The commercial real estate industry is in a constant state of change. It is difficult to determine where the industry will go next, but there are certain trends that have been established since early 2016. Since then, many changes have occurred and continue to do so as we approach 2023. The following trends will continue to shape commercial real estate in the year to come.  

Increased demand for office space in suburban areas

As the demand for commercial real estate continues to increase in suburban areas, mid-rise and high-rise office buildings will be filling up the underdeveloped supply and creating a shortage of land. The growth of the office market and increasing development in the suburbs will lead to a dramatic increase in demand for suburban office space.

More businesses moving to smaller cities

According to a recent survey, nearly one-third (31%) of organizations expect to be increasing their small business footprint by 2023. One of the primary reasons why businesses are moving to smaller cities is because many of modern organizations are seeking to reduce their operational costs. They want to achieve this by reducing headcounts, moving from expensive office space into flex offices and freeing up space for desks and laptops. As organizations move towards becoming less expensive, this will put financial pressure on commercial real estate as well as restaurants, cafes and hotels that serve them.

Coworking spaces becoming more popular

Commercial real estate investing is about more than just buying properties for cash flow. There’s a trend in commercial real estate that will shape the market in 2023 and is growing quickly: coworking spaces. Coworking spaces have become more popular as technology firms are taking over a lot of office space previously occupied by traditional service businesses. Many of these start ups and entrepreneurs don’t want to pay typical office lease rates (which can be as high as 99% of gross rent) yet they still need to be in the same building as their business partner, customer base or employees.

Rise in popularity of mixed-use developments

The current market trends in the commercial real estate industry suggest that mixed-use developments will continue to be prevalent in the next decade. The fact that leading real estate companies are signing up for mixed-use developments of various sizes indicates that these projects are growing in volume. Mixed-use developments have been springing up around the globe due to their superior productivity and financial benefits.   Commercial real estate is an industry that seems to always be at the forefront of change. We’re talking about a sphere where innovative technologies, shifting business models, and policy changes can have significant repercussions. This is why it’s important for those who work in commercial real estate to stay ahead of the curve by predicting the changes that are coming down the pike. Only then will they be able to adapt and capitalize on them.