As Americans continue to reevaluate where they live and work in the aftermath of the global pandemic, commercial real estate is poised for growth in 2022. At Markerr, we’re constantly looking at how the industry is adapting to emerging technology and developing new standards. Here are a few trends we’re watching in the coming year.
Multi-family investors will diversify their portfolios into single-family investments.
Working from home will continue to impact where people choose to live. While overall demand for housing is growing, many Americans cannot afford the down payment to buy a home in the most desirable neighborhoods. This trend is particularly prevalent in gateway markets where developers and investors are already responding to high demand for multifamily structures. We’re paying close attention to how inflation will affect those markets and how a fully-remote workforce will drive where people live in the long term.
CRE firms will increase their investment in data-driven technologies and proptech acquisitions will continue to gain momentum.
As investors reevaluate their processes and strategies, they’ve gradually been adopting new, data-driven approaches to influence their decision making. We expect that trend to accelerate in 2022. Continued delays with 2020 Census data have encouraged firms to consider non-traditional data and investment committees are looking for more consistent evaluation criteria. We also believe that demand for more data will drive more proptech acquisitions. We’ve already seen companies such as Altus acquire StratoDem and Reonomy, and JLL has acquired Skyline. This indicates that tech-first strategies will continue to grow in CRE. We expect to see more consolidation as investors seek to leverage data to uncover new opportunities.
Sunbelt markets will continue to see outsized aggregate income increases, which will help rent growth in 2022.
Markerr expects that the Sunbelt markets will continue to see outsized employment growth compared to the Gateway markets. While Gateway markets will continue to have higher median income growth in the coming year, we believe that Sunbelt markets will begin narrowing that gap. This means that we’ll see a higher aggregate income increase in the Sunbelt. Since both employment and income growth are highly correlated to rental rate growth, Sunbelt markets are likely to continue outperforming throughout 2022.
Success in commercial real estate will increasingly depend on a firm’s ability to balance careful planning with the ability to move quickly as opportunities arise. Accessing accurate, granular data on markets and properties across the country makes it much easier to do this. At Markerr, we’re excited to provide the data to help fuel your investment decisions for 2022 and beyond.