4 ways to disrupt the commercial real estate market

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To say that commercial real estate has undergone significant disruption in the past year is an understatement to say the least. With many businesses using the Covid-19 pandemic as an opportunity to downsize their offices and move to a more remote workforce, some real estate companies have undeniably struggled.

In contrast, the ever-increasing demand for multi-family housing has helped fuel a record volume of real estate investments in recent months.

All of this shows that 2021 is fraught with both challenges and opportunities – and that the commercial real estate industry is about to experience even more disruption.

Here are four ways to tackle this disruption.

1. Invest in coworking spaces

The way people work has changed dramatically over the past few years. While self-employment and the gig economy were already on the rise before the pandemic, pandemic-fueled leave and layoffs have dramatically increased the number of people doing this type of work.

At the same time, however, many people have found that working from home is not always ideal. Trying to get the job done when you share a small apartment with your spouse, kids, and pets makes interruptions too easy.

To mitigate this, many players in the concert economy – and even in traditional commercial spaces – are turning to co-working arrangements. While workers can be self-employed or work for different companies, they use the same shared office space, along with its resources and expenses.

With the demand for such spaces set to increase with an increasing number of freelancers and more companies looking to downsize, commercial real estate investors would be wise to facilitate coworking options to fill their properties.

Related: 5 incredible tips to turn real estate into a fortune

2. Leverage data analysis

AI and machine learning have become commonplace in many industries, but commercial real estate tends to lag behind in these areas. This is not necessarily due to a lack of technological options. On the contrary, the industry as a whole is generally resistant to change.

While this may cause traditional real estate investors to lag behind in our increasingly tech-driven world, it presents a significant opportunity for potential disruptors. Managing data in a way that allows you to extract powerful insights and generate accurate reports is essential for identifying opportunities and threats for your business as a whole.

By taking advantage of the growing number of software solutions specifically available for the commercial real estate niche, you can automate much of the work and be in a better position to identify and act on key information.

When you let data analytics tools and other technologies streamline your back-end operations, you can focus more of your efforts on closing high-yielding investment opportunities.

3. Understanding the potential of urban and suburban spaces

While the overall perception during the Covid-19 pandemic was that people were largely abandoning urban spaces, the numbers paint a different picture. New York City is seeing roughly twice as many newcomers as in 2019, largely thanks to younger workers who want the active and diverse lifestyle that urban environments offer.

These growth trends are not entirely one-sided, with many suburbs of major cities experiencing tremendous growth thanks to more affordable housing and the ability to work remotely. Of course, with the growth of the suburbs, more businesses are needed to provide the necessary services to the residents of these areas.

While this doesn’t sound disruptive on its own, commercial real estate investors in 2021 would be wise to diversify their portfolios with a mix of urban and suburban spaces. Both areas hold great promise, but it’s unclear what other changes may be on the way.

Geographic diversification of your investments could be the key to minimizing risk. As weather disasters like this year’s freezing in Texas illustrate, you never know when something could happen to your properties.

Related: Property management could be a game-changer for your income

4. Key to industrial and distribution facilities

Global e-commerce has seen a dramatic increase in its share of retail sales during the pandemic, reaching a staggering $ 26.7 trillion. While in-person shopping has recovered well thanks to the lifting of lockdowns and other measures, e-commerce continues to experience higher demand in 2021.

With less business being done in traditional stores, commercial real estate investors should make industrial and distribution facilities a key priority in their investment portfolio. Even the big brands traditionally associated with physical sales are increasingly turning to e-commerce.

The transition from traditional brick and mortar distribution warehouses to e-commerce distribution warehouses will dramatically change business operations for many. Commercial real estate investors who begin to make these properties a priority now will be in a much better position for what will undoubtedly be an ever-evolving change in the way businesses deliver goods to their customers.

Will you be a disruptor or will you be disrupted?

The commercial real estate market appears poised for greater transformation than ever before. Savvy entrepreneurs will anticipate these disruptive forces and take advantage of them to increase the total value of their portfolios. By acting proactively now, you can ensure your financial success in 2021 and the years to come.

Related: You Are Your Best Real Estate Asset


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