Image Source: Phil Essing Corporate Shifts Changing Commercial Real Estate Dynamics Changing business trends are altering the dynamics of the global commercial real estate market. So what's changing, what's in, what's out, and how will it all affect Canadian real estate investment opportunities and portfolio performance? Office Trends & Migration Shifts in office trends are gaining momentum, and as a result, are trickling down to impact other property sectors. According to recent surveys and a feature report on Corporate Shifts' from the CCIM Institute, the business world and it's connection to property markets has changed dramatically in the last couple of years. Even more change is ahead as new trends are adopted. Real estate is becoming far more important to businesses of all types as they recognize the additional value and revenue it can bring. This is especially true during a time when many industries are seeing profit margins negatively impacted by emerging technology. Other factors and trends impacting office property are:
- Banking, legal, and government tenants have been reducing square footage needs by 15% on average when it comes time to renew leases
- Just 8% of commercial real estate firms say they are not outsourcing, which is indicative of business as a whole
- By 2017, 40% of workers are expected to be working remotely
- Business migration continues to heat up as startups and major head offices head to emerging markets, search for hot business hubs and better talent pools, and desire more value for their property dollar
Millennials Driving A New Real Estate Landscape A new, younger generation is driving the future of real estate, and industry experts and builders are being careful to keep their tastes and demands in mind when designing new spaces and communities. Millennials love walkability, proximity, convenience, and mobility. This emerging trend is driving up the demand for co-working space and local venues to work and meet clients, as well as bolstering the value of local shopping and smaller shopping plazas. All Bets Are On Retail Perhaps not “all” bets, but savvy commercial real estate investors have their eye on the retail sector to lead in growth and returns over the next few years. Older generations are being replaced by younger ones, who are keeping living costs down, are just growing into their full income potential, and are more inclined to spend their paychecks on fashion, food, and fun.
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