Commercial property has different challenges than residential property, and the people who manage those properties need to be sure what direction to take. The choices and changes they make can affect not just the tenants of the properties, but the investors who own those properties, as well. With that in mind, commercial property managers need to be aware of the trends and predictions for 2016, so they can be prepared.
According to the National Association of Realtors, commercial real estate markets are going to see modest growth in 2016 and into 2017. That's good news for the people who own commercial property, and also for those who manage it. However, it could also mean more work for property managers, so they will need to be ready. Whether they need to reorganize the way they do things, delegate responsibilities, hire new people to handle the increased workload, or make other changes, it's important that they have a good idea of what's coming in 2016, so they aren't caught completely off guard.
Here are some other trends and predictions commercial property managers need to carefully consider as they move toward and into 2016:
1). Office vacancies will go down, as the demand for office space goes up.
As the economy slowly rebounds, more and more people are looking for office space. Most of them don't want to buy a building, or can't afford that luxury, so they need to rent space. By leasing commercial property, they give property managers lots to manage as part of the build out process. They also improve things for the owners of the buildings, but this may require maintenance or other repairs that would not have been made if the office space was vacant. Upgrades to older office spaces also have to be done, because companies want and need office spaces that can keep up with their technological needs. Commercial property managers need to work with the property owners on ideas for upgrading and whether it will be cost-effective for them going into 2016.
2). Industrial and retail spaces will be needed more than they currently are.
It's not just office space that will start filling up. Retail and industrial spaces will also begin to see more tenants. That's thanks to a growing economy, which is making people cautiously optimistic about starting businesses and expanding businesses that they already have. With that in mind, commercial property managers can expect to see an influx of tenants who want to rent these kinds of spaces, and of owners who need companies to manage their spaces. That can be good news for commercial property managers when it comes to their finances, but may also require them to expand their own businesses and bring on more people. That could reduce the extra profit they expect to make if they don’t scale efficiently, but will be very beneficial in the long run.
3). While improvements will be seen, commercial property growth is still lagging.
The growth of tenancy in office, industrial, and retail space is encouraging, but commercial property overall is still lagging where the economy is concerned. Growth has been slow, and hasn't kept up with the rebounding of the residential market. That's important to consider, because commercial property managers don't want to get too caught up in the idea that they are going to see growth. Hiring extra people or making other changes should only be done once the growth they are actually seeing supports that. Then they can avoid expanding too much too fast.
4). Multi-family housing will continue to see strong growth.
One exception to the slow growth of commercial properties is multi-family housing. This is an area that is in demand, as more and more people want to live in apartments or other multi-unit dwellings. Commercial property managers who have a lot of multi-family dwellings to keep track of may find themselves busier in 2016, simply because of the number of people who are choosing that lifestyle. With the growth of it, more investors are also going to be interested in buying multi-family properties, and they will need companies with experience that can manage those properties for them.
5). Overall, things are looking up.
Growth in the commercial sector may still be a bit slow, but real estate growth overall is looking up. Things are improving, and the pace is steady. That's good news for property managers, whether they handle residential, commercial, or both. As real estate of all types continues to grow, and as more investors start to consider everything that comes with buying and operating a commercial property, there will be further opportunities for commercial property managers in 2016 and beyond. Now is a good time to get into commercial real estate and its management, and an even better time for people who are already involved in those endeavors to prepare for next year's growth.
