3 Hot Trends in Commercial Real Estate in 2022

Investing in real estate is a matter of learning to read trends early, but which trends you read matters. Every commercial real estate market is a little different, and there are usually several markets within a geographic area because the potential buyers for office space, retail space, light industrial, and other types of commercial properties are all different. That being said, it’s also a good idea to keep an eye on the national real estate trends so you can take into account how they might impact the ones you see locally over the coming months.

1. Inventory Is Tight

The biggest difficulty for flippers and those looking to invest in rentals right now is the lack of available inventory in many places. That has been changing with the rising trend in foreclosures since the emergency pandemic measures expired, but the biggest problem is not raw supply, it is supply compared to demand. Large investors are more active than ever, so the key to finding great deals is to get your hands on properties before they hit the channels those major players use to find properties.

2. Price Fluctuations Are Chaotic

Commercial real estate has risen to unprecedented value levels over the last few years, but all price fluctuations are temporary, and many analysts are cautioning against investing heavily in markets where the properties are currently overvalued. The problem is that not everyone agrees with the analysts about what that word means, and demand is holding prices high in some areas while buyer fatigue and attrition are driving down prices in others. If you work in multiple areas, tracking each one separately will be the key to predicting price trends for a while.

3. Private Financing Is the Go-To Resource

Bank loans for commercial properties come with a lot of red tape because they are seen as major investments, with loans that are among the longest-term lengths offered on any product. There are very few options for speedy closings, and established credit scores tend to be required as well. By contrast, private lenders offer specialty programs like commercial real estate bridge loans that have been designed to let you close quickly.

Bridge loans are so good for fast closings that they have even become preferred by some investors hunting long-term income properties. Not only does it allow the deal to be finished quickly, but it also gives you a chance to invest in any renovations you need while making interest-only payments. After you are done, refinance into a regular commercial mortgage at the new value of the property to set yourself up for low monthly overhead while the building is earning. It’s that simple.


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