JH Berry & Gilbert, Inc

Real Businesses. Real People. Real Estate.

2016 CRE Outlook

January 19, 2016

facade-919015_19202015 proved to be an exciting year of growth for commercial real estate. Sales of income-producing properties were the highest since the financial crisis of 2007, and a multitude of economic factors contributed to a strong year of robust CRE industry development. While some naysayers claim the trajectory of CRE advancement is destined to stabilize in the coming year, others foresee continued market momentum. Here are three trends we expect to see this year in CRE.

  1. Continued Millennial Influence

The growing millennial workforce dominated industry blogs and forums in 2015 as employers sought best practices for recruiting and retaining these younger workers. As a result, many businesses moved to more urban environments or investigated innovative and collaborative office design concepts. In 2016, this workforce will continue to influence the CRE industry by challenging traditional work culture and driving office development to urban spaces. Their use of technology will also influence the industry, as CRE professionals will seek additional innovative ways to reach younger customers.

  1. Strong Industrial Market

The 2016 PWC Emerging Trends survey places the industrial market at the top of the commercial property sector for investment and development prospects in 2016. The improved economy is bolstering consumer demand and will in turn result in new industrial construction. Similarly, technological advances and the increased popularity of e-commerce will lead to a surge in warehouse development as consumers continue to seek ways to bypass brick-and-mortar retail channels.

  1. Office Redevelopment

Continuing 2015’s trend, urban office spaces in primary markets will remain in high demand as businesses attempt to recruit and retain young talent. Although millennials are spearheading the demand for office space in city centers, secondary office markets in more suburban areas won’t be negatively impacted as a result. In fact, these spaces should experience high levels of investment as some owners find more value in renovation than urban relocation. When relocation is not an option, businesses in secondary markets are choosing to invest in developing creative, mixed use and collaborative spaces to satisfy evolving work cultures. This trend of redevelopment will only increase in 2016, as supply and demand counteract.

Like 2015, this year is forecasted to be strong for commercial real estate. We are excited to see additional industry development and look forward to being a part of CRE market growth across Alabama and throughout the Southeast!