A new decade is upon us and there is no better time to look at the top trend that will shape the real estate industry in for the years to come. While many of these trends are focused on commercial real estate, there are also a few trends for residential investors as well as those who service investors. So, let’s get started as time is money.
- Investing in Opportunity Zones Continues to be Hot
Now that the government has issued guidelines on its Opportunity Zone program, investors are lining up to find ways to make the most of it. According to a recent report from Real Capital Analytics, there is more than $6 trillion in properties across the country which could benefit from investment under the program.
Given the program was enacted as part of the 2018 Tax Cuts and Jobs Act, 2020 could be the year that investment in eligible properties swings into high gear. Not only could this be a boon for investors who would reap the benefits of generous tax incentives, but it would also benefit many of the communities where these properties are located.
Given the potential windfall from this program, many industrial insiders are expecting a rush of interest in eligible properties. As such, would-be investors need to identify and control properties in their area before it is too late as the surge in interest is certain to impact property values.
- Shopping Mall Conversions Set to Take Center Stage
If the 1980s may have been the decade when shopping malls exploded across the country, then the 2020s will be the decade of shopping mall conversions. It’s no secret that shopping malls across the country are casualties of the growth of online shopping.
But there is still value in these developments as eCommerce players, healthcare service providers, churches, and others are eyeing these properties. As such, conversions could become a massive driver for commercial properties.
In many ways, this is an easy lift for most investors as the properties are generally in high-traffic areas with abundant parking and access to public transportation. Also, shopping malls rarely have environmental concerns that former industrial sites have. Lastly, many malls are well-suited for renovation and this means the cost of repurposing the property is less than it would be in other situations.
- Why Flip When You Can House Hack?
For years, flipping has been one of the primary ways investors get into residential real estate. However, the strength of the economy has made it harder to find ideal candidates. While some are still making money flipping homes, others are seeing another opportunity to arise – house hacking.
This is when a property owner converts a room, or several rooms, in their home into rental units. Granted this is not something new as residential investors commonly add another unit to a multi-family home. However, the rise of services such as Airbnb has made it possible for owners to rent make money from a spare bedroom. In some cases, investors are buying homes and then renting out the entire house, whole or in part, to fractional tenants.
- The Sharing Economy Comes to Services
The sharing economy is transitioning into more than just offering rides, delivery services, or your spare bedroom, it is starting to become a keyway that service companies manage their businesses. This can be seen in the real estate industry where construction companies are relying on sharing services to reduce their capital costs.
Granted leasing and other construction equipment financing options will continue to play a vital role in how contractors acquire the equipment they need to run their businesses. But industry players are also looking for ways to reduce their capital costs and this can include fractional ownership.
Not only does this reduce the upfront cost of specialized equipment but in some cases, contracts can rent out the equipment when they don’t need it; this can help construction companies to unlock a new source of revenue.
- Industrial Real Estate Generates Interest
While manufacturers might not need as many employees as they used to, they still need land to place their factories. This includes gobbling up shuttered factories are automation makes it cheaper to move manufacturing centers closer to their markets.
In addition to reshoring, eCommerce giants have also taken a keen interest in former factories as the open floor plans make them good candidates for distribution centers. This is especially true as the demand for Class A bulk warehouses has maxed out the supply and players are looking for alternatives.
As you can see there are several trends which investors, developers, and service providers such as contractors can use to grow their businesses in 2020 and beyond.