After a tough year facing continual pandemic-related stressors and disruptions, the commercial real estate industry is proving itself to be more resilient than ever. Despite the market closures and changes to business-as-usual, global real estate investment skyrocketed in 2021.
Global Real Estate Investment Reaches Over $757 Billion
According to JLL, global real estate investment in 2021 reached $757 billion in just the first three quarters alone. This momentous investment volume marked the highest ever point in a nine-month period, climbing four percent above the industry’s previous record from 2019.
In the third quarter of 2021, investment volume totaled $292 billion — 77% higher than what was invested during the third quarter of 2020.
Year-over-year, investment in the retail sector increased by 35% while investment in the office sector increased by 27%. The global investment rates were concentrated in the Americas regions, which saw investment increases by 80% YOY. In total, 2021 generated $124 billion in cross-border investment capital into the Americas.
What Does This Mean for CRE Agents?
With global real estate investment at an all-time high, what does this rush of capital mean for commercial real estate agents? What should CRE professionals be watching right now, and how will this impact their businesses?
Let’s explore what this increase in CRE investment across the globe means for agents and industry professionals.
The Built Environment is Back — But It’s a “New Normal”
Despite concerns that commercial real estate assets may fall to the wayside of digital infrastructures post-pandemic, the massive wave of investment proves otherwise.
While investors were hesitant to make deals throughout the pandemic’s lasting uncertainty, the progress of recovery was strong enough in 2021 to prompt investors to get back into the ring. The strong economic performance coupled with increased optimism for commercial real estate assets has shifted investor sentiment, inviting more capital into the built environment.
While commercial real estate assets have rebounded after the pandemic, the industry is being propelled by new, innovative trends that are set to redefine the lasting “new normal.”
Many investors and businesses are strategizing to accommodate changing consumer preferences that demand greater access to convenience, wellness, health, and safety in 2022.
As more money fuels the rapid expansion of commercial real estate’s “new normals,” agents should follow the trends that are changing the expectations for building infrastructure and leasing services.
For example, tech-enabled and high-quality assets are in high demand within the office sector as workplaces strive to achieve the best telecommunications and amenities offerings for on-site teams.
On the other hand, many retailers are looking to incorporate human-centric designs and interactive amenities into their storefronts to attract foot traffic. The hospitality industry is investing in sanitation, wellness, and a touch-free environment to help guests feel safe and comfortable when staying in a hotel.
To achieve these goals, clients from each sector will need to strategically curate their real estate portfolios to meet their needs and mitigate risks. Agents should keep a close eye on the trends that are changing each sector to best assist clients.
More Momentum for CRE Sustainability Initiatives in 2022 and Beyond
Sustainability and environmental concerns have been a persistent underlayer of the pandemic as many companies have made decarbonization pledges over the last two years.
As a result of the positive climate action being taken to create greener cities across the globe, buildings and organizations are being held accountable for their impact on the environment.
One new trend that is emerging is that buildings are being rated and evaluated by their ability to combat climate risk. Another climate-related consideration is an asset’s resilience against storms and weather events. Learning about the weather risks local to your area can help you assist and guide clients when making leasing decisions.
Understanding how sustainability can impact leasing terms between landlords and occupiers is a must for CRE agents moving forward. In 2021, 35% of global occupiers had already included green clauses in their leases. Agents should also learn about new green lending trends, which give sustainable developments access to financial aid and special lending programs.
Understanding how sustainability impacts commercial real estate deals can help agents assist their clients and facilitate transactions that benefit tenants, landlords, and the environment.
Agents, Prepare to Adapt
While the resurgence of investment activity within real estate is a strong green light for the industry’s recovery, agents should strive to remain at the cutting edge of new CRE trends. As an agent, your ability to adapt and keep up with commercial real estate’s post-pandemic rhythm will determine your success in the long term.
To stay current with these trends and more, read more articles on the RealNex Blog.