At the beginning of every year, a coaching organization I belong to offers “Predictions Week” for the new year. It’s pretty obvious to everyone who is involved in commercial real estate that the past few years of pandemic have been a major disruption in any long-term trends and have caused a re-shifting and a re-thinking of what’s to come. Some of the old ways of doing business are simply not continuing.
2022 Emerging Trends
Two of the most interesting trends, to me, have been the shift in work behaviors (The “Great Resignation”) and the shifting migration patterns (away from cities, into secondary and tertiary areas.) The commonality that I see is people’s desire for a better life is not only an American “Dream,” but is becoming a reality.
Predictions
During Predictions Week, one of the speakers said this:
“2022 is a year of hope and dreams. What dreams we can envision for ourselves come true. Explore and experience new opportunities. [Numerologically,] 2022 is a 6 year… there are new beginnings in this 6 year. Our “attraction factor” is multiplied. A deeper sense of connection returns to our lives. We’ve been growing our ability to plug in.”
Dr. Robert Pease
The message he offered for 2022 is to, “Elevate positive change.”
My sense is that the huge number of people leaving their jobs and either starting their own businesses, or only taking another job where they will be listened to and heard, is a permanent change. I also think that people moving to areas they prefer to live in, based on life-style choices, will continue to happen.
Commercial Real Estate
One of the biggest real estate trends that has already emerged in 2022 is the “Build to Rent” market. This trend reflects both the typical family’s desire for a single-family home and the space to accommodate work from home, school from home combined with a professionally managed property and the amenities that may be provided.
The second biggest trend we are seeing is the return to travel and the opportunities in the hospitality sector. At the onset of the pandemic, almost all lenders ceased any activity in the hospitality sector. Now, in 2022, we are seeing a lot of optimism anticipating a return to pre-pandemic occupancy levels driven by both people’s need for vacation travel, and a return to business travel. Nothing replaces the benefits of face-to-face meetings – and I don’t mean Zoom.
The Environent
In reflecting on these changes and shifts in global consciousness and the American economy, there is one more aspect that needs to be addressed. That is the environment. Many people acknowledge that the recent UN COP26 Climate Conference may not result in sufficient action to reverse climate change. In response to increasing environmental concerns, an increasing number of lenders are allowing developers to include PACE (Property Assessed Clean Energy) loans as part of their capital strategy.
Sofia Capital Ventures is taking that a step further and is now aligned with a funding source that can actually help developers (and existing property owners) calculate the “carbon footprint” of the building over the lifetime use of the property, and generate off-setting “Carbon Credits” that are used to shore-up the equity portion of the capital stack.
Please Contact Us
If you find any of these trends positively impacting your commercial real estate, business interests, or just want to know more, please CONTACT US. We offer a free, confidential assessment of your project or mini-consult. Let us know how we can help you achieve your CRE investing goals in 2022.
