Five Predictions for Commercial Real Estate in 2017

Justin Yelda

By Paul Bensman, Associate Broker / CEO at Locations Commercial Real Estate Services

2016 was a year filled with both growth and uncertainty. Here’s what I see ahead for commercial real estate in 2017. 

  1. Closures and Consolidations.  More retailers will consolidate and close their doors. This is mainly a result of steadily increasing online competition and over-saturation of locations. Sears just announced that it will close more than 30 Sears and Kmart stores in early 2017.
     
  2. Shopping Center Foreclosures.  Larger shopping centers with mid-large size boxes will start going back to lenders in the next 12-18 months. Many bank notes are up for renewal. Given the surplus of available mid-large spaces, and the demand by discount Tenants for lower rates, center income will not support these notes.
     
  3. Multi-Family Stays Strong. The apartment market and demand for new multi-family space will continue to be a strong sector. The process of adding thousands of new apartments to the Detroit housing market has already begun and new developments will continue into 2017.
     
  4. Distributions Networks Grow. The demand for Warehouse space for distribution and logistics will continue to grow for both existing and new construction. A huge part of this growth is due to the surge in online shopping.  Amazon recently announced plans to open a $90 million warehouse in Livonia, Michigan, on a former General Motors site.
     
  5. Office Market Remains Weak. The office market continues to struggle, and I don’t see the demand for space picking up. This sector has been impacted by job cuts and the connectivity resulting from new technology.  Millennials are also changing the game, choosing work spaces that are less formal and more flexible, and making telecommuting more mainstream. Today’s worker can be on the beach and conduct 95% of their business. 

 

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