The slow pace of the U.S. economy’s recovery is frustrating. But commercial real estate pros should be pleased that despite this sluggish recovery several commercial sectors are not only performing well, but thriving.
That’s the message from the latest economic report from Cassidy Turley, “What’s Hot in Commercial Real Estate,” a report released this summer.
Real GDP in the United States is on track to grow at a rate of just 2 percent in 2013. That’s about the same pace that the economy saw during the last three years of this slow economy.
That doesn’t mean, though, that certain commercial sectors aren’t doing well. Cassidy Turley points to the multi-family sector, which continues to thrive. But it also includes “big box” distribution-center space, high-end office space, creative office space and medical office buildings in the category of “thriving” real estate.
Why are these sectors doing so well? The rise of e-commerce and mobile technology has helped lead a surge in demand for distribution-center space in many markets across the country. Multi-family is doing well in part because Millennials — residents who are 20 to 35 — are entering their prime rental years. Then there are the Baby Boomers who are hitting the age in which they need increased medical attention. This has caused demand for medical office space to soar.
Today’s workplace is increasingly focused on mobility, wireless office spaces, communal work areas and creative space, according to Cassidy Turley. That’s why properties that can help companies go wireless and set up non-traditional workspaces are doing so well in this recovery. And why are most downtown areas hot today while suburbs are cool? Younger people are drawn to urban lifestyles.
The Cassidy Turley report gives hope to those who wonder if commercial real estate can ever get hot again. The truth is, there are plenty of sectors out there that are already hot. And the reason behind this? It almost always comes down to demographics.
