clients.

What are some of the trends you’re seeing in your local market? Are they in-line with those we are seeing nationwide? Join in the conversation by connecting with us on Facebook.