Is 2022 the Right Time to Expand Your CRE Portfolio?

We're now far enough into 2022 to have a pretty good idea of what's to come this year. Nearly every commercial industry segment has grown and recovered from the initial shock of COVID-19's impact on the economy.

That being said, some verticals and segments improved more quickly than others. The factors that influenced the kind of year each of these verticals had in 2021 have continued into 2022. These include labor shortages, logistics issues, and inflation.

Does this mean 2022 is a good time to expand your commercial real estate portfolio, or is it rather a time to hold tightly to your purse strings? To help you answer this question, let's begin by seeing what industry experts have to say.

What Experts Expect 2022 to Be Like for Commercial Real Estate

A quick Google search will show you a plethora of expert advice for investing in the commercial real estate industry. For example, The Motley Fool tells us that the industrial and multifamily sectors look the most promising this year. Demand for warehouse space drove prices to record heights and vacancies to record lows last year.

Like in industrial real estate, multifamily investors can expect strong demand to support higher rent in most markets across the country, according to the National Association of Realtors (NAR). “Multifamily vacancies hit 4.7% in the third quarter of 2021, reverting back to levels seen at the end of 2019,” Victor Calanog, Head of CRE Economics for Moody’s Analytics, told The Motley Fool.

The Motley Fool also mentions that retail spaces should have some good performers and that REITs (real estate investment trusts) remain a promising avenue for overall returns. JP Morgan agrees, and feels that the commercial real estate industry has a positive outlook heading into 2022. Their recent article tells us, "The year ahead looks positive, with retail and multifamily asset classes rebounding and industrial continuing to thrive. Commercial real estate has also found innovative ways to increase the affordable and workforce housing supply."

Exploring the Impact of Remote and Hybrid Work on CRE

It's not all good news, particularly when it comes to office space. In years past, office space has been a large portion of a commercial real estate owner's portfolio, but remote and hybrid work has had catastrophic effects on investments like these. Across the country, the future of offices is still largely unknown.

That being said, working from home is creating a demand in larger homes. For example, some renters are upgrading from a one-bedroom to a two-bedroom to ensure they have a place to work. Many developers are designing and building houses with a home office, knowing this is a big selling point.

Commercial Real Estate Software Can Reduce Your Risk in Expanding Your Portfolio

Nearly every expert in the know is telling us that multifamily, industrial, and retail real estate markets have largely recovered from the early days of the COVID-19 pandemic. That makes 2022 a great time to increase your commercial real estate portfolio in these areas. Nonetheless, nothing in real estate development is ever a sure thing. You want to make wise decisions focused on the right sectors and backed by as much data as possible.

Dan Rosenbloom, Managing Director and Head of Investments at Cadre, tells Forbes, "I believe that every positive trend and new opportunity should be balanced against the impact of the multiyear pandemic playing out. The market will favor investors that move efficiently and practice extensive due diligence. It can also help to prepare."

Commercial real estate software helps you make these investing decisions by using past data to predict trends, not guesses or your gut instinct. Helping commercial real estate owners and developers make better decisions is the main focus of Northspyre's AI-based solution.

As user experience is a key focus of Northspyre, you will be able to access your data through generated dashboards and reports to make consistent, reliable data-informed decisions.

The U.S. economy made a spectacular recovery last year, giving us exciting momentum in 2022 and opportunities that can only be seized with confident decision-making. Commercial real estate software makes this possible. Contact Northspyre for more information and to book a demo today.