The Best Commercial Real Estate Market Trends Heading Into 2023

Just like everything else in the world, real estate is changing. Locations once considered popular are now seen as less desirable when compared to others. Tenants are changing what they want in their rented spaces. Technology is increasing efficiency and making buildings more desirable. These changes will cause real estate trends to shift to realign with the new state of things. Understanding these emerging trends is vital to future real estate success. Here are the best commercial real estate market trends heading into 2023:

Shift to Second-Tier Cities

Real estate investors are leaving first-tier cities due to their high prices and starting to build portfolios in second-tier cities instead. Many companies are also beginning to make these moves, with second-tier cities offering better conditions for success. These location changes will cause economic growth and raise real estate value in second-tier cities. Recent studies back this predicted trend, showing that up to 28% of residents in first-tier cities plan to leave them. The top markets to watch are in places like Nashville, TN, Austin, TX, Raleigh, NC, and Phoenix, AZ. Cities that didn’t make the list are New York, NY, Chicago, IL, and Los Angeles, CA, all previously top markets to invest in for real estate.

Rise of Technology

Like most other industries, the real estate industry is being affected by technological developments. The industry will look very different in 2023, from mobile apps to artificial intelligence. Perhaps the most exciting technological development is the solutions offering better property management for property managers. From scheduling cleaning services to keeping track of maintenance requests, a property manager has a lot to juggle. New technology allows all their tasks to be better organized and more efficient. These changes make tenants much happier, increasing tenant retention and giving investors more security.

Mixed-Use Growing in Popularity

There is a growing demand for mixed-use properties with the workforce changing. Convenience is the name of the game these days, and tenants are committed to living and working in flexible environments. Many people, particularly millennials, want to live in mixed-use areas to enjoy everything they want in one place. Just like this type of property is growing in popularity for tenants, it’s also a type of property that’s growing in popularity for real estate investors. Due to how popular mixed-use properties are, it’s harder for tenants to find spots in them. Some even have wait lists because they’re at full occupancy – something real estate owners love. Not only is there a high occupancy rate because of this popularity, but the tenants who earn spots in these popular areas will also be of better quality as they don’t want to ruin their chances of having the perfect place to work or live (or both).

Companies are Pickier

With the workforce in such disarray, many companies have more to consider when leasing space for their business. They’ll need to assess their labor force and how much they will be working from home versus working in the office. They’ll also want to focus more on location as convenience is becoming necessary for many employees who won’t work from home. Some companies might even consider looking for spaces that offer additional amenities to make themselves look more alluring for employees. These are all factors that commercial real estate investors should consider to better cater to these companies that are potential tenants.

Repurposing

A significant cause of shifting real estate trends is the changes in the workforce. Employees choosing to work from home more often is causing companies to downsize their office spaces. Some companies might even choose to move their business model to fully work from home and decide to get rid of their offices altogether. With so many companies making these choices, many commercial buildings will be left open and in need of tenants. Owners will need to repurpose these buildings to fit the changing needs and desires of other possible tenants if they hope to keep their real estate profitable.

Keep these rising market trends in mind, and you’ll be sure to succeed in your 2023 real estate endeavors!