Trends and Opportunities in the Current Commercial Real Estate

As we move into the latter half of 2024, the commercial real estate landscape presents several notable trends and opportunities. Here are some key points.

• Multifamily and Neighborhood Retail continue to perform well with Neighborhood Retail success extending beyond Class B and C. However, the creation of new, affordable housing remains constrained globally due to high construction costs, even as rents have peaked and are now declining nationally.
• Office Spaces, despite their challenges, are not obsolete. While some buildings may be functionally obsolete, there are opportunities for upgrades and conversion into apartments or data centers.
• Industrial properties, especially cold storage facilities, are performing well. Reshoring and nearshoring efforts in manufacturing may boost the Industrial sector over time. For now, industrial users are seeing an uptick in inventory, albeit, it’s still slim pickings.
• Cash Optimization, in certain markets, is crucial. Quick asset purchases during stressful situations can be advantageous for investors, especially those sitting on cash.
• Medical Offices tend to be more stable than other commercial properties. Demand remains consistent due to healthcare services being essential due to our aging population.

Dr. Peter Linneman, a world-renowned economist, CEO, founder, and principal of Linneman Associates, sheds light on the uncertain landscape of Commercial Real Estate. While influential players anticipate higher rates persisting, Peter holds a different view – he predicts a global decrease in rates over the coming months and years.

Additionally, Peter foresees sustained Gross Domestic Product (GDP) growth and easing inflationary pressures. As the labor market remains very healthy,  Linneman actively navigates the commercial real estate market indicating “go” status on investments.

The second half of 2024 offers exciting opportunities. Early signs point to increasing stability amid a new normal on the horizon. Innovation and boldness are set to redefine the space market, casting a spotlight on commercial real estate evolution for the remainder of the year.

Meanwhile, in the Southwest Region, the office sector’s performance takes the lead. Effective revenue increased 0.62% in the first quarter of 2024 compared to the same period in 2023. Among 72 submarkets, Albuquerque ranked #5 in the region, according the Moody’s commercial real estate submarket performance trends. Notably, Albuquerque’s revenue, for the same time period was 2.3% higher than in 2023.  Despite national office building vacancies, Albuquerque continues to deliver robust statistics.

If you are interested in learning more about the Albuquerque commercial real estate market, feel free to reach out to me.  Given these factors, now is an opportune time for investing in commercial real estate.